Textron's Beechcraft Acquisition "Everything We Expected," Says CEO

July 16, 2014
Textron's acquisition of Beechcraft Corp. and the subsequent merger of Beechcraft and Cessna is going well, Textron CEO Scott Donnelly said at the Farnborough International Airshow.

July 15--LONDON -- Textron's acquisition of Beechcraft Corp. and the subsequent merger of Beechcraft and Cessna is going well, Textron CEO Scott Donnelly said in an interview at the Farnborough International Airshow.

"So far, it's been everything we expected," Donnelly said of Textron Aviation, which was created in the merger.

Today, when you sit down with employees, "you can't really know or care who was with which business," Donnelly said.

That's unusual in an acquisition.

Often with employees affected by a merger, there can be a "we vs. they" attitude between workers of two companies.

In this case, employees at Cessna and Beechcraft live in the same city. They often live in the same neighborhoods and their children attend the same schools, Donnelly said.

That makes it easier to build relationships.

Textron bought Beechcraft Corp. in March for about $1.4 billion -- roughly a year after Beechcraft emerged from a Chapter 11 bankruptcy.

Textron Aviation CEO Scott Ernest also spoke to The Eagle during the Farnborough Airshow about the merger and the market.

It was good to make organizational changes quickly after the acquisition, they said.

"When something like this happens, all the employees know things are going to be different," Donnelly said. "If you don't move quickly, then it's a traumatic event."

He knows that with the merger, however, some people don't have jobs anymore.

The company announced in April that it was laying off 750 people, including 575 in Kansas.

"It's not easy," Donnelly said.

The goal is to make a strong and successful company.

Textron is investing in new products, something that was difficult for Beechcraft to do, Ernest said.

That's created momentum.

It's also given Beechcraft customers confidence that if they place an order, they will receive it.

"That's an opportunity for us," Ernest said.

There are 2,500 Hawker jets out there flying. Production of Hawker aircraft ended during the bankruptcy, although Beechcraft stressed it would continue to offer support and service.

Now, as those Hawker owners move to a new airplane, hopefully they will move into Cessna products, Ernest said.

However, Donnelly said, "it's still a very tough market."

It's difficult to say when there will be an upturn.

"We thought we hit bottom in 2012," Donnelly said. "We didn't. We've been guessing wrong forever."

The normal market indicators, such as corporate profits, number of used aircraft for sale and utilization, haven't been real reliable during this downturn.

Now, though, the indicators are moving in the right direction, Donnelly said.

"Our folks are working hard to sell," he said. "We can do what we control. All the increase in sales has been driven by investment in new products. It's a market that responds to new."

The company is committed to investing in products, he said.

The merger has been well received by customers in Europe and elsewhere, Ernest said.

"Globally, it's been well accepted," he said. They like the factory-owned service centers they have access to.

"Beech didn't have that," Ernest said.

Donnelly praised the talented work force in Wichita.

"Wichita is not a low-cost country," Donnelly said. But "we get access to talented people."

They do a great job designing and manufacturing products, he said. The jobs are high paying.

"As long as it's a productive work force, then it works," Donnelly said.

They are good craftsmen, and they're talented, he said.

"These are the kind of people we need."

Reach Molly McMillin at 316-269-6708 or [email protected]. Follow her on Twitter: @mmcmillin.

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