A bankruptcy judge on Monday rejected Hawker Beechcraft’s request for permission to expedite the sale of its remaining inventory of discontinued Hawker 4000 business jets for a substantial discount after a group of Hawker 4000 owners protested.
Hawker Beechcraft said it wanted to accelerate the sales before competitors can introduce new aircraft into the market that could further decrease the value of the Hawker 4000 aircraft.
An ad hoc committee of Hawker 4000 customers, in a court filing, protested, saying that rather than hastening the process, sales of the assets should proceed in a measured, responsible process to maximize the value of the aircraft.
Hawker Beechcraft has 20 Hawker 4000 in its inventory, with a retail value of $20 million each. The inventory includes 13 new Hawker 4000s, three in production and four used planes.
The company shouldn’t rush to abandon the assets and sell them for a substantial discount and for “what appears to be little more than the value of the engines and avionics produced by other manufacturers,” the court filing by the committee said.
A hearing on the Hawker 4000 motion is set for Nov. 29 in bankruptcy court.
Hawker Beechcraft filed for Chapter 11 bankruptcy protection May 3.
Talks with Superior Aviation Beijing to buy the assets of Hawker Beechcraft broke down recently, and the company said it planned to emerge from bankruptcy as a slimmed-down stand-alone company focusing on Beechcraft and military products.
Hawker Beechcraft also said late last month that it was discontinuing warranties on the Hawker 4000 and Premier 1 and 1A business jet lines, as well as its extended service contracts on the two planes.
It’s also discontinuing its agreements to upgrade and enhance the Hawker 4000s.
On Friday, Hawker Beechcraft filed a related motion for an order authorizing it to sell its remaining Hawker 4000 inventory without warranty or support commitments.
Hawker 4000 owners, worried about discontinuance of warranties and other agreements, hired attorneys to protect their interests.
They want to preserve the value of their planes by ensuring that they continue to receive parts and services to keep them flying, a letter to Hawker 4000 owners said.
Abandonment of the warranties and agreements could depreciate the value of the airplane as well as ground the airplanes, the owners argued.
Hawker 4000 owners, whose aircraft represent multi-million-dollar investments, aren’t the only ones upset.
“I feel sick about it,” said Bob Falk, who took delivery of a Premier 1A in May 2011. “It doesn’t do anything for the value of my airplane.”
A five-year service and support plan was part of the agreement in the sale.
“I think they’re making a big mistake,” said Falk, who also owns a Beechcraft King Air and Baron and has been a customer since 1966.
“It’s a bad deal,” Falk said.
The company is talking to Falk about buying another King Air with an extended support agreement.
He will have to evaluate that.
“Who’s to say they’re not going to do the same thing?” Falk said.
He blames the investment companies who bought the company from Raytheon and not the local executives.
“Now you have outsiders who are dictating to all this, who put the debt on the company and are now trying to change the company,” Falk said. “They’re not worried about brand recognition. They aren’t worried about warranties. They’re worried about how they can get the most money and screw everybody else.”
Hawker 4000 owners said in their court filing that the company could gain greater value from its Hawker 4000 inventory by establishing a clear path to ongoing service and support of the aircraft.
Hawker Beechcraft said it plans to act responsibly in dealing with the current customers and have assured them that they are committed to developing an ongoing service and support solution.
“If the Debtors are successful in doing so, the confidence it would generate in prospective Hawker 4000 customers should help to increase the value of the Debtor’s remaining inventory of aircraft,” the motion said.
The process to sell the Hawker 4000s will require a reasonable amount of time, the committee said in its filing. “Thus, there is simply no reason to race to sell the Hawker 4000 inventory before those efforts play out.”