Hawker Beechcraft's announcement of its potential sale to a small Chinese company for $1.79 billion could mark the beginning of the end of a decades-long period of missed opportunities and missteps at what had been among general aviation's most solid manufacturers.

Many in Hawker Beechcraft's Wichita headquarters regard the buyout as the best option, but others elsewhere are skeptical about the offer's substance and the future of the company.

Specifically, Hawker Beechcraft, which filed for Chapter 11 bankruptcy protection May 3, announced July 9 that it had entered an “exclusivity agreement” with Superior Aviation Beijing Co. Ltd., lasting 45 days, during which the two will attempt to finalize details of the takeover. If that occurs, Superior would serve as a stalking horse in an open bidding process. During the exclusivity period, Superior is to provide Hawker Beechcraft with up to $50 million to continue business-jet production.

Superior has said it would keep Hawker Beechcraft's existing operations in the U.S. and retain its employees and executives. No mention was made of also establishing manufacturing operations in China, though that seems a likely eventuality, considering the prestige the Chinese attach to aircraft-building and the country's vast market potential for such products.

Notably, the transaction would not include Hawker Beechcraft Defense Co. (HBDC), which makes the T-6A/B military trainer and is developing a tactical version, the AT-6. However, if HBDC is sold separately, up to $400 million from its divestiture would go to Superior.

Should Hawker Beechcraft fail to be acquired, it plans to emerge from bankruptcy as a standalone entity whose ownership would transfer from Goldman Sachs and Canada's Onex Corp., which acquired it from Raytheon in 2007, and to its creditors. That would erase $2.5 billion of debt.

While the news stirred hope among fretful Hawker Beechcraft employees, their reaction was hardly universal. “What an exceedingly odd announcement,” comments Richard Aboulafia, vice president-Analysis, at the Teal Group. “If AVIC/Caiga [established Chinese aircraft manufacturers] were behind this, that would be one thing. But we're talking about a much smaller and less well-connected entity.”

Indeed. Hawker Beechcraft identified Superior as an “aerospace manufacturer,” but the adjective appears inflated.

The Chinese company, which is 60% owned by a private entity and 40% by the Beijing municipal government, came into being in 2010 when the venture bought Superior Air Parts, a bankrupt Texas parts maker for general aviation piston engines. A few years earlier the same Chinese venture purchased Brantly, an often-failed maker of small helicopters. Those subsidiaries are now co-located in Coppell, Texas. However, all of Brantly's tooling was moved to China, where the helicopter is being developed as a UAV. Meanwhile, Superior Beijing manufactures small piston aircraft engines for the Asian market.

Jack Pelton, the former head of Cessna Aircraft, expresses surprise at the acquirer. “It's not a complete unknown,” he says, “but it's a small business compared to Hawker Beechcraft.”

The deal is also a surprise to Frederico Fleury Curado, CEO of Embraer, a competitor in both business jets and military trainers. “We were expecting a Chinese buyer, but not this one,” he said. “We were expecting an established buyer.”

Aboulafia is less guarded. “We're looking at the people who bought Brantly,” he says. “They're not showing up with $1.8 billion here; that's not going down.”

A Superior takeover will have to receive bankruptcy court approval and be blessed by the Committee on Foreign Investment in the U.S., a federal inter-agency group that will weigh the deal's national security implications.

While HBDC would not be involved, the King Air would, and the Pentagon operates hundreds of them, most importantly as intelligence, surveillance and reconnaissance (ISR) platforms.

The idea of a King Air produced by a Chinese-owned company does not 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,” he says. Nevertheless, it is impossible to predict how a sale to the Chinese of such an iconic American brand might play out in Washington.

James's comments touched on a larger problem. Introduced in 1964, and with some 7,000 units delivered, the King Air has been Hawker Beechcraft's cash cow. However, management's understandable enthusiasm for the turboprop caused it to spurn jet development for too long.

Raytheon, which acquired the company in 1980, attempted to leapfrog competing jets by introducing in 1986 what it hoped would be the ultimate business aircraft, the Starship—a twin pusher turboprop with a canard forward, main wing aft and made of composites. But Starship was star-crossed. Deemed too heavy, too slow, too expensive and too ugly, the market flatly rejected it.

That expensive experience—the company put the program loss at $500 million, but insiders say it cost considerably more—chastened Raytheon. Rather than launch any all-new programs, it acquired rights to the Diamond II, a Mitsubishi business jet of unremarkable performance, which it began building in Wichita in 1988. Then in 1993, it acquired the 30-year-old Hawker program. While the company has made significant improvements to all models, only the King Airs are market leaders.

When once again it set out with clean-sheet designs for the Premier light jet in 1995 and the top-of-the-line Horizon the following year, it stumbled badly to the finish line. Certified in 2001, the Premier was a modest performer. And work on the Horizon, since renamed Hawker 4000, consumed a decade to win full certification, and by then other super-midsize jets had stormed the market.

So, Hawker Beechcraft finds itself with products seen by many as too old or non-competitive.

And while the T-6 has been a stellar product, the original 700+ aircraft order from the U.S. Navy and Air Force is nearly fulfilled, with no other large-scale buyer on the horizon. Meanwhile, a flap over a competition between the AT-6 and Embraer's Super Tucano for an Air Force-led contract (see article below)prompted Hawker Beechcraft to file a lawsuit, embarrassing the service.

Hawker Beechcraft says Superior would be “investing substantial capital in the company.” If so, its backers best have deep pockets, strong stomachs and patience aplenty.

Pelton says upgrading or developing a new aircraft can cost $180-700 million or more and that Hawker Beechcraft will require several such infusions because “long term, they'll still be in a spiral unless they invest.”

The company returns to bankruptcy court July 17 to request permission to pursue the Superior deal. The way forward will become clearer after that, but not the ultimate outcome.

Notes Pelton, “We're not going to know what this chapter looks like for another three to four years.”

With Bradley Perrett in Beijing; Fred George and Jen DiMascio in Farnborough; and Dave Fulghum in Washington.