Hawker Beechcraft passed out 60-day layoff notices to 350 employees Monday as it synchronizes its production line “by making changes to previously planned production schedules and resizing our work force.”
The company told employees of the layoffs in an early morning meeting Monday and in a letter.
“We continue to manage our way through a challenging and rapidly changing environment while implementing transformations across our company,” the letter to employees said.
“While we have experienced success with our transformation, market conditions are requiring us to adjust our overall production cadence to help ensure the company will compete effectively in the future,” it said.
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The letter is signed by Hawker Beechcraft Corp. chairman Bill Boisture and Hawker Beechcraft Inc. CEO Steve Miller.
“This remains a difficult, unprecedented time for our company, our employees and our industry,” Boisture and Miller said in the letter. “I ask that we all uphold our pattern of respect and care for our impacted colleagues, and remain focused on our jobs as we carry on our effort to become a smaller, more agile company that will remain competitive in the future.”
The company declined to comment beyond the letter.
Hawker Beechcraft employs about 4,700 people in Wichita. Counting Monday’s notices, the company has cut 537 jobs in Wichita, according to the Kansas Department of Labor.
The financially troubled company reported losses last year of $632.8 million and sales of $2.44 billion, the company said in a filing. April 13 with the Securities and Exchange Commission. The results compare with sales of $2.8 billion in 2010 and losses of $304.9 million.
Hawker Beechcraft has “substantial indebtedness,” which totaled $2.33 billion on Dec. 31. That amount of debt could have “important consequences,” the company said in the filing.
It could mean that Hawker Beechcraft may not be able to satisfy its obligations on the notes, obtain additional financing, capitalize on business opportunities or react to pressures and changes in the industry, it said in the filing.
If it’s not able to make payments, refinance the debt or obtain new financing, the company warned it may have to consider other options, the filing said. Those options could include sales of assets, sales of equity, negotiations with its lenders or filing for Chapter 11 bankruptcy, it warned.
In March and April, the company began to furlough employees that work on various aircraft, including the Beechcraft King Air, Piston and Premier IA and the Hawker 4000 and 987 family, it said in its 2011 financial report filed April 13 with the Securities and Exchange Commission.
“These furloughs were a result of difficulty in obtaining adequate composite materials in order to continue production as well as matching production to demand,” it said. “The furloughs will be on a rolling basis and are expected to occur for one to two months. Each furlough will last 30 to 45 days.
Miller said in a news release April 13 that the company will make some important decisions in the coming weeks.
“(Its) filing reflects the combined effect of the prolonged weakness in our market that has continued to affect our business and the heavy debt burden the company has operated under since 2007,” Miller said in the release. “Hawker Beechcraft continues to work closely with our lenders to restructure the company’s balance sheet, and to do so as quickly as possible.
“In the coming weeks, we expect to decide on a path forward for Hawker Beechcraft that will include a plan that will put the company on firm financial footing and better position Hawker Beechcraft for the future. As we move forward with this process, we remain steadfast in our commitment to building, selling and servicing the best airplanes for our civilian and military customers.”
In March, employees cheered when they were told that the company decided not to follow an earlier plan to close Plant 1, the result of a partnership between the company and its Machinists union forged during the last round of negotiations. Keeping Plant 1 open would save 300 jobs.