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Tue, Sep 21, 2010

Textron Adjusts Business Jet Outlook

Cessna Says It will Cut 700 Jobs

ANN Realtime Update 09.21.2010 1530

Cessna said Tuesday it will cut another 700 positions because of the sluggishness of the economy.

Multiple media sources indicate that Cessna CEO Jack Pelton sent an e-mail Tuesday to Cessna employees announcing the move. Pelton said that cancellations have slowed, but that "the recovery and growth we expected to see throughout the year have not materialized, and the timing of any recovery remains uncertain."

The 700 jobs to be cut are in addition to the 8,000 positions Cessna has shed since 2008. The company has about half as many workers at its Wichita operations than it did late in that year.

The Associated Press reports that company spokesperson Doug Oliver said the timing of the layoff notices had not yet been determined. He said the layoffs would be company-wide.

Union machinists at Cessna this past weekend ratified a new seven-year contract by default when a strike resolution failed to get a favorable vote from a majority of the union membership. A majority voted to reject the contract, but did not vote to walk off the job. Oliver said the two events were unrelated.

Original Story: Cessna parent Textron reported Tuesday that it is adjusting aircraft production schedules and reducing headcount at its Cessna business unit due to continued weakness in new aircraft orders.

"While we are seeing solid performance in most of our other businesses, we have not yet seen a discernible improvement in business jet order activity," said Textron chairman and chief executive officer Scott C. Donnelly. "Therefore, we are taking further production and restructuring actions at Cessna."

The company still expects 2010 earnings per share from continuing operations excluding special charges to be in the range of $0.55 to $0.65. Manufacturing free cash flow from continuing operations for the year is now expected to be approximately $400 million, compared to a previous target of $500 - $550 million, reflecting lower expected jet deliveries.

Higher finance receivable liquidations at Textron Financial should more than offset the lower expected cash from manufacturing operations, as the company now expects to reduce receivables by $2.4 billion this year, up from its previous target of $2.0 billion and its original target of $1.6 billion. During the third quarter, the company repaid the $665 million balance remaining on the Textron Inc. $1.25 billion bank line. The company continues to be on track to reduce net debt below $5.5 billion by the end of the year.

Textron plans to issue third quarter financial results on Wednesday, October 20, 2010.

FMI: www.textron.com

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