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Beechcraft emerges from Chapter 11 bankruptcy

Feb. 21, 2013, Wichita, Kan. - Aircraft maker Beechcraft, formerly Hawker Beechcraft, emerged Tuesday from bankruptcy protection freed from much of its debt and its unprofitable business jet operations.


February 21, 2013
By USA Today

It's now focused on its turboprop and piston aircraft, and on its military work.

 

But
the prospect of huge government defense cuts comes at a crucial time
for the Wichita, Kan., company, as it competes for a $354 million U.S.
government contract to build aircraft for use in Afghanistan. The
high-stakes "light air support" contract could ultimately be worth
nearly $1 billion, depending on future orders.

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The single-engine
turboprop, dubbed the AT-6, that Beechcraft proposes to build under the
LAS contract is crucial for the company. It hasn't been put into
production yet, but CEO Bill Boisture told The Associated Press Tuesday
that building such a plane is a major objective this year. Winning a
customer to launch production is one of the top three goals to get
Beechcraft off on the right foot in 2013, the company told its
employees.

 

"We have good prospects for that happening," Boisture,
who had been chairman of Hawker Beechcraft, said in an interview at the
company's Wichita headquarters. "If the LAS contract is not awarded, or
we don't win for some reason, we would have to take some small, interim
steps until we have achieved a launch customer. But we will go forward
with the program."

Beechcraft is exiting bankruptcy with roughly
5,400 employees worldwide, including about 3,300 at its headquarters.
Boisture said he expects employment to remain stable.

 

The company
has long said the AT-6 government contract would generate about 700
jobs, but Tuesday Boisture said it is "not useful" to speculate about
whether all those would be additional jobs if the company won the LAS
contract, or whether there would be layoffs if the company did not get
it.

 

In addition to getting a launch customer for the AT-6 program,
employees gathered at companywide meetings Tuesday were told that
Beechcraft's other major objectives include making sure that world
markets know "Beechcraft is back — that it is well-capitalized, soundly
financed and able to develop new products" and re-establishing its sales
network for the business and general aviation planes it still builds.

 

The
renamed company's formal announcement that it is exiting bankruptcy
comes two weeks after its reorganization plan was approved by the U.S.
Bankruptcy Court in the Southern District of New York. Beechcraft's debt
was cut and creditors agreed to $600 million in exit financing. That
could help it to better compete in the special mission, trainer and
light attack airplane markets while continuing its turboprop and piston
airplane manufacturing.

 

Beechcraft's other defense products include the T-6 military trainer, with a worldwide fleet of nearly 800 aircraft.

 

Beechcraft
no longer builds business jets. It has shed their unprofitable
manufacturing operations and is in talks with several interested parties
in the sale of the rest of the Hawker business jet assets, which
include intellectual property, tools, inventory and facilities. Boisture
declined to identify any potential buyers.

 

Hawker Beechcraft,
owned by Canadian investment firm Onex Partners and Goldman Sachs
Group's private equity arm, filed for bankruptcy reorganization in May.
Goldman and Onex kept a minor equity stake in the reorganized company.
Hawker Beechcraft's new owners are creditors who swapped debt owed to
them for equity stakes in Beechcraft.

 

Hawker Beechcraft struggled
with the sluggish business jet market more than other plane makers
because it was purchased in 2007 in a debt-heavy deal just before the
general aviation market tanked. Its bankruptcy involved 18 entities and
$2.4 billion in debt. In addition to its Wichita headquarters, the
company has factories in Little Rock, Ark.; the United Kingdom; and
Mexico, and more than 90 service centers worldwide.

 

Beechcraft
traces its Kansas roots to Beech Aircraft Corp., a company founded by
Walter and Olive Ann Beech that began making aircraft in the 1930s.