Raytheon has taken a controlling stake in loss-making US fractional ownership company Flight Options and agreed to provide additional capital as needed over the next 18 months under a recapitalisation agreement with other investors. The US defence giant has been covering Cleveland, Ohio-based Flight Options' losses since it merged with the company's Raytheon Travel Air fractional subsidiary last year.
Raytheon has agreed to exchange Flight Options' debt for equity, increasing its stake from 49% to 65%. The company has also agreed to provide aircraft financing for the next five years. Accounting rules have required Raytheon Aircraft to remove from its backlog $850 million in orders placed by Flight Options as part of the merger, but the fractional ownership company will begin to take delivery of new aircraft as part of the recapitalisation.
The deal will allow Flight Options to grow and to introduce new products and programmes, says chief executive John Nahill, appointed by Raytheon to turn the loss-making business around. The company has signed a maintenance agreement with Raytheon Aircraft Services to cut operating expenses and help take the fractional programme into profitability. Flight Options operates 200 aircraft, of which around 75% are Raytheon types.
Source: Flight International
