Can a 70-year-old corporate turnaround specialist who helped engineer revivals of companies such as Chrysler, Delphi, Bethlehem Steel and Waste Management work his magic one more time to save ? AIG Chairman Robert S. “Steve” Miller last week was appointed CEO of the ailing manufacturer of business jets, general aviation turboprops and military trainers. And just hours into the job, he insisted he will aim to revive—not sell—the Wichita-based company.
Hard-hit by a three-year-old downturn that has decimated sales of small- and medium-sized business jets, Hawker has seen cumulative operating losses of nearly $1 billion since 2009. And the future of its most profitable business, military turboprops, has been called into question after Hawker's AT-6 trainer/attack aircraft was passed over for a $355 million U.S. Air Force contract in favor of's Super Tucano.
The turmoil has generated widespread speculation that Hawker's private owners—Goldman Sachs and Canadian investment firm Onex Corp., which paid a top-of-the-market price of $3.3 billion in 2007—want out. During a recent earnings call, the CEO of rival's parent questioned Hawker's future. “In terms of guys going out of the market, there's obviously a great deal of uncertainty around where Hawker Beech is going,” CEO Scott Donnelly told analysts.
Miller maintains that Hawker “absolutely” can survive as a stand-alone company. And he dismisses rumors that Goldman Sachs and Onex could sell its civil operations to a Chinese entity. “There is no plan in my kit bag here to sell this company or any of its pieces,” Miller said in an interview. “You can never say never, but China principally is of interest to me because it's a great and growing market.”
Miller replaces Bill Boisture, who will remain as chairman of Hawker's operating subsidiary, Hawker Beechcraft Corp., and continue to lead a lawsuit against the Air Force that seeks to overturn the AT-6's exclusion from the military trainer contract. Boisture, who had earlier run, NetJets, and Butler Aviation, was hired in early 2009 shortly after the brutal business jet downturn hit. He moved aggressively to make operational improvements and stanch deep financial losses, but it was not enough to restore profitability.
Whether Miller succeeds will depend in large part on when demand for smaller business jets finally rebounds. His prior understanding of Hawker was based largely on its reputation, but he does have experience in business aviation, having managed Chrysler's purchase of Gulfstream in 1985 and its spinoff five years later. There is also a personal connection. When Miller was CEO of Delphi, one of his unit presidents, Guy Hachey, was lured away to run. Now the two will face off as competitors, a prospect Miller playfully relishes. “I can't wait to call him up,” he says, “and tell him how I am going to beat his brains out.”
|Current||Previous||Fwd.||Tot. Ret. %||Tot. Ret. %|
|Company Name||Week||Week||P/E||3 Yr.||1 Yr.|
|AEROSPACE & DEFENSE|
|Allegheny Technologies Inc.||47.43||46.50||16.6||95.8||-26.8|
|Alliant Techsystems Inc.||58.72||60.40||8.6||-28.4||-16.9|
|Bombardier Inc. ‘B’||4.83||4.73||9.9||41.0||-21.3|
|Embraer-Empresa Brasil ADR||28.46||28.64||11.5||85.4||-13.1|
|Esterline Technologies Corp.||64.97||63.25||12.2||70.1||-9.0|
|FLIR Systems Inc.||25.50||26.01||15.6||9.0||-20.8|
|Precision Castparts Corp.||171.72||166.45||17.9||152.7||15.2|
|SIFCO Industries Inc.||22.10||21.87||….||282.4||36.1|
|Singapore Technologies Eng.||2.40||2.36||16.6||47.1||-1.8|
|TransDigm Group Inc.||116.00||106.83||18.7||248.3||41.2|
|Triumph Group Inc.||66.07||65.00||12.8||194.2||44.8|
|Source of financial data: Standard & Poor’s and Capital IQ Inc. (a Division of Standard & Poor’s) U.S. dollars and cents. Forward P/E ratio uses S&P and Capital IQ forecasts of current fiscal year.|