FTX bought two aircraft – the Legacy and a Bombardier Global aircraft. The Legacy has been in the Bahamas since the collapse of FTX.

Island Air Capital, a Bahamian air charter company, had argued in bankruptcy filings that it owned the aircraft. It has now agreed to the fly the aircraft to the US.

“Under the primary terms of the Stipulation and Order, IAC agrees to withdraw litigation previously filed against the FTX Debtors, Stipulation and Order,” said Damian Williams, a US attorney in a court filing. In return the US government has agreed to pay costs for flying the aircraft to the US and for maintenance on the aircraft before the collapse of FTX.

The government is now asking for court authorisation to sell the Legacy.

Paul Aranha, the owner of Island Air Capital, had argued that Island Air Capital owned both the Legacy and the Bombardier Global. In a filing, Island Air Capital had said that it owned the aircraft using financing from FTX.  “The aircraft loan was in the form of an unsecured, no-interest loan agreed to in a handshake deal between FTX’s then-CEO Sam Bankman-Fried and IAC’s beneficial owner, Mr. Aranha,” said the operator in a court filing.  

In the filing Island Air Charter said it provided charter flights, aircraft upgrades and other services worth more that $15m to FTX and its founder Sam Bankman-Fried. Island Air Charter said that FTX did not wish to own the aircraft and agreed to finance two more aircraft for them.

The Bombardier Global was bought in March 2022 and the Legacy in August 2022. Both aircraft were being fitted with new interiors and connectivity when FTX filed for bankruptcy.

The post US government set to sell two FTX business jets appeared first on Corporate Jet Investor.

The decision to enter Chapter 11 allows Tamarack to continue to operate and focus all activities on supporting the ATLAS winglet customers and to support EASA and FAA as they consider the proposal for lifting the restrictions imposed by the ADs.

Tamarack is committed to the safety of its products and has offered ATLAS upgrades free of charge in the form of two Service Bulletins prior to the ADs. These upgrades improve the reliability and safety of the ATLAS winglet modification.

These solutions have been proposed as the resolution of the ADs. Tamarack is working with all ATLAS-equipped CJ owners to arrange for upgrades. Currently, 73% of the ATLAS fleet is upgraded with more upgrades happening daily. The aircraft involved in the April 2019 incident that precipitated the EASA EAD was not upgraded, and there have been no reported incidents in those aircraft with the latest upgrades. Tamarack believes these upgrades will be considered the Terminating Action for these ADs.

EASA and FAA have been reluctant to provide an estimated timeframe; but we are keenly sensitive to the day-by-day impact that this situation has imposed upon our customers. We are committed to continue working hard with EASA and FAA to enable them to have all the data they need to approve a resolution at the earliest possible hour.

Tamarack’s goal is to complete the retrofit of the fleet with both upgrades as soon as possible, in anticipation that EASA and FAA will concurrently agree that these upgrades are considered the Terminating Action for these ADs.

Tamarack values the close relationships with current and future customers, its valuable employees, vendors, and partners. Tamarack believes that Chapter 11 will be a temporary state, and it is meant to ensure the long-term viability of the company.

The post Tamarack Aerospace files voluntary Chapter 11 bankruptcy appeared first on Corporate Jet Investor.

Bill Boisture, CEO of Beechcraft Corporation.

Beechcraft, which replaces Hawker Beechcraft, has today emerged from Chapter 11. The new company is focused on selling Beechcraft, military and trainer aircraft and supporting both Hawker and Beechcraft aircraft. It is looking to sell the Hawker production division.

“We are emerging as a much stronger company. We have cut costs and restructured. We are in a much stronger position now and I am focused on getting the good news to our staff, our customers and prospects, and to our key suppliers that have worked with us through the process,” said Bill Boisture, CEO of Beechcraft in an interview with Corporate Jet Investor. “We are emerging with a balance sheet that enables us to have a stable future and compete internationally.”

He says a small group of people are working on the sale of Hawker assets and that the board of Beechcraft Corporation will formally appoint advisers to manage the sale.

Hawker Beechcraft filed for Chapter 11 bankruptcy protection in May 2012. The company was struggling to pay $125 million of annual interest on the $2.5 billion of debt that had been used to acquire the company.

