Raytheon Aircraft's president holds forth on the future of its line of piston, turboprop, and jet aircraft.
Last October, AOPA Pilot visited the newly built Wichita headquarters of Raytheon Aircraft Corporation. As part of a pre-NBAA briefing on Raytheon's new Hawker Horizon mid-size business jet, we had the opportunity to interview Roy Norris, Raytheon's president. There are plenty of new developments going on at Raytheon, and in a free-wheeling discussion Norris took the occasion to fill us in on the company's latest strategic thinking.
What's new at Raytheon these days?
We have completely redesigned this factory. Completely redesigned our development methods. I don't think I've ever seen a company go through as major a transition in my career. It's producing remarkable results: the JPATS I, the Premier I introduction last year — which was the most successful new aircraft introduction in the history of this industry. We took the first orders at NBAA '95.
How many orders were taken at that show?
There were 51.
You mentioned follow-on aircraft to the Premier I — a Premier II and III — anything going on with those concepts?
Oh, very much so. We're actively working with the Premier II. In fact, I was in Lexington [Massachusetts, site of Raytheon's corporate headquarters] yesterday, briefly going over our 5-year plan. That will be a stretched and longer-range version of the Premier I, the same barrel size. The Premier I has a very, very nice cross section, almost as big in size as the Hawker. The Premier I was designed really as just the start of a family. There is a Premier II, and there is a Premier III. It's in what you call the "conception of development" stage. We're looking at system selection; we're fine tuning and talking to customers about what it should be. We'll go through a narrowing down process. The objective is just like the Premier I — to offer a quantum jump in performance capabilities at a lower price.
Is the piston line going away?
No. We are not investing right now in new piston development. And the reason for that is very simple. We're thinking that the greater opportunities right now are in light jets and in super mid-size jets and light mid-size jets.
There is no question that the King Air line continues to be the bread and butter of this company. The jets will surpass it, but the King Air, despite the forecast of the industry, is not a declining market. We have increased our sales in King Airs in each of the last 3 years, with 14 percent ahead this year in King Airs. There is a definite market there for that airplane. So what we've found is that there is a core King Air market or core turboprop market. That's the only way you can explain King Air sales in excess of 100 units and growing about 14 to 15 percent per year. So the reason I mention this is that the King Air is now basically a 30-year-old design that we've steadily improved, but we've learned so much now in terms of how to design airplanes and how to manufacture airplanes more cost effectively. And there is some exciting new engine technology coming that promises to dramatically lower cost of operations and dramatically lower the cost on the engines themselves. We think marrying that with some of the technology we've developed in Premier I, and are developing in the Hawker,…[can lead to] a King Air II series. And we are looking very closely at that.
This is all really inspiring, but it just makes us wonder. Other manufacturers would say the same thing. Don't you worry about an oversaturation of the light to medium jet market?
I don't think so, because while other manufacturers are saying the same thing, they aren't doing the same thing, OK? And everybody would like to sit down and talk about, 'Oh gee, we're doing this we're doing that,' but look at the designs. The designs aren't any different from what have been there for the last 20 or 30 years. They might have bigger engines on it, they may fit a bigger cabin. Where's the new technology? Where are the things that are gonna pull costs out of the airplane? Prices of our competitors' products haven't been coming down; they've been going up, because they're using the same technologies that they've used for the last 20 years to build airplanes — in some cases, for the last 50 years. So there is no investment there. Who is moving to the use of advanced materials? Nobody else. It's one thing to talk about it. I never listen to what people say; I watch what they do. We're doing, they're saying — I guess that would characterize the differences between us and some of our competitors now.
Are you going to make a Citation X killer?
Yeah, we've got a Citation X killer [the Hawker Horizon]. Well, it doesn't need to be. The product has been a failure, the X. Let's just look at the facts. It came out of the factory, 17 orders. I was there when we launched that program. I was part of that process. Our chairman wanted a go-fast airplane, and he's got a go-fast airplane. The market told us at that time they'd like a reasonably go-fast airplane, Mach 0.84 would be just fine — but give us a cabin, give us something that people are going to be comfortable in for 3 hours. And the market has spoken.
