Wichita-based manufacturer divests some key assets in attempt to become leaner, stronger
Beechcraft continues to remold itself as it weighs bids for its Hawker 4000 and Premier aircraft programs, looks to downsize its footprint and sets out to return to its roots.
The Wichita airframer, which exited Chapter 11 bankruptcy protection in February without the Hawker name, “got interest in all” bids on July 2 for the Hawker 4000 and Premier type certificates, along with associated spare parts, tooling and facilities, and hopes to wrap up a sale by the end of the year, CEO Bill Boisture said during a roundtable with Aviation Week editors.
In addition to selling the airplane programs themselves, Beechcraft is offering the associated paint and completions plant in Little Rock, Ark. But that is just a part of a number of ongoing downsizing efforts to strengthen its core businesses.
Beechcraft also has consolidated its piston and turboprop production into a single facility in Wichita, closing the piston-only plant. That facility, Boisture says, is on its way to becoming a big-box store. Other plans include efforts to sell its composites plant (Plant 3) in Wichita, along with the associated technologies. The sale of Plant 3 and property at the south end of the Beechcraft campus will reduce its vaunted “square mile” on Wichita's east side by about 20%.
The decision to sell off the composites-technology assets—after failing to find profitability in them over the past three decades through three different aircraft programs—will enable Beechcraft to become a much simpler company that does not have to divert resources to support the composite programs, including Hawker 4000 and Premier. Boisture says composites and the associated aircraft did not have the “ilities”—reliability, maintainability, operability—that are needed.
The company has a number of bidders, Boisture says, but he would not predict how the sale would proceed. Interest ranges from those seeking to purchase of all of the assets to those wanting groups of them, and others just interested in specific pieces.
He envisions purchasers of the Hawker 4000 and Premier programs will establish a company similar to Sabreliner to support the 400 aircraft in their collective fleets. He is more skeptical about the likelihood those aircraft will return to production. Such an effort would take 4-5 years and an investment of $200-300 million, he says. “Unless there was a strategic national [interest], you probably wouldn't undertake it,” he adds.
Without those programs, Beechcraft can sharpen its mission to reestablish its brand in the market and restore customer and supplier confidence. Boisture was upbeat on its progress, saying that despite the bankruptcy process, suppliers have worked closely with the company. Customers have provided positive feedback, he adds. “Beechcraft customers know the focus of the company was diffused through,” he says.
As for branding, the company is returning to its roots, he says, noting that prior to the past couple of decades, “Beechcraft had been one of the benchmarks.” But in recent decades it had been “pummeled.”
The company is hoping to stabilize following several years of financial uncertainty. It emerged from bankruptcy protection without 85% of its former $2.4 billion in debt, along with production of its costly jet programs.
As a result, the company will be profitable this year and will not have to draw on its line of credit. The company, which now employs 5,400 workers worldwide, is expected to bring in $1.8 billion in revenues, about one-quarter of which will come from its defense/training business, another 35-40% from Global Customer Support and the remainder from its commercial aircraft enterprise—30% of that from special-mission aircraft.
A by-product of the elimination of debt and sale of its unprofitable jet programs and composites technology is the ability of Beechcraft to invest trifold into its now core competencies—pistons, turboprops and military/trainer/special-mission aircraft. Boisture is hesitant to provide details on new products, telling Aviation Week earlier this year that as the company regained its footing, he wanted to “talk a lot less” about new aircraft and instead assume a “Skunk Works mentality.” The company has stated, however, that it expects to bring new diesel variants of the Bonanza and Baron aircraft to market by the end of 2014 and remains “highly interested” in the single-turboprop market.
Beechcraft is trying to determine which parameters would differentiate a single turboprop in the market—who the competition and what the cost would be, he says, though he would not elaborate about the timing. As for the diesel variants, Boisture notes the difficulty in obtaining aviation gasoline in international markets. “We know we've got to make some changes” to keep them in production.
While striving for stability, Boisture acknowledges that some changes may be pending. Three of the major shareholders specialize in distressed properties. In those cases, the question comes up on whether they are long-term owners. “I wouldn't think so,” he says.