Beechcraft has $600 million in permanent financing, including a $425 million term loan facility and a $175 million revolving facility. Some of the term loan was used to repay its debtor-in-possession credit facility and pay other restructuring costs. JP Morgan and Credit Suisse were joint lead arrangers and joint bookrunners.

As well as stopping production of Hawker aircraft, Beechcraft has also cut staff and closed three service centres, leaving it with 10 worldwide. Although the company has been renamed as Beechcraft, the customer services division will continue to be called Hawker Beechcraft Services and support both Hawker and Beechcraft aircraft. It remains committed to the Hawker 400XPR and Hawker 800XPR upgrade programmes.

New focus

With the company now out of bankruptcy protection Boisture is focusing on new sales. He says they are excited about winning a launch customer for the AT-6 Light Attack Aircraft and developing new products. He believes that it was harder to win large government project when the company was in bankruptcy.

Boisture believes that Chapter 11 did stop some commercial buyers in the last half of 2012 but has not harmed the Beechcraft brand.

He also says that the company will launch new products. “The restructured company has three times as much to spend on Beechcraft research and development as it did before,” says Boisture. “So all our resources and talent can go on Beechcraft.”

Beechcraft also hopes to finish implementing a new SAP system that it has been working on since 2011.

“Toughest days are behind us”

Boisture recognises that Chapter 11 has been unsettling for employees, suppliers and customers. He says that Beechcraft customers were concerned when Hawker Beechcraft withdrew warranties from Hawker 4000 and Premiair aircraft.

“Chapter 11 is a rough place and tough things happen,” he says. “Customers were concerened and it created a shadow of uncertainty. But it was a temporary situation and didn’t damage Beechcraft in the long term.”

He also acknowledges how unsettling the process has been for the company’s staff and praises the union’s positive role in the process.

“I am very proud of our people and of the company. There are a lot of unknowns involved with Chapter 11 and it has been a very tough process. Our employees and unions had both personal and professional apprehensions about the process but they focused on doing their jobs properly and building high quality aircraft,” says Boisture.“I am proud we have made it through the tough times and we are ready for one markets improve. We went through it together.

The Beechcraft restructuring team

Legal representative: Kirkland & Ellis
Financial advisor: Perella Weinberg Partners
Restructuring advisor: Alvarez & Marsal

Senior Secured Lenders’ legal representative: Wachtell, Lipton, Rosen & Katz.
Senior Noteholders’ legal representive: Milbank, Tweed, Hadley & McCloy LLP
Senior Noteholders’ financial advisor: Blackstone.
Unsecured Creditors Committee’s legal representative: Akin

Beechcraft’s board

Robert (Bob) Johnson is the Chairman of the company’s new board. Its other members are: General Donald G. ‘Don’ Cook, Gene Davis, Ralph Heath, David Tolley, Gideon Argov, Mark Ronald, Paul Fulchino and Bill Boisture.

The post Bill Boisture: “Beechcraft leaving Chapter 11 as stronger company” appeared first on Corporate Jet Investor.

“Today marks the rebirth of an 80-year-old American aircraft manufacturing business with a globally recognized brand. Beechcraft has emerged from this process a stronger company with both financial and operational strength and stability,” said Bill Boisture, chief executive officer of Beechcraft. “We have a strong line of versatile and globally renowned products like the King Air turboprop and the T-6 military trainer aircraft, and the largest global customer support network in the industry. Our highly skilled and dedicated work force is focused on building aircraft of exceptional quality and reliability. With these elements as our foundation for the future, we will compete worldwide and we will win.”

“I would like to thank our employees for their hard work and focus, and our union partner, key creditors, elected officials, suppliers and customers for their strong support throughout this process,” Boisture added.

Beechcraft’s product portfolio includes the King Air family of the 350i, 250 and C90GTx and there is a fleet of more than 7,000 King Air turboprops operating in 115 countries around the world.

Its piston-engine Bonanza G36 and Baron G58 twin continue to represent the pinnacle of high-performance, six passenger capability for their class. A global fleet of nearly 25,000 Baron and Bonanza aircraft also serve as an entry level platform for the King Air line.