What happens in every one of these cases of failed designs is that there's a very smart businessman in this country. His name is Richard Santulli of NetJets, and Richard Santulli's specialty is going out and buying distressed airplanes. He buys airplane designs that are in trouble. He started out with the Citation S/II. We got in trouble with the S/II. We put a TKS system on the wing; nobody liked that. People had been asking for a bigger Citation II and more gross weight. The Citation II had grown in weight until about all you were carrying were pilots and peanuts, and the people were saying, 'Give me some more gross weight; give me a little more speed.' And we gave them the S/II, and they went 'blah.' And we were heavily discounting that airplane, less than a year after it had been introduced. Actually we stopped production on it after 150 units — shortest production run Cessna ever made.
Well, how do we solve that problem? We went out and found our friend Richard Santulli, and said, 'Rich, we have a problem.' He says, 'I know you have a problem. I think I can solve it for you, but its gonna cost ya,' and it did. He founded [NetJets] based around the S/II. He bought those airplanes at highly, highly discounted prices.
Step two: Cessna got through the Citation V sales peak; sales were going down; we were about ready to be sold. We got a problem. Let's go back and see Rich. He bought the Citation V — once again, at discount prices. Enter British Aerospace. Got a problem airplane: Hawker 1000. Been there, done that. Two different companies. I'm not trying to say 'look how dumb they are and how smart we are.' We are right in there with them. Made a mistake in the design — too close to the [Hawker] 800.
What did British Aerospace do? 'Mr. Santulli, we got a problem.' And then you've lost your inventory and shut the product line down, which is what we've done. The last two 1000s that came out this year go to Rich Santulli. Rich has made a fortune off of it. He is selling them at list price because he has [packaged] services with it.
Enter the Citation X. Big problem. Should have listened to the market. Markets are very clear, and they are also very ruthless when you don't listen to them. They said, 'We don't want no Mach 0.90. We'd like a nice Mach 0.84, and we'd like a nice cabin, and we'd like something about $15 million. What you gave us was something that goes Mach 0.92, that's got a small cabin by comparison, and cost $15.5 million to $17 million.'
'Mr. Santulli, we got a problem.' And Santulli cut a deal on those airplanes that would bring tears to most people's eyes, particularly Cessna's CFO. We're not gonna get into that kind of game. We understand the equation now — it's listen and listen very carefully, and give them exactly what they want. Don't try to second-guess your customer. Our customers today are more sophisticated in the use of airplanes than we are; they know more about what makes a good airplane design than we do. That's a fact. Don't second-guess him. Don't get into this 'well, we understand what you say, but we think what you really want is this.' We understand you want a new King Air, but we're gonna give you something that looks very, very different than a King Air. Bad mistake. We understand that what you want is a conservative-looking airplane, but were gonna give you something that looks like it's out of the twenty-third century. Big mistake.
Could you talk a little about the Starship? What did you learn?
We learned to listen to our customer, and we learned how to build airplanes out of composites inexpensively, and we've learned how not to build airplanes out of composites. And we learned that composites can provide dramatic improvements to an airplane. But they've got to be used in places where they make engineering sense — where they provide real benefit — rather than building an airplane out of composites just so we can say we can build an all-composite airplane, which is the way we have approached Starship. This time around we said, 'Where will composites help us? Where can I offer a demonstrable advantage, make it bigger, make it cheaper, make it stronger, make it faster, [more] cost effective?' If there are areas where I can achieve that demonstrably by use of composites, use them. But if not, don't use them — use something else that provides that better, cheaper, faster, stronger criteria.
What's the labor reduction using composites?
Oh, it's dramatic. The fuselage for the Premier is a day versus a week for the Starship.
