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May 9, 2011
By Alton K. Marsh
Financial numbers were down as expected in the first quarter of 2011, yet Hawker Beechcraft has successful military sales to cushion the recession and several reasons for optimism. Still, the company will never return to its pre-recession size.
“We continue to transform our business and are making great strides in becoming a smaller, more agile company,” said Hawker Beechcraft Chairman and CEO Bill Boisture.
There is still the expected bad news as the company works its way back to profitability. Net sales were $558.4 million, a decrease of only $9.8 million compared to the first quarter of 2010. Revenues in the business and general aviation (B&GA) segment decreased by 14.6 percent, and operating losses increased by 31.8 percent.
“We continue to experience significant losses in our B&GA segment,” Boisture said. “This was driven in large part by loss-making aircraft charges, higher sales and marketing expenses related to our international expansion, expenses associated with our cost-reduction initiatives, and continuing weakness in the general aviation market.”
Still, there were signs of improvement. Deliveries in business and general aviation were up with 45 in the first quarter, compared to 34 last year. The backlog increased by $122 million over 2010, with new orders of $714 million exceeding cancellations of $33 million.
Other good news came from the military and customer support segments. Trainer and attack aircraft revenues were up 24 percent, with operating income up by 31.8 percent compared to the first quarter of 2010, while Global Customer Support was up 3.4 percent and operating income up 8.3 percent. Other good news was that used aircraft inventories are down, meaning the company is getting rid of the aircraft it took as trade-ins and is converting them to cash. Sharp buyers know prices of used aircraft are depressed, Boisture said. That is, however, not likely to last long.
The Hawker 4000 is selling well internationally, while the King Air turboprops are doing well in North and South America, Boisture said. He gave special notice to the King Air sales team for its performance during a telephone briefing on first quarter results.
The company received $10 million from the state of Kansas to develop new products and enhancements for existing aircraft, along with state funds for training of 250 employees. The U.S. Air Force is expected to offer a competitive contract for light air support aircraft in the next few months, and Hawker Beechcraft officials feel they are a strong competitor with their AT–6 single-engine turboprop.
Hawker Beechcraft recently lost a case filed against it by Airbus UK concerning the volume obligations for fuselages, wings, track kits, and spare parts. The International Chamber of Commerce awarded Airbus $14.2 million.
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