Without the programs, Beechcraft continues to focus on re-establishing its brand in the market and restoring customer and supplier confidence. Boisture was upbeat about working toward those goals, saying that despite the company’s recent history, the suppliers have been working closely with the company.
The customers have also provided positive feedback, he says. “Beechcraft customers know the focus of the company was diffused through Hawker Beechcraft,” he said.
As for branding, the company is returning to its roots, he says, noting that before the past couple of decades, “Beechcraft had been one of the benchmarks.” But in recent decades it had been “pummeled,” he says.
Beechcraft is hoping to stabilize following several years of financial uncertainty. After Goldman Sachs and Onex bought the company from Raytheon for a “startling price” of $3.3 billion in 2007, with each putting in $500 million of their own cash along with borrowing additional funds, the company became “leveraged to the hilt.” In 2009, “its fate was sealed by the downturn … you simply had to do the math” to know restructuring would be on the horizon, he says.
The planning for reorganization began months in advance, going back to late 2011, which enabled the company to enter protection with a prearranged restructuring plan. The two pieces that were not yet in place were an agreement with the union on pensions, along with the Pension Benefit Guaranty Corp. But Beechcraft was able to secure those agreements within months of filing for bankruptcy.
While the plan was in place for reorganization, investors and executives agreed it would be worth considering strategic buyers, which led to the July 2012 announcement of a potential accord with Chinese firm Superior Aviation Beijing, “which began a journey in of itself,” Boisture concedes. That deal ultimately collapsed on Oct. 31, leading Boisture to refer to it as the “trick-or-treat decision,” adding “there would be no treat” even though it expended $50 million of the Chinese firm’s money to keep its jet facilities operating during the exploratory period.
He cited dealings with the governments on both sides as an underlying cause for the collapse, but also acknowledges that a learning curve on working with the Chinese played into it. Asked if the Chinese used the process to absorb his company’s intellectual property, Boisture was adamant in his denial: “Absolutely not!”
But in the end, Beechcraft emerged as a stand-alone, smaller company, shed of 85% of its former $2.4 billion in debt, along with production of its costly jet programs. And as a result, the company will be profitable this year and won’t have to draw on its line of credit. The company, which now employs 5,400 workers worldwide, is expected to bring in $1.8 billion in revenues, about one-quarter of which will come from its defense/training business, another 35-40% from Global Customer Support and the remaining from its commercial aircraft business – 30% of that from special-mission aircraft.
Another by-product of the elimination of debt and sale of its unprofitable jet programs and composites technology is the ability of Beechcraft to invest trifold into its now core competencies – pistons, turboprops and military/trainer/special mission aircraft. This means the continuation of exploring the market for a new single-engine turboprop and ultimately contemplating long-term engine and avionics upgrades for its venerable King Airs.