Hawker Beechcraft prefers to keep its business up in the air. The company manufactures passenger planes and offers service and support for aircraft. Its product line includes business jets, turboprops, and piston-powered aircraft. The company supplies parts, maintenance, and flight support to a fleet of some 37,000 aircraft via service centers in 30-plus countries. In addition to commercial planes, Hawker Beechcraft makes military training aircraft for the US Air Force and the US Navy. Among its top 10 customers, the US government represents about 30% of sales, primarily for T-6 trainer aircraft. In 2012 Hawker Beechcraft filed for bankruptcy protection.
The company filed for Chapter 11 protection after arriving at a prearranged restructuring plan that will remove about $2.5 billion in debt and about $125 million in annual cash interest expenses.
Despite its global reach, Hawker Beechcraft has taken a hit from the turbulent economic environment and credit crisis that has eroded corporate spending on commercial aircraft, losing more than $630 million in 2011. It had already struggled with a decline of more than 12% in 2010 year-over-year sales, largely attributable to flagging aircraft deliveries offset by a rise in trainer aircraft and customer support revenue.
Responding to ongoing weakness in the global economy and an anticipated aircraft production slowdown, Hawker Beechcraft cut its workforce by 8% in fall 2010, and announced the termination of another 800 jobs during 2011. The hard choice followed the elimination of approximately 2,300 jobs in 2009, a nearly one-quarter reduction in staff. In addition, it is shutting several facilities in Wichita, Kansas; work is set to transfer to third parties or to its facility in Mexico. Nonetheless, Kansas and local authorities have offered the company a $45 million incentive package to maintain its footprint in Wichita.
The defense market tends to be less susceptible to the ups and downs of the economy than the commercial sectors of the aviation industry. Hawker Beechcraft is a sole source supplier of trainer aircraft to the US Army and US Navy under the Joint Primary Aircraft Training System (JPATS) program. The US government is anticipated to require product support services for its T-6 family of trainer aircraft through 2050. In the meantime, Hawker Beechcraft continues to develop a light attack variant of the T-6 (known as the AT-6) that features integrated surveillance equipment, data link, and wings that can carry light attack weapons. It satisfied the US Department of Defense's trial experiment in 2010.
The company also sells military training aircraft and spare parts to militaries around the world. International customers accounted for 20% of deliveries in 2010. In the global business aviation market, Hawker Beechcraft has more than 100 facility-owned and authorized service centers -- the largest in the industry. It is continuing its aftermarket sales support covering Hawker business jets throughout Africa, Australia, and the Middle East. Nigeria, specifically, is forecast as one of the highest growth regions in the world. More than 50% of business turboprops sold in Africa in 2010 were made by Hawker Beechcraft. – less