Rockwell Collins reducing global workforce

Rockwell Collins on Friday said it will reduce its workforce by 500 people, or 2.5 percent, in the first half of fiscal 2016 due to projected continued slow sales of business jets.

The Cedar Rapids avionics and communications equipment supplier said it hopes to achieve the reduction in force with a voluntary separation retirement incentive plan in targeted areas of the country. If a sufficient number of employees do not volunteer, the company said it will reassess its options.

The company told its employees Friday and plans to release additional details next week.

Rockwell Collins said it expects a mid-single-digit decline in sales to the business jet sector in its fiscal year, which ends on Sept. 30, 2016. The business jet market accounts for 20 percent of the company's overall revenues.

Rockwell Collins said it expects fiscal year 2016 revenue between $5.3 billion and $5.4 billion and earnings per share in the range of $5.20 to $5.40. The top end revenue projection was below analysts' consensus estimate of $5.44 billion.

Rockwell Collins, which employs 20,000 worldwide, said the earnings guidance includes the impact of an estimated restructuring charge in the range of 10 to 15 cents per share in the first quarter of fiscal year 2016.

Kelly Ortberg, Rockwell Collins president and CEO, said the company does not expect to see the business jet market improve significantly in the next year.

'Our fiscal year 2016 guidance incorporates the previously announced production rate reduction on the (Bombardier) Global 5000/6000 aircraft,” Ortberg said in a news release. 'In addition, we have assumed additional rate reductions in both the mid-size and light segments of the business jet market in our guidance.”

Bombardier announced in May that it was lowering production of the Global 5000 and 6000 aircraft and laid off 1,000 employees. The company cited softer demand by China, Russia and other emerging nations for the ultra-long-range jets.

Global business jet shipments declined 4.1 percent in the first half of this year compared with the same period a year earlier, according to the General Aviation Manufacturers Association, an industry trade group.

'Over the last few years (Rockwell) Collins has been better than most in calling bizjet and defense trends,” Robert Stallard, an RBC Capital Markets analyst, said in a note to investors, according to Bloomberg News. 'That is why we would put particular weight on its call” for a drop in jet sales of at least 10 percent in fiscal 2016.

Rockwell Collins stock closed Friday at $83.68 per share, down $1.60 or 1.88 percent, on the New York Stock Exchange.