Hawker hit with large cancellation
12/15/2009 6:27 AM
08/08/2014 9:55 AM
Hawker Beechcraft announced Monday that fractional ownership company NetJets has canceled a "significant" number of aircraft it had on order.
The cancellations will reduce Hawker Beechcraft's backlog by $2.6 billion and represent 90 percent of the aircraft that NetJets has on order with Hawker Beechcraft.
The planes were to have been delivered over several years beginning in 2011.
The company declined to comment beyond what was included in the announcement.
The cancellations should not come as a surprise to Hawker Beechcraft, said Cowen and Co. analyst Cai von Rumohr. A drop in business jet demand and lower jet values have hurt the fractional ownership business.
"I don't think they seriously would have been assuming they were going to get those orders," von Rumohr said. "For a good long spell, there was some question about that."
Hawker Beechcraft also said that revenue for the fourth quarter is expected to be about $1.9 billion, bringing estimated yearly revenue to about $3.2 billion.
Operating income for the quarter is expected to be between about zero and a loss of $15 million. Full-year operating losses are estimated to be between $725 million and $740 million.
After adjusting for the canceled NetJets orders, the Hawker Beechcraft backlog at the end of 2009 is expected to be $3.5 billion.
So far this year, NetJets has canceled 12 aircraft it had on order and deferred delivery of all jets it was scheduled to receive this year and next until the end of 2010.
Hawker Beechcraft has said that NetJets wasn't expected to provide any substantial revenue in 2009 or 2010. The company historically has not represented more than 10 percent of Hawker Beechcraft's annual revenue.