The company’s Global Customer Support (GCS) team and its factory-owned service center network, Hawker Beechcraft Services, will continue supporting all Hawker and Beechcraft products. The network includes 10 facilities in the United States, Mexico and the United Kingdom, along with more than 90 authorised service centers around the world. The GCS team is dedicated to improving the value of Hawker and Beechcraft aircraft by employing products and services to simplify ownership, reduce operating cost and increase resale value. Two examples of this include the factory designed, engineered and supported Hawker 400XPR and Hawker 800XPR jet programs in which the company is offering owners the opportunity to upgrade engines, avionics and aerodynamics on their current aircraft.

Robert (Bob) Johnson is the chairman of the company’s new board. Its other members are: General Donald G. ‘Don’ Cook, Gene Davis, Ralph Heath, David Tolley, Gideon Argov, Mark Ronald, Paul Fulchino and Bill Boisture. The company’s leadership team remains in place, providing continuity and stability in running the business.

The post Beechcraft emerges from Chapter Eleven appeared first on Corporate Jet Investor.

Judge Bernstein reserved judgment regarding the subsidiary, Hawker Beechcraft Corporation, and asked the company to make a technical modification to the Plan before he issues a final order. The Court approved the company’s agreement with the Pension Benefit Guaranty Corporation (PBGC) and the International Association of Machinists to address its pension plans within the context of its restructuring efforts.

According to the terms of the agreement, accrued retirement benefits for participants in the company’s hourly/union plan will remain the responsibility of Hawker Beechcraft, while the PBGC will assume responsibility for the company’s base and salaried plans. Under the terms of this approach, the company estimates that 100 percent of union plan participants and more than 99 percent of non-union plan participants will receive the full amount of normal retirement pension benefits that have already vested. The company has reached a separate agreement to compensate those salaried employees and retirees whose pension benefits would otherwise have been reduced.

In addition, on January 30, the Court approved the company’s motion to retain JP Morgan Securities LLC and Credit Suisse Securities (USA) LLC to act as joint lead arrangers and joint bookrunners to structure, arrange and syndicate $600 million in exit financing, consisting of a term loan and a revolving line of credit. The affiliated banks of the joint lead arrangers, JPMorgan Chase Bank, N.A. and Credit Suisse AG, have committed to underwrite the financing. The financing will be used to repay all claims under the debtor-in-possession post-petition credit facility, pay certain settlement and cure payments and fund ongoing operations.

Separately, the company has announced that effective upon its emergence from this process, the company’s new Board of Directors will include: General Donald G. ‘Don’ Cook, Gene Davis, Ralph Heath, David Tolley, Gideon Argov, Robert (Bob) Johnson and Bill Boisture. The company expects to name two additional directors prior to the effective date of the Plan.

In addition, Bill Boisture will become chief executive officer of Beechcraft Corporation and Steve Miller will become senior advisor to the board. The company’s existing leadership team will remain in place, providing continuity and valuable insight into running the business.

The post Hawker Beechcraft issue an update on restructuring appeared first on Corporate Jet Investor.

The company also announced that JP Morgan Securities LLC and Credit Suisse Securities (USA) LLC have agreed to act as joint lead arrangers and joint bookrunners to structure, arrange and syndicate $600 million in exit financing, consisting of a term loan and a revolving line of credit. The affiliated banks of the joint lead arrangers, JPMorgan Chase Bank, N.A. and Credit Suisse AG, have committed to underwrite the financing. The financing will be used to repay all claims under the debtor-in-possession (DIP) post-petition credit facility, pay certain settlement and cure payments and fund ongoing operations. The financing is subject to, among other things, completion of definitive financing documentation and Bankruptcy Court approval.

Robert S. “Steve” Miller, CEO, said, “The tremendous show of support of our creditors for the Plan, which will dramatically reduce Hawker Beechcraft’s debt load, and the financing commitment from JPMorgan and Credit Suisse mark an important milestone for the company as it moves closer to emerging from the restructuring process.”

Bill Boisture, chairman, said, “The reorganised Beechcraft Corporation will emerge from this process in a strong operational and financial position, with the working capital and flexibility to execute a strategy built around our core products like the world-renowned King Air twin engine turboprop and the T-6 military training aircraft, which will enable the company to compete well into the future.”

