Since entering Chapter 11 bankruptcy protection in early May, US aircraft manufacturer Hawker Beechcraft has been exploring options for restructuring the company. As reported by Kansas-based newspaper the Wichita Eagle, HB has outlined three possible options of what the company may look like in the future.
From these three options, it is clear HB wants to keep the Beechcraft range, which is the Bonanza, Baron, King Air, T-6 Texan II military trainer and AT-6 ground attack aircraft. However, it is by no means certain that these are the only options the company has.
Quitting or off-loading the bizjet part of the company effectively demerges the company back into its original two components, as potential buyers for the jet business will most likely want the Hawker name to go with it. Suitors for the business are thought to be Cessna’s parent company Textron, and Brazilian manufacturer Embraer.
Textron Chairman and CEO Scott Donnelly said as far back as April: “there are certainly some assets [of HB] there that we think would be very interesting.”
The sticking point for HB is the Hawker 900XP, which is thought to provide healthy cash flows in the future–something HB needs–and won’t have a competitor in its class until the Embraer 450 and 500, Learjet 85 and Citation Latitude come on line in 2015.
The deadline for bidding on Hawker Beechcraft assets expired in early June, but details of the bids will not be made public as part of the Chapter 11 process.
If either Textron or Embraer were to buy the HB jet range they would have to find away to balance their offering without eroding the market for either airframe. It could mean the end for one or the other. If that is the case, the need to buy HB's bizjets in the first place would need to be carefully examined. Development costs could be saved by ceasing existing projects and allowing the mature HB products to carry the market.
The aviation market has very strong brand loyalty, so the possibility of the successful buyer running both their brand and the Hawker brand in parallel has some merit, but it is a risky strategy in what is a soft market at the moment. The cash out-lay now could not be recovered until the bizjet market itself starts to regain strength.
Also, it is possible that they have interest in only the manufacturing plants to build their own products, subsequently selling the type certificates of the HB range to third parties. If that is the plan, it wouldn't make sense to buy the Hawker name as well because it would carry no market power in the future.