Tuesday, February 19, 2013 4:10 pm
Beechcraft emerges from bankruptcy protection
By ROXANA HEGEMANAssociated Press
It's now focused on its turboprop and piston aircraft and its military work - but the country faces potentially massive defense cutbacks.
The prospect of the government's defense retrenchment comes at a crucial time for the Wichita, Kan., company, as it competes for a $354 million U.S. government contract to build aircraft for use in Afghanistan. The high-stakes "light air support" contract could ultimately be worth nearly $1 billion, depending on future orders.
The single-engine turboprop, dubbed the AT-6, that Beechcraft proposes to build under the LAS contract is crucial for the company. It hasn't been put into production yet, but CEO Bill Boisture told The Associated Press Tuesday that building such a plane is a major objective this year. Winning a customer to launch production is one of the top three goals to get Beechcraft "off on the right foot" in 2013, the company told its employees.
"We have good prospects for that happening," Boisture, who had been chairman of Hawker Beechcraft, said in an interview at the company's Wichita headquarters. "If the LAS contract is not awarded, or we don't win for some reason, we would have to take some small, interim steps until we have achieved a launch customer. But we will go forward with the program."
Beechcraft is exiting bankruptcy with roughly 5,400 employees worldwide, including about 3,300 at its headquarters. Boisture said he anticipated those employment levels to remain stable.
The company has long said the AT-6 government contract would generate about 700 jobs, but on Tuesday Boisture said it is "not useful" to speculate about whether all those would be additional jobs if the company won the LAS contract, or whether there would be more layoffs if the company did not get it.
In addition to the getting a launch customer for the AT6 program, employees gathered at companywide meetings on Tuesday were told that Beechcraft's other major objectives included making sure that the world markets know that "Beechcraft is back - that it is well-capitalized, soundly financed and able to develop new products" and re-establishing its sales network for the business and general aviation planes it still builds.
The renamed company's formal announcement that it is exiting bankruptcy comes two weeks after its reorganization plan was approved by the U.S. Bankruptcy Court in the Southern District of New York. Beechcraft's debt was cut and creditors agreed to $600 million in exit financing. That could help it to better compete in the special mission, trainer and light attack airplane markets while continuing its turboprop and piston airplane manufacturing.
Beechcraft's other defense products include the T-6 military trainer, with a worldwide fleet of nearly 800 aircraft.
Beechcraft no longer builds business jets. It has shed their unprofitable manufacturing operations and is in talks with several interested parties in the sale of the rest of the Hawker business jet assets, which include intellectual property, tools, inventory and facilities. Boisture declined to identify any potential buyers.
Hawker Beechcraft, owned by Canadian investment firm Onex Partners and Goldman Sachs Group Inc.'s private equity arm, filed for bankruptcy reorganization in May. Goldman and Onex kept a minor equity stake in the reorganized company.
Slightly more than 90 percent of Beechcraft is now owned by the investment firms that had been owed about $2.5 billion by Hawker Beechcraft, said spokeswoman Nicole Alexander. The four major shareholders are Centerbridge Partners LP; Angelo Gordon & Co.; Bain Capital's Sankaty Advisors LLC; and Capital Research & Management.
Hawker Beechcraft struggled with the sluggish business jet market more than other plane makers because it was purchased in 2007 in a debt-heavy deal just before the general aviation market tanked. In addition to its Wichita headquarters, the company has factories in Little Rock, Ark.; the United Kingdom; and Mexico, as well as more than 90 service centers worldwide.
Beechcraft traces its Kansas roots to Beech Aircraft Corp., a company founded by Walter and Olive Ann Beech that began making aircraft in the 1930s.