Clay Jones, chairman, president and chief executive of the aerospace supplier Rockwell Collins Inc. (COL), said Tuesday he's encouraged two important customers - Boeing Co. (BA) and Airbus - haven't announced significant production cuts on commercial airplanes given the drop in global air passenger traffic.

Jones told Dow Jones Newswires, "When everybody expects you to do something and you don't do it, that means that you know something they don't know." He suggested that airlines, expecting the price of oil to rise may be sticking to plans to buy more fuel-efficient aircraft, despite their financial challenges.

As well, "Boeing has said they're seeing deferrals, but not many cancellations," he said. "That suggests that if you're looking past the end of your nose, you want to stay in line for the aircraft you've ordered."

Jones said he's been surprised to see that commercial airlines in recent weeks are cutting aircraft usage, but not grounding more planes.

If Boeing or Airbus should announce production cuts, Rockwell Collins is prepared to act quickly to match lower demand for its products, Jones said. He said Rockwell Collins plans more production cuts this year related to the business jet market, resulting in some employee layoffs.

Early Tuesday Rockwell Collins said fiscal second-quarter net income slipped 2.4%, pushing the company's full-year outlook lower, as the market for business jets fell faster than expected.

Business jet production should hit bottom around September, the end of the company's fiscal year, Jones said. After that, the market likely will stabilize, and begin to recover along with the world economy. Historically, the executive said, the business jet market has bounced back quickly.

On the defense side, Rockwell has been a team member with Boeing on the troubled contest to win a contract for new refueling tankers for the U.S. Air Force. The contract will be rebid this year, with Boeing expected once again to face off with Northrop Grumman Corp. (NOC) and Airbus.

Dividing the contract between the bidders might be a good solution, Jones said. "I'm encouraged by talk of a split deal, because this contract is far more about politics than it is about technology." He said fears that a split contract would cost taxpayers more than a single program might not bear out, since "the cost of two programs could be offset by competitive issues. I'm not sure that dynamic has been brought into the equation."

Early Tuesday, the company lowered its full-year earnings forecast to a range of $3.70 to $3.90 a share on revenue of $4.5 billion, down from February's lowered estimate of $4.10 to $4.30 a share on revenue of $4.7 billion.

For the period ended March 31, Rockwell Collins reported net income of $164 million, or $1.03 a share, down from $168 million, or $1.03 a share, a year earlier. There were 2.4% fewer shares outstanding in the most recent period.

Revenue decreased 4% to $1.14 billion.

Analysts polled by Thomson Reuters expected earnings of 98 cents per share on revenue of $1.15 billion.

Rockwell Collins' commercial-systems revenue fell 14% as profits dropped 21% on lower sales volumes. Government system sales grew 6.4% as earnings rose 26% on higher margins.

Rockwell Collins' shares recently were down 2 cents at $37.24.

-By Ann Keeton, Dow Jones Newswires; 312-750-4120; ann.keetondowjones.com

(Kerry E. Grace contributed to this report.)