“We were expecting a Chinese buyer, but not this one,” Frederico Fleury Curado, CEO of rival Embraer, said during the Farnborough airshow. “We were expecting an established buyer.”
‘That’s Not Going Down’
Aboulafia questioned whether Superior would have the resources to meet the announced $1.79 billion cash sale. “They’re not showing up with $1.8 billion here; that’s not going down.”
Foley concedes that the purchase price was surprising, but he notes that General Dynamics initially raised eyebrows with its purchase of Gulfstream, but that turned out to be a strong investment.
Hawker Beechcraft also stresses that Superior intends to provide a substantial investment into the product lines. But Pelton notes that upgrading or developing an entirely new aircraft can cost $180 million to $700 million or more depending upon its complexity and that Hawker Beechcraft will require several such investments because “long term they’ll still be in a spiral unless they invest.”
Superior may have the ability to draw on the resources of its second major investor – the city of Beijing – which might well want to establish a business aviation manufacturing base. But that would be a long-term and costly venture to establish such a presence in the city.
In the interim, Hawker Beechcraft has stated unequivocally that Superior plans to maintain the company’s U.S. presence and that the deal would save thousands of jobs in Wichita and Little Rock, Ark.
Wichita Mayor Carl Brewer has been cautious about the move. “The city is working to gain a better understanding of how the proposed acquisition may impact our community,” Brewer says. “We’re encouraged by Hawker’s statement … which indicated Superior intends to maintain Hawker Beechcraft’s U.S. headquarters, management team and employees and continue product development throughout its commercial lines.”
Kansas Gov. Sam Brownback, meanwhile, finds the deal appealing if it helps employment in his state. “My major concern ... is the jobs in Kansas. Wichita is the air capital of the world, and we’ve got more major air companies there than anyplace in the world: Boeing, Airbus and all the [general aviation],” he says. “We want to grow those jobs.”
The good news, Foley notes, is that the companies have stated up front that employment and production will stay in Wichita. When CAIGA purchased Cirrus, it promised to keep production in Duluth, Minn., and so far has kept it there, Foley notes.