Reorganized Beechcraft ‘on a good foundation now,' says CEO
08/21/2013 5:45 PM
08/08/2014 10:16 AM
Bill Boisture, CEO of the newly reorganized Beechcraft Corp., thanked the aviation professionals gathered for Monday’s Wichita Aero Club meeting.
“You went down a rough road with us this past year,” Boisture told a packed room at the Doubletree by Hilton Hotel Wichita Airport.
The company, formerly Hawker Beechcraft, filed for bankruptcy protection in May 2012.
Before the bankruptcy, the company owed money to suppliers, some of which were represented in the audience on Monday.
“We want to thank you and your companies for your support,” Boisture said.
He also thanked them for their continued support of the new, restructured company.
Beechcraft is now a healthy company with a good future, Boisture said. It has a good product line and a good balance sheet.
“We have come out clearly and cleanly as Beechcraft,” Boisture said.
Boisture said he viewed the address to the Wichita Aero Club, as a “bit of a coming out.”
“We’ve got ourselves on a good foundation now,” Boisture said.
In 2007, Raytheon sold the then-Raytheon Aircraft to Onex Corp. and Goldman Sachs for $3.2 billion. It was financed by $1 billion of equity and $2.2 billion of debt.
Then the market took a steep turn down, and demand fell more than 45 percent.
“Their timing was not exquisite,” Boisture said.
The company emerged from bankruptcy in February as Beechcraft Corp., with less debt, lower fixed costs, a strong liquidity position and the ability to focus on product development, Boisture said.
Before the restructuring, the company was $2.6 billion in debt. That’s now dropped to $425 million.
Its Wichita footprint is 2 million square feet smaller than it was before the bankruptcy, a 40 percent reduction.
Shedding jet lines
The new company is not building business jets.
Beechcraft still intends to sell the assets of its business jet line, which was part of the restructuring plan.
A bidding process will begin shortly, with a target to sell by mid-year, Boisture said after his speech.
Beechcraft is now putting information in a “data room,” and will allow parties with the proper clearances to have access to it.
It’s signed nondisclosure agreements with interested parties, said Boisture, who also said he is not at liberty to discuss who is showing interest.
A sale of the Hawker assets will include Plant 3 on the west side of the Wichita site.
The market for new aircraft, however, remains tough.
Six months ago, Boisture said he thought 2013 would be similar to 2012, which was similar to 2011.
“I’m not anxious to be right about that,” Boisture said after his speech.
The economic factors that cause people to buy new airplanes – confidence in the government and in the economy – are still down.
Despite that, “we can persevere in a down economy,” Boisture said. “We don’t need an exceptionally good improving economy to be a stable business.”
Beechcraft is a global company, and there is growth potential is areas of the world, such as Africa, Russia and South America.
And, Boisture said, Beechcraft now is better positioned for new product development. One of the products it’s considering is a single-engine turboprop.
“We’ve got a spot in our product line that could be satisfied by that,” Boisture said.
But “we’re not going to tell everybody three or four years ahead of time what we’re going to do,” he said.
Air Force contract
Boisture encouraged those in the audience to contact members of Congress regarding the award of the Air Force’s light air support contract, worth $427.5 million, to Sierra Nevada Corp. and Embraer.
Beechcraft filed a protest of the deal with the Government Accountability Office.
“We’re not protesting because we lost,” Boisture said. “We’re protesting because we lost in a flawed process.”
Beechcraft offered, the AT-6, which he said was judged an exceptional airplane that was 40 percent less expensive than Embraer’s Super Tucano.
“So we’re scratching our heads,” Boisture said. “We’re also working like crazy to protest this thing.”
Part of the decision to give the contract to Embraer was because the Air Force thought Embraer could deliver planes sooner than Beechcraft, he said. But that would not be the case, he said, and the company filed explanations, which were not taken into account.
With the award, taxpayers will bring a Brazilian-based airplane to Afghanistan, a country the U.S. has been trying to stand up, Boisture said.
The U.S. is helping its allied friends under a Building Partnership Capacity, using U.S. weapon systems and U.S. manufactured products.
But with a Brazilian-built airplane, “that’s not what we’re doing,” he said.
“If our Defense Department can do this, then they can do other things as well,” Boisture said. “This is about national policy.”