What Now For Hawker Beechcraft?
So now what happens with Hawker Beechcraft? This week, we published the company's three plans for digging itself out of bankruptcy and surviving in one piece. But judging by what I've heard from a few people in the industry, it's going to be a tough slog to pull this off. The company is just not in a good competitive stance to run against Cessna, Embraer, Bombardier and Gulfstream, at least with the crippling debt it had before its bankruptcy.
And speaking of Cessna and Gulfstream, the watercooler talk around Wichita suggests that these two companies might be interested in Hawker Beechcraft's assets or some kind of a merger. Looking at the HB product line, it's hard to see much benefit for Cessna, other than the pure geographical convenience. It's got the market covered with its own jets so the Premier doesn't seem to be an addition worth the trouble. The Beechcraft piston line kind of perks along, but it's not doing big numbers. In 2011, Beechcraft sold 24 G36s and 30 G58 Barons. That's about $55 to $60 million worth of airplanes and a tidy number for a small company, but a rounding error for Textron-based Cessna which, even in a down year, sold eight times that many pistons, albeit many of them lower-margin 172s and Skycatchers.
Besides, Cessna's purchase and rebranding of the Columbia line hasn't exactly been a sterling sales success. In 2010 and 2011 combined, Cessna moved only nine of these airplanes. With the new TTx, perhaps Cessna can breathe some life back into the line. (During the same period, Cirrus sold 270 SR22s.)
The Gulfstream interest might be in the Premier or the Hawker line and its associated service tail. With cost controls in place, perhaps those business lines could be profitable, even if they evidently weren't in Hawker Beechcraft's business structure. In the T-6B, HB has some military work, but that's not a huge contract. The jewel in the crown may very well be the King Air line. HB has sold between 90 and 100 of these for years, about what Cessna has done with the Caravan. Whether turboprop twins would fit into the Cessna line is anyone's guess. We do know that Cessna plans to introduce a new airplane at AirVenture in July and that it will be a propeller model. My best guess is that it will be a turboprop version of the Mustang jet. We'll know in six weeks.
Beechcraft owners are understandably worried about continued support for their Bonanzas and Barons. Beech has been at it for 65 years and has a large installed base of more than 10,000 airframes. If HB doesn't survive as a discrete entity, the ideal outcome might be for a small company to get hold of the piston assets and make a go of it with small volume manufacturing and the support business. The best recent model for that is Eclipse, whose bankrupt assets were bought by a small group of investors who raised the capital and resuscitated the company. Of course, there are always Chinese interests to consider. They've proven heavy with cash and always ready to pick up an asset to populate the country's budding aerospace industry.
On the plus side, Beech owners can turn to a robust PMA and aftermarket for parts and support network, but that only goes so far. Having an active factory source for parts unquestionably props up the value of the airplanes while providing a higher comfort level. On the other hand, all of the company's major jigs and fixtures are in Mexico, we're told, and losing them would be a disaster. There's no indication that this is about to happen, but bankruptcies move in unpredictable ways. Here's hoping that Hawker Beechcraft's moves in the direction that favors owners and its longtime Wichita workforce.