LITTLE ROCK — Hawker Beechcraft Inc. said Thursday that negotiations to sell itself to Superior Aviation Beijing Co. for $1.79 billion have been abandoned and the plane-maker intends to emerge from bankruptcy as a stand-alone company.
The company aims to shed its private-jet lines. If a buyer for those lines isn’t found, that bodes ill for its Little Rock plant, which employs 280 and finishes out those planes.
The Wichita, Kan.-based firm intends to emerge from Chapter 11 restructuring renamed as Beechcraft Corp. in the first quarter of 2013. It would have “a business plan that focuses on its turboprop, piston, special mission and [military] aircraft — the company’s most profitable products,” the company said in a release.
Its plan also includes keeping “high-margin” segments — parts, maintenance and refurbishment.
The company entertains the “closure of the entire jet business if no satisfactory bids are received,” the release states. All of Hawker’s propeller aircraft are finished in Wichita.
The collapse of the deal may open doors for Textron Inc.’s Wichita-based Cessna Aircraft Co., Stephen Levenson, an analyst with Stifel Nicolaus & Co. in New York, said Thursday in a note to clients.
“Under almost any circumstances, we think the outcome could be positive for Cessna’s business-jet operations,” Levenson wrote. Hawker’s jet division probably will disappear, removing a competitor, and its King Air turboprop line, military-trainer business or both would flourish under Cessna, Levenson said.
Still, analyst Brian Foley of Brian Foley Associates of Sparta, N.J., said it’s possible that someone might be interested in the jet lines.
“This isn’t the end. I’ve maintained all along that there will be a surprise ending. This ain’t the end,” Foley said.
Foley said it’s possible that another Chinese company could bid for the product lines that are shed, although Richard Aboulafia, an analyst for the Teal Group in Alexandria, Va., said China’s aviation prowess is overrated.
The failure to sell to the Chinese company was “inevitable. It was a pipe dream,” Aboulafia said.
Aboulafia has been skeptical of the negotiations from the start, saying he had no reason to believe Superior was a viable bidder.
Aboulafia told The Associated Press that he is not optimistic about the ability of Hawker Beechcraft to sell its business-jet lines, saying those operations involved too much risk and not enough reward. Someone could rescue the Legacy Hawker 800 series of aircraft, the best part of its business jet lines, he said.
“The sad truth is that the part of the company that is salable is the same part that is survivable alone — the aftermarket, the military, the King Air and propeller planes,” Aboulafia said. “You are dancing around the big elephant — which is their business-jet lines — which look doomed.”
The Beechcraft name comes from the Beech Aircraft Corp. that was founded in 1932, according to the company’s website. Beechcraft, as the company was later named, was sold to a subsidiary of Raytheon Co. in 1980 and became Raytheon Aircraft, which in 2007 became Hawker Beechcraft, a company formed by Goldman Sachs Group Inc. and Onex Corp.
Hawker, which filed for bankruptcy protection in May and announced negotiations with Superior in July, is owned by Goldman Sachs Group Inc. and Onex Corp. Carrying a heavy debt load, it has registered net losses over the past two years of more than $900 million because of declining sales.
On Aug. 2, the company notified the Little Rock plant located at the Bill and Hillary Clinton National Airport, Adams Field, that 170 of the 450 employees would be terminated within 60 days.
Hawker also has issued layoff notices to nearly 1,000 workers in the Wichita operations this year, reducing the company’s employment in that city to about 4,000, according to the Wichita Eagle.
Hawker had been negotiating with Superior Aviation Beijing since July 17. A negotiation period of 45 days from that date was approved by the U.S. Bankruptcy Court for the Southern District of New York.
The exclusive negotiation with Superior was granted by the bankruptcy court. Hawker plans to schedule a Nov. 15 hearing on its amended reorganization plan, according to The Associated Press report.
During the negotiation period, Superior provided Hawker with $50 million in operating capital, which is now nonrefundable, the company said in the release.
Information for this article was provided by Beth Jinks, Susanna Ray and Jeffrey McCracken of Bloomberg News.
Front Section, Pages 1 on 10/19/2012