Hawker reiterates its plans

Aug. 6, 2010


Aug. 05--Hawker Beechcraft's top executive reiterated to Wall Street analysts that the company is considering alternate U.S. locations for some of its Wichita-based manufacturing.

The actions are part of a larger internal process called "Project Challenge," aimed to position the business for the future, Hawker Beechcraft CEO Bill Boisture said on a conference call about the company's second-quarter financial results.

"We do believe it is necessary to adjust the cost structure of the company to be profitable in a smaller market," Boisture said. "The company will finalize these and other facilities footprint decisions over the next six to nine months.

Project Challenge focuses on four areas: reduction of facilities, decisions on core and noncore tasks, supply chain rationalization and lean manufacturing initiatives, Boisture said.

"We continue to focus our effort on what we can control in our business and let the market sort itself out," he said.

"A good example of that is Project Challenge."

Hawker Beechcraft has narrowed the list of potential places of where to locate Wichita work from a list of 10 to two -- Mississippi and Louisiana, Boisture told The Eagle last month.

The company is working through the analysis and evaluation of moving work, including the investment needed and the payback, Hawker Beechcraft chief financial officer Sid Anderson said.

The market for business aircraft shows few signs of meaningful improvement, Boisture said.

"Overall, the new aircraft market in our segments is very slow and is trading at depressed prices," Boisture said.

The company's trainer business was a bright spot in the quarter, with solid revenue and generation of cash flow, he said.

The trainer received positive interest from U.S. partner nations and other countries in Europe, the Middle East and Africa at last month's Farnborough International Airshow in the U.K.

The reception from potential customers for the AT-6 was also good, Boisture said. The AT-6 is a modified T-6 designed for regular warfare, air support and border security.

Hawker Beechcraft's special mission King Airs were also a positive factor at the show, he said.

The commercial King Air market, however, continues to be challenged by the number of used planes for sale.

That's true for sales of the Hawker 900XP as well, Boisture said.

"There is a very good supply of recent used 800-900 series airplanes on the used market, and I think that until we see that absorbed, we'll continue to see depressed demand for those new units," he said.

The company reported Tuesday that it recorded net sales for the second quarter of $639.3 million, down $177 million from the same time a year ago. The company recorded an operating loss of $20.7 million in the quarter compared with an operating income of $39.4 million a year ago.

Reach Molly McMillin at 316-269-6708 or [email protected].