Hawker Beechcraft will seek approval from the Court to exit bankruptcy at the confirmation hearing scheduled for January 31 and expects to emerge from Chapter 11 in the second half of February. A new board of directors will be appointed by the new owners of the company and will take over on the date of emergence.

The post Hawker Beechcraft move closer to end of Chapter 11 appeared first on Corporate Jet Investor.

Court approval of the adequacy of the disclosure statement allows Hawker Beechcraft to begin soliciting approval of the POR from its creditors. The POR is supported by the official committee of unsecured creditors, and holders of a majority of the obligations under the company’s prepetition credit facility and senior unsecured bonds have also committed to support it.

Voting will be completed by January 22, 2013, and the company will seek approval from the court to exit bankruptcy at the confirmation hearing scheduled for January 31, 2013.

Upon its emergence from Chapter 11, the company plans to enter into a new financing facility of at least $525 million, consisting of a term loan and a revolving line of credit, that will be used to repay the debtor-in-possession (DIP) post-petition credit facility, issue letters of credit to replace the DIP and fund ongoing operations.

As part of its re-organisation, the company intends to rename itself Beechcraft Corporation and implement a business plan that focuses on its turboprop, piston, special mission and trainer/attack aircraft – the company’s leading products – and on its parts, maintenance, repairs and refurbishment businesses, all of which are profitable and have high growth potential.

The post Bankruptcy court approves Hawker Beechcraft disclosure statement appeared first on Corporate Jet Investor.

Whilst some are sceptical of Superior Aviation’s $1.79 billion bid, it is, in fact, an exceptional deal for the company, its staff and customers.

Hawker Beechcraft is a good company with good products, good staff and good management. But because of its unsustainable debt it has been starved of investment. Superior Aviation plans to invest in both the Hawker and Beechcraft products.

Perella Weinberg Partners, Hawker Beechcraft’s advisers, are comfortable that Superior Aviation has the cash and commitment to close and whilst there is a risk that some politicians will take the opportunity to criticise the deal, with the defence business staying in the US, it is hard to see how the deal could be blocked.

Superior Aviation and its bid team – Grant Thornton and law firm Locke Lord – are busy conducting due diligence now. People involved in the process say they have been impressed at the dialogue they have had with the Chinese bidder and its advisers and their ability to understand complex tax and pension issues quickly. Superior Aviation is rumoured to have raised its first round bid significantly as it grew comfortable with the manufacturer.

The biggest risk to the deal closing is another bidder. There has been talk of Embraer or Cessna raising their bids, but this is unlikely.  Both would like to buy Hawker Beechcraft but they have shareholders to answer to and existing businesses to integrate with. Their rational economic bids cannot compete with a strategic bidder like Superior Aviation which will pay more to enter a whole new market.

The same is true with private equity bidders who never like to be seen to overpay (Goldman Sachs Partners and Onex’s purchase of Hawker Beechcraft demonstrates what happens when you do this).

Mahindra, advised by Rothschild, is perhaps the only other bidder that could attempt to top Superior Aviation’s bid. Like Superior, Hawker Beechcraft would transform the Indian company, Superior Aviation has the advantage of 45 days of exclusive talks but if Mahindra choose to bid, it could quickly get up to speed using data that the manufacturer had collected for Superior. Although it is worth remembering that Mahindra is a listed company and does not have the flexibility of the mainly private Superior.

Good news for Hawker

The good news for staff at the manufacturer is that both Superior and Mahindra appear committed to the loss-making Hawker production line. The Hawker 4000 has not been a commercial success but it is a good aircraft. The problem is that it costs too much to build. This and the weak market for mid-size business jets, which has reduced sales prices for all manufacturers, has cut Hawker’s margin on each aircraft.

Management at Hawker have known about this problem for years but, because of having to make debt repayments, they have not had the cash to invest in streamlining production. Superior says it will do this. One manufacturer estimates that Superior might need to invest $300 million to cut production costs. If Superior does this it will not just be saving a great aircraft brand, it will be guaranteeing thousands of skilled jobs in Wichita, Kansas. As a Chinese company it should also be able to find cheaper suppliers for some parts.

