Difficult market conditions affected Hawker Beechcraft's third-quarter aircraft deliveries and financial performance, the company said Monday.
But there are some encouraging signs.
For one, orders have exceeded cancellations for the second quarter in a row, Hawker Beechcraft CEO Bill Boisture told analysts in a conference call.
There are signs of stabilization in the order book, Boisture said.
Still, the company isn't planning on meaningful market improvement until sometime in the second half of 2011, he said.
In the meantime, the company will continue to cut costs and inventory levels while investing and wisely managing its cash, said Sid Anderson, Hawker Beechcraft's chief financial officer.
"We continue to meet our financial obligations," Anderson said.
The company has production rates for 2010 set to what it thinks are appropriate levels given its order intake, Boisture said.
Its number of "white tails" — aircraft that are built but not sold — is at a manageable level, he said. He declined to say how many unsold aircraft the company has.
The company's military trainer market has been a bright spot. Sales of trainers totaled $169.7 million for the quarter, compared with $77.4 million for the same time a year ago.
The company also is actively pursuing new government and international business for the trainers.
When the market for business aircraft returns, Boisture said, the company is "well positioned for growth."
Hawker Beechcraft said it recorded sales for the third quarter of $757.7 million, down from $783.3 million a year ago.
It posted a net loss of $683.9 million, up from a loss of $21.2 million a year ago, according to its filing with the Securities and Exchange Commission.
The company took an impairment and other charges totaling $746.4 million, which resulted in an operating loss for the quarter of $721.1 million.
It also took a $521.3 million charge to reduce the carrying value of goodwill and intangible assets in its business and general aviation segment.
And it took a $205.1 million charge for other asset impairments and to increase reserves for potential claims from suppliers and from "loss-making aircraft," primarily from losses on the Hawker 4000 business jet.
Lower pricing pressures are expected to continue to cause additional charges on loss-making aircraft, particularly on the Hawker 4000, as more units are built and sold below estimated final costs, the SEC filing said.
The company took the charges on its balance sheet because of its expectations of a slow market recovery, reduced production volumes and increased downward pricing pressure on new aircraft sales, it said.
It delivered 64 civil aircraft in the quarter, down from 86 a year ago.