Senior company executives say it is "business as usual" at Hawker Beechcraft, which on 3 May opted to enter Chapter 11 bankruptcy protection in an attempt to eliminate more than $2.5 billion of debt, restructure its balance sheet and renegotiate contracts with its suppliers.
"We are continuing to build, deliver and support our customers," says executive vice president Shawn Vick. "We don't anticipate any difference in the day-to day-running of our company."
He stresses that the company's decision to move into Chapter 11 "was entirely voluntary" and had the support of its senior secured lenders and bondholders, some of whom have converted their debt into equity in the company. Chapter 11 "is a protective environment", he says. "It gives us the mechanism by which we can rid ourselves of this debt overhang. It also allows us to sit down with our vendors and suppliers and address the long-term agreements that were reached prior to the financial downturn."
Hawker Beechcraft was acquired in 2007 for $3.2 billion, of which $2.2 billion was financed on the company's balance sheet. "This was an era when we were expected to grow at 15% a year," says Vick. "We were competing in market segments where annual deliveries totalled 1,600 aircraft. We are now in a marketplace that is looking to absorb around 800 aircraft a year - it's a completely different environment today."
The Wichita-based airframer is operating under a debtor-in-possession arrangement during bankruptcy, using $400 million in financing that will enable it to "continue paying employees, suppliers, vendors and others in the normal course of business", says Vick. "Our lenders would not have provided this finance if they didn't believe Hawker Beechcraft had a future," he adds.
The Hawker Beechcraft brand "is well known and widely respected" and the airframer's global fleet of business jets, turboprops and pistons "is in the 10,000's", Vick continues.
"There is great value in our product line both for new and used aircraft," he says. "However, the stubborn economic downturn shows no signs of easing. At best, I would say that the segments in which we compete are flat right now."
Meanwhile, the airframer has for the first time flown its Hawker 400XPR equipped with Williams International FJ44-4A-32 engines. The light business jet - launched a year ago as an upgraded version of the 400A/XP - incorporates the new powerplants in place of Pratt & Whitney Canada JT15D-5 turbofans, composite winglets and optional Rockwell Collins Pro Line 21 avionics. Certification is scheduled for September.