Selling defence

Many headlines still refer to Hawker Beechcraft as being owned by Goldman Sachs and Onex. It is worth remembering that the real owner is now Centerbridge Partners and the debt holders. They are rumoured to be pretty happy with Superior Aviation’s bid (in fact there is a danger they may try and get more). Perella Weinberg’s next challenge is to sell the profitable Hawker Beechcraft Defence.

This may sound easier than selling the commercial business but now is not a good time to sell a defence company. Mergers and acquisitions do not like uncertainty and the threat of sequestration to the US defence budget – a long word for big cuts – later this year does not help. In 2011 it is rumoured that Hawker Beechcraft received an offer for the defence business it will do well to get the same amount now.

Will Hawker Beechcraft stay in the US?

Sceptics will say that Hawker Beechcraft will be shipped to China and of course in the long-term this could happen. However, it is also an oversimplification.

For at least the next five to 10 years Superior Aviation says the company will stay in Wichita and this makes sense. After that it is likely that some production will stay in the US with more parts and components coming in from Chinese suppliers.

“Superior is committed to maintaining Hawker Beechcraft’s strong presence in the United States and retaining its current employee base and experienced management team, while positioning the company for future growth at home and abroad,” said Bill Boisture, Chairman of Hawker Beechcraft Corporation.

Some production in China is also likely. As a Chinese company Superior has a much greater chance of making this work than Cessna or Embraer which have joint ventures with China Aviation Industry Corporation (AVIC). Things have definitely changed since McDonnell Douglas set up its disastrous joint venture in 1985 but the risk of failure is still very high for partnerships. Hawker should have a big advantage here.

There will continue to be a lot of outrage about a great US company like Beechcraft being sold to China (it is worth remembering that Hawker was a UK company). The truth is that the company was always destined to be sold abroad to a strategic buyer.

“It was clear that the likely buyer was going to be Chinese,” says Michael Richter, managing director and co-head of Lazard’s aerospace and defence group in Los Angeles, a major adviser of aerospace mergers and acquisitions. “The country has been building major aerospace capabilities and Hawker Beechcraft is the largest and most significant component.”

Some have argued that it would have been easier if the buyer was AVIC – the huge (and some would say dysfunctional) Chinese aviation company which no doubt bid, In fact, it would not be impossible that two competing parts of AVIC may have submitted competing bids.

It is easy to be dismissive of companies that you have not heard of, but there are a lot of large companies in China that foreigners do not know. Superior Aviation is an entrepreneurial company backed by local government which has done a good job of growing Superior Airparts – the largest supplier of PMA parts to turboprop engines – after buying it when it was in Chapter 11.  There is no reason why it cannot do the same with Hawker Beechcraft.

Whilst it is easy to overhype the short term prospects for business aircraft in China, Superior will give Hawker Beechcraft unrivalled access to this market. Like US buyers, Chinese customers are often loyal to local companies.

“China has built strong presences in other transportation industries,” says Julian Mitchell, director, equity research, Credit Suisse Securities in New York.  “In rail, the Chinese manufacturers are global leaders and it is the number one shipbuilder globally. Why should aerospace be different?”

Rather than attacking Superior Aviation’s bid we should be welcoming them and looking forward to a new chapter – much better than Chapter 11 – in Hawker Beechcraft’s history.

The post We should all welcome Superior Aviation’s bid for Hawker Beechcraft appeared first on Corporate Jet Investor.

Whilst some are sceptical of Superior Aviation’s $1.79 billion bid, it is, in fact, an exceptional deal for the company, its staff and customers.

Hawker Beechcraft is a good company with good products, good staff and good management. But because of its unsustainable debt it has been starved of investment. Superior Aviation plans to invest in both the Hawker and Beechcraft products.

Perella Weinberg Partners, Hawker Beechcraft’s advisers, are comfortable that Superior Aviation has the cash and commitment to close and whilst there is a risk that some politicians will take the opportunity to criticise the deal, with the defence business staying in the US, it is hard to see how the deal could be blocked.

Superior Aviation and its bid team – Grant Thornton and law firm Locke Lord – are busy conducting due diligence now. People involved in the process say they have been impressed at the dialogue they have had with the Chinese bidder and its advisers and their ability to understand complex tax and pension issues quickly. Superior Aviation is rumoured to have raised its first round bid significantly as it grew comfortable with the manufacturer.

