Hawker Beechcraft has lost nearly half of its $6 billion backlog for aircraft orders on the cancellation of post-2010 orders by fractional provider NetJets. The airframer revealed the news as part of its fourth quarter 2009 financial update on 14 December.
"The impact of the cancellations will be to reduce the company's current backlog by approximately $2.6 billion," Hawker Beechcraft said in its update. "Hawker Beechcraft has previously disclosed that NetJets, while a considerable source of backlog, was not expected to provide the company any substantial revenue during 2009 or 2010 and has historically not represented more than 10% of the company's annual revenue."
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"After removing NetJets orders from backlog and considering anticipated sales and order activity for the fourth quarter, the backlog is expected to be approximately $3.5 billion as of 31 December," the company says, adding, "The company continues to expect depressed demand in the near term." Hawker reports that it is expecting its full-year operating loss to total between $725 million and $740 million on $3.2 billion revenue.
Trouble at NetJets reflects the economic stress on the fractional business as a whole, which this year recorded its first yearly reduction in fleet size in 17 years of annualised growth.
Hawker Beechcraft chief executive Bill Boisture, speaking at the Wichita Aero Club on 15 December, said the fractional industry has traditionally suffered from a business model that does not properly address the residual value of assets and capital replenishment costs. "NetJets is struggling to get it right in a big hurry," he said.
Meanwhile, Hawker Beechcraft has clinched Chinese approval for its Hawker 4000 business jet. Deliveries of the super-midsize aircraft into the country are scheduled to begin during the first quarter of 2010.
Source: Flight International
