’s proposed $1.79 billion deal with China’s Superior Air Beijing leaves open the fate of its defense business and raises issues about the control and supply of the venerable King Air line that is in special-use roles around the globe.
Hawker Beechcraft next week will seek U.S. bankruptcy court clearance to begin exclusive negotiations for the sale of all but its defense business to the Chinese firm (Aerospace DAILY, July 11).
The proposed agreement, announced July 9, would leave the defense business — which in recent years has been Hawker Beechcraft’s most lucrative — as either a standalone operation or to be sold separately. Should it be sold, up to $400 million of the divestiture would be refunded to Superior.
Hawker Beechcraft Defense Co. (HBDC) produces the T-6A/B Texan II military trainer and is developing a tactical version of the single-engine turboprop aircraft, the AT-6, for the U.S. Air Force’s Light Air Support (LAS) contract to be awarded early next year.
But the original 700+ aircraft demand by the U.S. Navy and Air Force is nearly fulfilled, with no other large-scale buyer on the horizon. And the LAS program, out for rebid, was originally awarded to a Sierra Nevada/team bidding the Super Tucano.
Even though HBDC would not be part of the deal with the Chinese, the Beechcraft King Air turboprop aircraft would, and the Pentagon operates hundreds of those in a variety of roles, most importantly as intelligence, surveillance and reconnaissance (ISR) platforms.
Hawker Beechcraft would have to satisfy concerns raised about the control and supply of airframes, components and technical support for the King Airs, such as the MC-12W Liberty, that HBC builds for ISR conversions, among other U.S. government special-mission uses.
“This raises a blurry line between military and civilian technologies,” says an aviation trade association source.
The U.S. Committee on Foreign Investment in the U.S. (CFIUS), an interagency group that examines the impact of foreign involvement in U.S. firms, will want to review the implications of Chinese ownership on national security.
King Air 350ER turboprops bound for civil use and military ISR conversions, for instance, roll down the same assembly line. CFIUS will evaluate the potential effect of the sale on national security.
CFIUS and other government agencies may look at hard firewalls between the Chinese owners and Hawker Beechcraft’s board of directors, the firm’s management team and even aircraft assembly lines. They also may insist that future aircraft and spares be provided by approved U.S. and allied-nation vendors, if those aircraft are destined for ISR conversion.
“It’s highly doubtful that the U.S. government would want to be dependent on a Chinese supply chain,” another industry source says.
“There are hard firewalls you have to create if you are using an ISR platform over which the Chinese might have influence.”
But if Hawker Beechcraft can convince the U.S. government that Superior Aviation Beijing is just a passive partner interested in investment income, then the deal stands a much better chance of approval.
The idea of a King Air produced by a Chinese-owned company doesn’t bother Lt. Gen. Larry James, U.S. Air Force deputy chief of staff for ISR. “If you are talking just about the airframe, it’s not a state-of-the-art, push-the-edge-of-the-envelope capability,” he says. After all, “A King Air is a King Air.”
But it’s impossible to predict how a sale to the Chinese of such an iconic American brand might play out in Washington.