The biggest risk to the deal closing is another bidder. There has been talk of Embraer or Cessna raising their bids, but this is unlikely.  Both would like to buy Hawker Beechcraft but they have shareholders to answer to and existing businesses to integrate with. Their rational economic bids cannot compete with a strategic bidder like Superior Aviation which will pay more to enter a whole new market.

The same is true with private equity bidders who never like to be seen to overpay (Goldman Sachs Partners and Onex’s purchase of Hawker Beechcraft demonstrates what happens when you do this).

Mahindra, advised by Rothschild, is perhaps the only other bidder that could attempt to top Superior Aviation’s bid. Like Superior, Hawker Beechcraft would transform the Indian company, Superior Aviation has the advantage of 45 days of exclusive talks but if Mahindra choose to bid, it could quickly get up to speed using data that the manufacturer had collected for Superior. Although it is worth remembering that Mahindra is a listed company and does not have the flexibility of the mainly private Superior.

Good news for Hawker

The good news for staff at the manufacturer is that both Superior and Mahindra appear committed to the loss-making Hawker production line. The Hawker 4000 has not been a commercial success but it is a good aircraft. The problem is that it costs too much to build. This and the weak market for mid-size business jets, which has reduced sales prices for all manufacturers, has cut Hawker’s margin on each aircraft.

Management at Hawker have known about this problem for years but, because of having to make debt repayments, they have not had the cash to invest in streamlining production. Superior says it will do this. One manufacturer estimates that Superior might need to invest $300 million to cut production costs. If Superior does this it will not just be saving a great aircraft brand, it will be guaranteeing thousands of skilled jobs in Wichita, Kansas. As a Chinese company it should also be able to find cheaper suppliers for some parts.

Selling defence

Many headlines still refer to Hawker Beechcraft as being owned by Goldman Sachs and Onex. It is worth remembering that the real owner is now Centerbridge Partners and the debt holders. They are rumoured to be pretty happy with Superior Aviation’s bid (in fact there is a danger they may try and get more). Perella Weinberg’s next challenge is to sell the profitable Hawker Beechcraft Defence.

This may sound easier than selling the commercial business but now is not a good time to sell a defence company. Mergers and acquisitions do not like uncertainty and the threat of sequestration to the US defence budget – a long word for big cuts – later this year does not help. In 2011 it is rumoured that Hawker Beechcraft received an offer for the defence business it will do well to get the same amount now.

Will Hawker Beechcraft stay in the US?

Sceptics will say that Hawker Beechcraft will be shipped to China and of course in the long-term this could happen. However, it is also an oversimplification.

For at least the next five to 10 years Superior Aviation says the company will stay in Wichita and this makes sense. After that it is likely that some production will stay in the US with more parts and components coming in from Chinese suppliers.

“Superior is committed to maintaining Hawker Beechcraft’s strong presence in the United States and retaining its current employee base and experienced management team, while positioning the company for future growth at home and abroad,” said Bill Boisture, Chairman of Hawker Beechcraft Corporation.

Some production in China is also likely. As a Chinese company Superior has a much greater chance of making this work than Cessna or Embraer which have joint ventures with China Aviation Industry Corporation (AVIC). Things have definitely changed since McDonnell Douglas set up its disastrous joint venture in 1985 but the risk of failure is still very high for partnerships. Hawker should have a big advantage here.

There will continue to be a lot of outrage about a great US company like Beechcraft being sold to China (it is worth remembering that Hawker was a UK company). The truth is that the company was always destined to be sold abroad to a strategic buyer.

“It was clear that the likely buyer was going to be Chinese,” says Michael Richter, managing director and co-head of Lazard’s aerospace and defence group in Los Angeles, a major adviser of aerospace mergers and acquisitions. “The country has been building major aerospace capabilities and Hawker Beechcraft is the largest and most significant component.”

Some have argued that it would have been easier if the buyer was AVIC – the huge (and some would say dysfunctional) Chinese aviation company which no doubt bid, In fact, it would not be impossible that two competing parts of AVIC may have submitted competing bids.

It is easy to be dismissive of companies that you have not heard of, but there are a lot of large companies in China that foreigners do not know. Superior Aviation is an entrepreneurial company backed by local government which has done a good job of growing Superior Airparts – the largest supplier of PMA parts to turboprop engines – after buying it when it was in Chapter 11.  There is no reason why it cannot do the same with Hawker Beechcraft.