Here is the equation on composites in airplanes: Great material, what it provides for you is — in general — more weight, greater strength, greater toughness, crash survivability. But not everywhere. The second thing is that composites are very time-consuming things if done by hand. It is a process that only reaches its potential when you automate it, when you do it by numerically controlled machines, when you do it by robots. Now, you take the composite material, marry it with robotic manufacturing techniques, and you come up with something that is dramatically beneficial in certain areas of an airplane. For example, with Premier I, for the same outside cross section of the airplane, I can give you an 8-inch-wider interior and an inch taller interior using composites versus using aluminum. Big advantage: that's free space. Every time you increase the barrel diameter of an airplane, you pick up a lot of drag. That was the problem with the [Citation] X, by the way. Russ [Meyer, Cessna's chairman] couldn't have a Mach 0.92 airplane and a decent cabin size, so we compromise the cabin against the wishes of the market, and they said, 'Wrong; we're not gonna buy that.' But by going to a composite structure you could have kept that same barrel size, same drag count, but give the customer the increased space that they want, full stand-up cabin, flat floor, all those things. So my point is we learned from Starship how to do it right and how not to do it right. And we took that very expensive lesson, a very good lesson, and applied that in the Premier. We'll be applying it in all the future products in this company.
So what's that mean for the Beechjet?
The Beechjet continues to sell well. Like all airplanes, at some point in the future, it will be replaced by newer technology, greater speed, greater comfort, lower price. What it is I don't know at this point. I certainly see it going out for at least 5 to 8 years more.
Do you see the piston products stretching out that long?
Yes, I think there is an ongoing demand for Bonanzas. I'm watching with interest what's happening in the marketplace, and we'll see how well Cessna does with the new introduction with its models.
Do you see making any investment in the piston line in the next 5 years?
Yes, there could be. We will choose those investment opportunities that we think have the best potential for producing returns, and that means where there is the greatest demand and where we think we've got something unique to offer. I won't go out and build something that is just another shaped box. If we introduce a new piston airplane, it will be something that represents a significant advance in terms of value, which translates to higher performance and lower costs.
Where does the new Horizon fit in all of this?
Well, the Horizon is the next bullet out of the gun. It's bullet number three out of this whole new process and this whole new company that we've built here. And we felt, looking at what's come to be called the super mid-size business jet market, that there was a real hole there that wasn't being served, and we felt that the entrants that had come into that market place were not being well-accepted by the market or they had made changes in their product that moved them out of that market. First of all, we saw that the Citation X was not a success, and we asked why.
We, after having experienced the difficulties we did with the Hawker 1000, made a decision that really what the market would like would be a bigger and better Hawker, but one that was substantially advanced beyond the Hawker 800 or the Hawker 800 XP.
So we began this process actually 3 years ago right after Raytheon acquired the Hawker corporate jets division of British Aerospace. I came aboard as president, and the second day I was there I initiated a study on the new Hawker.
Now let's talk about what our design goals were. The Hawker series has been, without a challenge, the best selling mid-size business jet in the industry. It has had roughly 35 to 45 percent of the market for its entire lifetime. In fact, last year its worldwide market share was 44 percent for the mid-size business jet market. It is the most successful mid-size jet that has ever been produced. And the remarkable thing about it is that it has been that for 20 years.
[Customers] love the cabin and they love the range. The market has been saying all along, 'Give us a coast-to-coast airplane. We do not want to stop for fuel.' The Hawker 800 was the closest to achieving that. It could make it most of the time, and for 90 percent of the trips that people flew in this country, it would never have to stop for fuel and could carry plenty of passengers and plenty of bags. So that, coupled with its cabin size, is what I think has caused the Hawker to dominate the industry for all of those years.
We came up with a series of about eight different designs that were just kind of straw man designs. And [our customer group] narrowed that down to three basic overall conceptual designs that seem to be pretty close to the mark — and rated that against every other mid-size business jet that had ever been produced until we came up with three broad designs that they felt, this group of people, was substantially superior. And then we took those three conceptual designs, and we sent them back to our engineering group here, and we said 'OK, take these basic guidelines and design three airplanes for us,' obviously not down to detail design, but enough that we could guarantee properties.
