Financial Shakeup Comes As Company Must Raise $1 Billion

Faced with a global economic crisis that shows no signs of ebbing, this week Textron released two executives formerly responsible for the company's finances... and its CEO hinted at the possible sale of one of Textron's aerospace subsidiaries.

Textron announced Monday that Chief Financial Officer Ted French and Buell Jay Carter, Chief Operating Officer of Textron Financial, were shown the door. Forbes reports Textron SVP Richard Yates will serve as acting CFO in French's place, while Textron Financial -- which has seen massive losses tied to the current recession -- will report directly to Textron President Scott C. Donnelly.

"Under Scott's and Warren's leadership, I am confident we will successfully execute the strategy we've put in place for Textron Financial at a more rapid pace," Chairman Lewis B. Campbell said.

It's not difficult to see why Textron Financial is ailing. In addition to providing loans on such high-dollar items as Cessna business jets, the financial department also has funds tied up in golf courses and vacation resorts. Those aren't the kinds of assets to have in today's economy... and Textron Financial is offloading those properties as fast as it can.

Textron previously announced in December it would focus on its manufacturing operations -- in addition to Cessna, Textron also owns Bell Helicopter, and entities such as E-Z-GO golf carts -- leaving the financial aspects to other entities. While that may be a sound plan in the long run, in the short term investors are reportedly frustrated by plummeting sales, due to the lack of available credit for potential buyers.

The Fort Worth Star-Telegram reports that uneasiness may lead Textron to attempt to sell off one of its two aerospace companies. Speaking at a Barclays Capital conference with investors Tuesday, Textron CEO Lewis Campbell said the company must increase liquidity by at least $1 billion in the first half of 2009.

Selling off Bell or Cessna would be one way towards attaining that goal... and while it's hard to say for certain which company might be put on the sale block, it appears Bell would be the more enticing entity for potential buyers.

While both companies have seen commercial sales plunge over the past several months, and have laid off workers, Bell still has a number of military orders to fulfill, that are less susceptible to economic trends.

FMI: www.textron.com