Hawker Beechcraft gets OK to operate during bankruptcy

The U.S. Bankruptcy Court for the Southern District of New York has granted approval of Hawker Beechcraft’s “First Day Motions” as part of the company’s voluntary filing for reorganization under Chapter 11. Approval of these motions enables Hawker Beechcraft to continue to operate in the ordinary course of business during the reorganization process.

Among the first-day motions granted today, Hawker Beechcraft received approval to continue to pay employees, and to pay all vendors and suppliers in the ordinary course for goods and services delivered after the commencement of the Chapter 11 case. The company will use $400 million in Debtor-in-Possession (DIP) financing, negotiated as part of the prearranged restructuring, to make payroll and pay bills, company officials said.

On May 3, Hawker Beechcraft and a number of its senior secured lenders and senior bondholders agreed to the terms of a financial restructuring plan that will eliminate approximately $2.5 billion in debt and approximately $125 million of annual cash interest expense, officials added.

For more information: HawkerBeechcraft.com



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  1. Mike says

    So what really caused Hawker Beechcraft
    to file Chapter 11 bankruptcy? Is this just due to the economy or
    are there other circumstances that led to the troubled company? I
    think it was a combination of the economy, the product, and the
    company in combination.

    As an operator of a King Air B200, we
    have the frustration of the company issuing mandatory service
    bulletins, whereby none of us really know or understand the
    circumstances, and why ours is affected. In addition, you try and
    adhere to this chapter 4 item in the maintenance section…and you
    can’t get parts to continue airworthiness. Think I am kidding? The
    recent May 1 2012 tail inspection panel requirement to check for
    corrosion and cracks on T-tailed King Air’s is the perfect example.
    Because of the expense and downtime for installation of the panels,
    many operators waited until timing for an inspection to complete the
    install of the panels, which meant a run on the kit the past six
    months, while HBC did not have them in stock!

    Not only was the kit expensive, around
    $9,000 for a small box with $250 in materials, but we had to purchase
    these from an outside vendor that could supply the kit. I met with
    the V.P. Of Global Services in Wichita about this, and was told the
    problem was a vendor could not come up with the nut-plates that hold
    the panels. They had to be a non-metallic type of nut-plate…so as
    an operator, you were left not knowing what you were going to do on
    May 1st, or finding someone else to purchase the kit from. I believe
    over 5,000 of the King Air models were affected, and for the factory
    not to have these panels available for a majority of the operators,
    just shows how Hawker Beechcraft has blown it.

    In my opinion, the factory could better
    support the airplanes and at the same time, provide expertise during
    the install by working with the HBC service centers. Its not that
    there are bad people at HBC, its that the company has a complacency
    and disregard for maximizing business that they could provide, and
    would produce cash flow and owner satisfaction.

    I always hear, “this is an aviation
    thing” when that is the poorest excuse for not conducting business
    the way you should. Although Cessna has had some difficult times,
    Cessna is more pro-active in their business model, and they don’t
    have ANY of the problems Hawker Beechcraft does. I am hoping the new
    CEO of HBC gets this, and understands that the company needs to start
    understanding the business, and how much they are losing because of
    the non-sense that comes from the factory support. As a
    manufacturer, they should be all about creating a relationship with
    the operator of the aircraft, by offering service after the sale,
    whether it is continued engagement, or marketing the service center
    to the operators who would then have a relationship with someone that
    has direct access to the factory/manufacturer.

    Another problem with Hawker Beechcraft,
    seems to be the product profile that has cost the company a lot of
    money, with very little result. As an example, the Hawker Premier 1A
    entry level jet that the company has been building since March 2001.
    Although they have sold approximately 300 aircraft, they didn’t get
    it right and now they are talking about the Premier II that currently
    is on hold in the design stage. They did offer a large cabin and a
    very fast airplane, while the per mile cost is less than a B200, the
    airplane didn’t have enough wing…it required much more runway than
    the Cessna Citation, although it was 30 knots faster.

    If they had a study group and committee
    on this one, I hope they are doing something else on the next design
    committee, as if you had someone with jet experience that had
    operated a flight department, the airplane would have had more wing
    for runway performance. Perhaps the cruise speed would not be as
    fast, but last I looked the induced drag curve goes way down at high
    speeds, and with a swept wing you may be only talking 10 knots max!

    I am hoping the Chapter 11 bankruptcy
    will bring about some change in the culture of the company, and HBC
    will realize that this is a tough environment, its time to pony up
    and start doing business that makes sense, and isn’t given the pass
    that this is just aviation! All too often, our industry…yes, you
    know who you are, believes that because its aviation, we don’t have
    to follow good business practices and my ideal marketing strategy is
    to think we have the best product in the world and everyone will want
    it….so where are the customers? Seems we have a shrinking
    population, doesn’t it! This is our problem, and we need to fix it.

    As a professional aviation business
    consultant, we mean business…its the only way the industry will
    survive. http://www.get-aviation.com

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