Beechcraft’s announced sale to Cessna-parent Textron hardly comes as a surprise. In a roundtable with Aviation Week editors in July, Beechcraft CEO Bill Boisture noted that three of the company’s major shareholders specialized in distressed properties and expressed doubts they were investing in the storied aircraft company for the long haul. But what really stands out is the price: $1.4 billion. In December 2006, when Raytheon struck a deal to sell the Wichita, Kan.-based operation to a partnership of Goldman Sachs and Canadian buyout firm Onex, it commanded $3.3 billion.
That was a very different time. Demand for business jets was so strong that some industry veterans were predicted the industry had become recession proof. And initially, the purchase of the company -- then known as Hawker Beechcraft -- looked to be a smart move. In the summer of 2008, backlog hit a record $7.4 billion, more than double the $3 billion it stood at when Raytheon sold, and sales were up 47% from a year earlier.
But some savvy investors questioned early on whether Goldman and Onex could capitalize on their investment, given the hefty price that they paid. “This is… a bet on the future of general and business aviation, which has been remarkably strong in the last few years,” private aerospace investor Jon B. Kutler told Aviation Week at the time.
As it turns out, it was a very bad bet.