The second time through, we said, 'What engine would you like on it?' We didn't come in and say, 'We have decided to put the Allison engine on it, and let me tell you why that's a good decision.' We said, 'Here's the various engines that we consider, here's the Allison engine, here's the Pratt & Whitney engine, here's the CFE engine. What do you think?' And they picked the engine. And we went back and brought all of the avionics suppliers. Here's what Collins had proposed, here's what AlliedSignal had proposed, and here's what Honeywell had proposed. And we said, 'Which of these do you want?'
What did they pick?
They picked Honeywell. And they picked Pratt & Whitney. We asked them their thoughts on the wing. We had elected that we were going to put the wing out [under subcontract]. We weren't going to build the wing ourselves, and we had worked with three major world-class wing designers. British Aerospace, Fuji, and early on in the game, I guess we talked with Textron Aero Structures for a little bit. They came in with preliminary designs for the wing. [The customer group] picked the wing spar from Fuji Heavy Industries; they build the center section for the [Boeing] 777. They got a wonderful wing, and they won the competition.
Never before has the buyer had as much say in what the airplane was going to be. Never before. So we took those basic conceptions and went back through this process again, and they said that's it. We want that one.
It's the new Hawker Horizon, and what it is, is a totally new Hawker. The only thing that is common to the earlier Hawker — other than the design valuations and judgment valuations — is the control column.
It has a very similar look; it has the Hawker look. You will see it in the windows. It has that little scoop on the top; people like that. Same type of tail, but more importantly, other than just the surface features, all the design valuations, the judgments, were made by this team of engineers. One hundred fifty of them are British, and they have designed the new Hawker, and it is Hawker through and through. It has some dramatic changes, compared to earlier Hawkers.
For example, it is much, much faster. It is a Mach 0.84 airplane — that is max cruise speed in level flight. Fastest Hawker that has ever been built. Range at Mach 0.82 is 3,100 nautical miles NBAA IFR, and max range is 3,400 nautical miles at, I think, Mach 0.78. Certified to 45,000. Pratt & Whitney 308, 6,500-pound-thrust category. Six thousand-hour TBO. Big difference. [It takes off in] 5,250 feet at gross, which is 36,000 pounds even. That gives you the gross features of the airplane.
The other thing — perhaps the biggest thing — is Hawkers have always distinguished themselves not only by being long range, but by having the most comfortable cabin. And this is a big jump in cabin size, 84-inch-diameter fuselage, all composite; and the interior dimensions, 77.5 inches in cabin width. Dramatically larger in size than the Hawker 800 or Hawker 1000. It's about 5 feet longer than the Hawker 1000; enormous cabin. And we did that without having to go with a humongous-size fuselage that would require much more powerful engines to push it around in the sky. We did that by using the composites.
So the Horizon will be the launch customer for the Honeywell Epic avionics suite?
That's right. It's based on the 777 technology, the latest thing in the world; it's fantastic. Here's another interesting thing about it. Honeywell will be the full avionics integrator. Honeywell will supply a totally integrated package. There will be some components on it from AlliedSignal, but they are providing the total integration and guaranteeing that it all works together. It will all operate to a common bus for such things as maintenance recording and fault error analysis. It's what Honeywell did with the 777, and Honeywell has developed a tremendous ability in terms of being an integrator, to make sure all of this stuff works together. And you know, avionics systems have become so complex, in particular in the software area. Compatibility across the whole system has become one of the key, key requirements. When you're buying this here and buying that there, the probability that it's all going to work together well is very low. We've seen that in some airplanes over the last few years. Honeywell is going to do a totally integrated system. They're responsible for delivering the functionality. They have to ensure that everything works, and they did that beautifully with the 777 — and they're going to use the same approach here with the Hawker Horizons. We're really excited.
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