Czech Aircraft Maker Cutting 450 Jobs

Times are tough at Aero Vodochody... but the Czech aircraft maker says it plans to return to the black by 2008.

Returning to profitability won't be easy. Company HR director told the Prague Daily Monitor this week the company will cut 450 employees from its 1,644 by the end of August, due to restructuring efforts. Most of those cuts will be in executive-level positions, he added, with most of those workers getting five months wages in compensation... six months if they'd worked at Aero for more than 10 years.

Aero CEO Peter Ondro -- who was appointed to the position recently by Aero's new owner, Penta Investments -- says the company will focus on production, as well as winning new orders.

Ondro says the company will also seek to increase volume in its contracts with other manufacturers, such as producing Sikorsky S-76C helicopters and the wing box for the C-27J Spartan military transport turboprop. Aero also expects to deliver four L-159 light jet fighters (shown above, right) to the Czech Air Force.

"We are not closing any production activity. Technological minima, necessary for potential orders for L-159 and Ae 270 aircraft, will also be preserved," he said. "It is, however, necessary to reduce the number of employees in order to make the production and related activities effective. We are not counting with any further rationalization of employment at this moment."

It isn't hard to see why. Aero expects to lose over $43 million US for 2006, after a $64 million shortfall a year earlier. The company had negative net worth of $338 million at the end of 2006.

With Penta kicking in funds to offset those losses, however, Ondro says he expects the tide to turn soon.

"I believe that we will succeed in filling Aero with work, that production and development capacity will be maximally occupied in the context of aerostructures growth, L-159 aircraft marketing on foreign markets and other projects," Ondro added. "Together with new orders, re-increase of employment can be expected."

"We still expect a loss this year, but the company will be in the black in January 2008," he said.

FMI: www.aero.cz