Hawker Beechcraft will cease production of its Hawker 400XP light jet for the next two years in order to align supply with demand.
"We think the market will remain relatively depressed... in the range from 12 to 24 months," Hawker Beechcraft CEO Bill Boisture said Friday in a conference call.
The company reported its third-quarter financial results earlier this week.
Boisture also told analysts during the call that the company is still evaluating offers from Louisiana and Kansas. The company's filing with the Securities and Exchange Commission said decisions are expected to occur this year and into early 2011.
"We're continuing to evaluate different proposals, and we'll make a decision regarding them in the coming months," Boisture said.
Boisture said Hawker Beechcraft received an offer from Louisiana to move "substantially all of our manufacturing facilities."
It also received an offer of incentives from Kansas to keep the majority of production here.
However, the Kansas offer was contingent on successful negotiations with the Machinists union. The union rejected the company's seven-year contract offer last month.
The union's contract expires in August, and Boisture said the company doesn't plan on re-opening talks early.
Production of the Hawker 400XP will cease in January and is expected to resume in 2013, the company said in its SEC filing.
"We've made a decision that puts the future of that airplane out beyond the current economic problem," Boisture said.
The company took a $7.8 million charge in the third quarter primarily related to inventory on the Hawker 400XP.
The company delivered one 400XP in the third quarter, down from four a year ago. For the first nine months of the year, it delivered four, down from eight in 2009.
In suspending the program, the company was careful to preserve all the technical data, work instructions and job guides to help when production resumes, Boisture said.
"We suspended this program as carefully as any one I've ever seen," he said.
Hawker Beechcraft said Tuesday it recorded sales of $594.7 million in the third quarter, down $163 million from a year ago.
It also recorded operating losses totaling $81.4 million compared with losses of $721.1 million a year ago.
The company took a $36.3 million charge in connection with a Hawker 4000 upgrade and enhancement program, it said in its filing.
Hawker Beechcraft booked $516 million in orders for the quarter, which exceeded cancellations of $437 million.
It's the sixth consecutive quarter in which new orders exceeded cancellations.
The company delivered 49 planes in the quarter, down from 64 a year ago.
Its company also has "substantial indebtedness," it said in the SEC filing.
As of Sept. 30, its debt totaled $2.14 billion, including $59.9 million of short-term obligations.
"In this difficult environment, we continue to reinvest resources and transformation of our business by realigning our business and our cost structure," Boisture said Friday.
That transformation includes the previously announced closure of several Wichita facilities and the reduction of 800 jobs, he said.
He called the work "noncore" and said it can be done more economically by suppliers and at its Mexico plant.
The work is targeted to be moved by August.
Despite the down market, Boisture called last month's National Business Aviation Association convention in Atlanta a success.
"We sold five new airplanes, booked $18.5 million in Hawker Beechcraft service business, and we generated a substantial number of hard leads," Boisture said.