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Friday, July 25, 2014

Cessna parent remains interested in Hawker Beechcraft — for the right price

Textron would scoop up Hawker’s assets — at the right price.

BY MOLLY MCMILLIN
The Wichita Eagle

Cessna Aircraft’s parent company, Textron, remains interested in the assets of Hawker Beechcraft and its defense business but “it would have to be at a value that we felt was appropriate," its top executive said during a conference call with analysts Thursday.

"We’ve always expressed an interest," said Scott Donnelly, chairman and CEO of Textron. “I think some of the assets of the company are interesting and would be good for our company, and we could do the right thing for their existing customers and our customers; it would all work.”

At the same time, “I feel great about what our team is doing, so we don’t have to do something here,” Donnelly said.

“Absolutely, we are interested,” he said. But only if it’s a good financial deal and a good value for shareholders.

Hawker Beechcraft, which is in Chapter 11 bankruptcy, has entered an exclusivity agreement with Superior Aviation Beijing to explore the sale of the company, except for the defense business, for $1.79 billion.

But the bid process isn’t closed, Donnelly noted.

Should Hawker Beechcraft and Superior reach a sale agreement, the company would still go to an auction process.

“I would say the number that’s out there (the $1.79 billion) is a number that is a pretty high number,” Donnelly said. “We will watch it … and see how it plays out.”

If Superior buys Hawker Beechcraft, “then it means Hawker is still in the market,” Donnelly said. “We’ve been competing with these guys for a very long time.”

Donnelly spoke to analysts following Textron’s release of its second-quarter financial results.

Cessna Aircraft posted a $111 million increase in revenue, while profits rose $30 million in the second three months of the year as aircraft deliveries rose.

Sixty percent of orders and deliveries in the quarter have been to domestic customers, and 40 percent have been made abroad.

Cessna delivered 49 new Citation jets during the quarter, up from 38 in the same time period last year.

The company expects the market for light to midsize business jets to continue a steady, slow recovery. And Cessna is planning on higher production rates in 2013.

There are some uncertainties in the second half of the year, however.

The economy, world markets, the election and changes to tax policy are worries that may keep customers on the sidelines, Donnelly said.

The planemaker’s backlog at the end of the quarter totaled $1.5 billion, down $196 million from the end of the first quarter.

The backlog does not include an order to fractional ownership company, NetJets, which placed an order for up to 150 Citation Latitudes for its fleet. The planes will be entered to the backlog as serial numbers on specific aircraft come into play, Donnelly said.

Cessna’s revenue totaled $763 million in the second quarter, up from $652 million a year ago.

Profit totaled $35 million, up from $5 million for the same period a year ago.

Textron posted revenue of $3.02 billion in the quarter, up from $2.73 billion a year ago.

Net income totaled $172 million, up from $90 million.

Reach Molly McMillin at 316-269-6708 or mmcmillin@wichitaeagle.com.

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