November 2, 2011
By Alton K. Marsh
Hawker Beechcraft lost money in the third quarter, but far less than in the comparable quarter for 2010. The company said that it “recorded an operating loss of $42.2 million, an improvement of $39.2 million as compared to an operating loss of $81.4 million during the same period of 2010.” Hawker Beechcraft said the improvement was primarily because of one-time charges made during the third quarter of 2010.
While the company saw improvements to gross margin, operating loss, and net loss, revenue was down. Business and general aviation sales decreased by 15.9 percent as compared to the same period in 2010. Revenues in the trainer and attack segment, the T-6 Texan, decreased by 17 percent while operating income was down by 37.6 percent. The global customer support segment was also down by 6.6 percent, with operating income down 10 percent.
“We continue to improve our operating cost structure primarily by the investments we are making to drive costs out of the business,” said Bill Boisture, Hawker Beechcraft chairman and CEO. “However, we continue to feel the effects of the depressed light-jet market, which is evidenced by fewer deliveries in our business and general aviation segment this quarter.”
Hawker Beechcraft reported 38 business and general aviation deliveries in the third quarter of 2011, compared to 49 deliveries in the same period of 2010. The company said in a news release that the primary contributor to the difference was supply disruptions “that have affected production of the King Air, Hawker 4000, and piston aircraft, causing deferral of some deliveries that were expected to occur in the third quarter.” The company expects the effects of the disruptions to continue into the fourth quarter for King Airs and piston aircraft, but U.S. deliveries of Hawker 4000s have resumed.
“We continue to experience lower demand in our business and general aviation segment due to a lack of confidence in the global economic environment,” Boisture said. “However, with the supplier issues resolved and the recent FAA certification of the Hawker 4000 upgrade and enhancement program, we have resumed deliveries of our flagship aircraft and it is already receiving great reviews in the marketplace.”
On November 3 media in Wichita including KAKE television reported that poor quality parts, and a lack of parts, from Hawker Beechcraft operations in Mexico have delayed manufacturing, and will result in a new layoff of 88 workers. Without the delays and the requirement to rework some of the parts, the layoffs would not have been necessary, reporters were told by their sources.
The business and general aviation segment reported sales of $283.2 million in the third quarter of 2011, a decrease of $53.6 million from the same period of 2010.
The company reported third-quarter net sales of $518.8 million, a decrease of $75.9 million compared to the same period of 2010.
During the quarter, Hawker Beechcraft drew a total of $75 million on its revolving credit facility “in order to keep a prudent amount of cash on hand as it worked through supply issues and accumulated inventory,” the company reported. It paid back $25 million in the quarter, leaving $50 million outstanding at quarter-end.
Backlog was $1.3 billion on Sept. 30, compared to $1.4 billion on June 30, with deliveries of $519 million, new orders of $526 million, and cancellations of $30 million, the company said. About 28 percent of the backlog at the end of the third quarter represented orders that are not expected to be delivered in the next 12 months, it added.
With the resolution of the Hawker 4000 supply disruption, deliveries have resumed in the United States; but Hawker Beechcraft is awaiting approvals from agencies in other countries to deliver the aircraft in those areas. The company expects disruptions related to King Air and piston aircraft to continue in the fourth quarter, resulting in fewer deliveries than planned. Year-to-date deliveries in the business and general aviation segment are down 127 airplanes, compared to 137 deliveries in the same period of 2010.
AOPA Pilot Senior Editor Alton Marsh has been a pilot since 1970 and has an airline transport pilot certificate and instrument and multiengine flight instructor certificates, aerobatic training, and a commercial seaplane certificate.
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