Hawker puts new focus on military aircraft

PARIS — Hawker Beechcraft is taking the market for military and special-mission aircraft more seriously than it has in the past and placing more focus on that business, CEO Bill Boisture said Tuesday at the Paris Air Show.

Together, its military, special-mission and their support make up 50 percent of the company's earnings.

Its products fill a "major market need," Boisture said. There's more of a requirement to deal with small insurgencies and counterterrorism in what's been called "irregular warfare." Such conflicts are difficult to address with expensive weapon systems, he said. And armed forces are facing constrained budgets. The AT-6 light attack aircraft is more cost efficient.

Several months ago, Boisture said he leaned toward Air Force Chief of Staff Norton Schwartz and made a comment about the AT-6.

"Ten million bucks a copy," he told Schwartz. "That's a lot of fighting machine."

Boisture on Tuesday also spoke about the upcoming labor talks with the Machinists union, the exploration of a partnership with a Chinese company and how the restructuring now under way is going.

The China market

When the Paris Air Show is over, Boisture will fly to China where ongoing discussions are taking place about the potential of a venture for final assembly of one of its airplanes for the emerging Chinese market.

China has relaxed restrictions on low-altitude airspace and between now and 2020 plans to open more than 50 airports, Boisture said.

"That makes our airplanes much more usable inside China," he said.

Those steps are a start at opening up the country for more business travel.

Today, the business jet market in China is for jets with longer ranges. And government restrictions still limit the use of private planes.

But China already is thinking about the jobs that will come with the opening of airspace and construction of infrastructure to support it, Boisture said.

Having a partnership with China will encourage it to use Hawker Beechcraft business jets, Boisture said. Some preliminary decisions could be made on a partnership between now and the end of the year, he said.

Restructuring on track

Hawker Beechcraft is on track in its restructuring of the company, Boisture said. The company is closing Plants One and Two and moving the work to its plant in Chihuahua, Mexico, and to outside suppliers.

"We'll meet our goals for work transferred out of our plants by year end," he said. Most will be completed by August.

The company would move faster if it could, Boisture said. But the current pace is manageable.

At the same time, employees are receiving technical training through the company's investment and through a grant from the state of Kansas.

"By the end of 2012, we will have the best trained touch workforce in the industry," Boisture said.

Contract negotiations between the company and the Machinists union open early next month.

"I'm optimistic on how these discussions will go," Boisture said. "I'm optimistic that we've got two parties that are well informed about the situation and the economy."

The company wants to talk about building a partnership with the union for the future, he said. "It probably won't look like what we've had in the past, because it can't."

In October, union members rejected a seven-year contract offer by a vote of 55 percent to 45 percent, rejecting 10 percent pay cuts and other concessions in negotiations that opened a year early as the company considered moving the business outside the state.

Because the current contract hadn't expired, the union could not strike.

The Machinists struck in 2008, the first time there had been a strike at the company since 1984.

Special modifications

In the special-mission area, Hawker Beechcraft now has a King Air demonstrator configured as a medevac to show potential customers. The plane is on display at Hawker Beechcraft's static display at the Le Bourget airport outside Paris.

The company is upgrading King Air 350 aircraft so they will provide significantly more electrical power, key for some special-mission applications.

In the meantime, Hawker Beechcraft is studying its King Air production line to see how best to standardize manufacturing processes for military use. That would make the process more efficient and less expensive.

The question is at what point does the plane come off the commercial line to be customized for military and special-mission uses, Boisture said. Some processes could be standardized for all planes but used only for military modifications. It makes more sense than tearing into what's already been built.

The company has reorganized the team and is focusing on these lines business.