Whilst it is easy to overhype the short term prospects for business aircraft in China, Superior will give Hawker Beechcraft unrivalled access to this market. Like US buyers, Chinese customers are often loyal to local companies.

“China has built strong presences in other transportation industries,” says Julian Mitchell, director, equity research, Credit Suisse Securities in New York.  “In rail, the Chinese manufacturers are global leaders and it is the number one shipbuilder globally. Why should aerospace be different?”

Rather than attacking Superior Aviation’s bid we should be welcoming them and looking forward to a new chapter – much better than Chapter 11 – in Hawker Beechcraft’s history.

The post We should all welcome Superior Aviation’s bid for Hawker Beechcraft appeared first on Corporate Jet Investor.

Shawn Vick, Hawker Beechcraft’s executive vice president for customers, is a fighter. And he came into EBACE ready to fight back.

Whilst Cessna and Bombardier launched new aircraft, Vick (pictured above) and Hawker Beechcraft announced more sales than any other manufacturer.

With the president and chairman of Hawker tied up with restructuring (and rumoured to be meeting potential buyers), Vick had the tough job of selling the benefits of his company’s Chapter 11 filing to Europeans that associate bankruptcy protection with liquidation.

His overall message is that by eliminating $2.5 billion in debt the company has been strengthened for the future.

Vick is right saying this. As a professional he also refused to criticise Onex and Goldman Sachs for overleveraging the company pointing out that in 2007 the company had $4.6 billion in assets and a $6 billion background.

“No organisation chooses to go down the Chapter 11 route without significant consideration,” says Vick. “However it was the right thing to do to address the debt that was impairing the business.”

He says that in December 2011 it became clear that the debt was becoming unsustainable – particularly the balloon payments due in 2013 – and the company began to look at Chapter 11 seriously. Five months later, Vick now says the company hopes to leave bankruptcy protection by December 2012.

One criticism of Hawker Beechcraft is that the management team has tried to make too many significant changes too quickly – partly driven by the debt overhanging them. Changes included implementing a new SAP operating system; redesigning the manufacturing process, outsourcing – where he says – cost and quality objectives could be met, cutting supply chain costs, investing in new service facilities and parts logistics infrastructure and changing customer services.
Problems with SAP implementation delayed billing for the services business and the publication of Hawker Beechcraft’s annual results.

“I have been associated with other SAP implementations and business transformation is always hard work,” says Vick. “But it was necessary. Under Bill Boisture’s visionary leadership we have done everything we could to improve the business and we had to make these changes.”

Splitting Hawker and Beechcraft

Vick dismisses the business plan options included in the bankruptcy filing as an exercise. He believes that Hawker and Beechcraft can be successful by staying together.

“Too much has been made of those options in the filing. It was a modelling exercise outlining potential alternatives. It was just to provide a view of the variety of options that could be available and should not be taken out of context,” says Vick.

He was unable to answer detailed questions about it without the document.

“A lot of speculation – nearly all wrong – has taken place,” says Vick.  “The Hawker 4000 is a spectacular flying machine. We have announced more operators and more orders at this show.”

He is clearly worried about how the press is reporting on Hawker Beechcraft. “It does not impact  me, but I do worry about the 6,000 exceptional people we employ who are building world class products,” he says.

Building a great company

Vick joined Hawker Beechcraft in 2009. Having held senior roles at British Aerospace, Gulfstream, Bombardier Aerospace and Landmark Aviation, as well as advising private equity firms, he understood challenges the company faced during the downcycle. He says he has no regrets about joining and is optimistic for the future.

“No one enjoys Chapter 11 but I love my job immensely,” says Vick. “We are very simply taking the steps that are necessary for us to emerge out of bankruptcy protection and as a strong, profitable company.”

Despite all of the noise surrounding Chapter 11, Vick is keen to stress that business is going on and customers are still his main focus.

He says: “Everything you do to build a great company is everything you do to build a company’s value.”

And with that he heads off to keep Hawker Beechcraft running and keep fighting on.

The post Shawn Vick and Hawker Beechcraft come out fighting appeared first on Corporate Jet Investor.