Celebrating a rebirth and a 75th anniversary in the same year is unusual, particularly for a company for which five years ago neither event looked certain. But March's $3.3 billion sale of Raytheon Aircraft and creation of Hawker Beechcraft, three-quarters of a century after Beech Aircraft was formed, suggests something has changed at the Wichita, Kansas-based general aviation manufacturer.
"It is no secret this business got in trouble," says chief executive Jim Schuster, who took over a struggling Raytheon subsidiary in 2001 and led its transformation into a thriving privately owned company. "Five to six years later, we had a business that when put into play drew a tremendous amount of interest, both in terms of the quality of buyers coming forward and the values associated with the business."
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Jim Schuster (centre), flanked by Sanjeev Mehra (left) from Goldman Sachs, and Nigel Wright of Onex Partners |
The sale to private equity firms Goldman Sachs and Onex Partners was announced in December and completed in March, creating a profitable independent manufacturer with an 8,000-strong workforce that delivered 426 aircraft last year across one of the widest product ranges in the business, recording revenues of almost $3 billion.
It was not always so. "The problems in the business started here," says Schuster, tracing them to the early 1990s when the company, recovering from the failure of the Beech Starship, launched three new composite-fuselage jets - the Premier I, Hawker 450 and Horizon. "The plan was done nicely, but the people had no experience developing a jet. They took on a more than superhuman task," he says.
"When I arrived in 2001, the company had a product line that was behind the competition and three programmes in early development," Schuster says. The Premier I light jet was having a difficult certification and needed more investment, work on the super mid-size Horizon (now Hawker 4000) was not as advanced as hoped and the medium-light Hawker 450 had to be shelved.
"We were in a save-the-business mode, laying off people as quickly as we could," he says, praising Raytheon's support for its struggling aircraft company: "They were a very good steward of the business." Schuster's priority was improving customer service and support, while attacking the cost structure. "That required some tough decisions to outsource work."
But the result is a profitable aircraft manufacturer that is growing, and which has attracted top-tier buyers in Goldman Sachs and Onex. "They understand the aircraft business and are committed to the long haul. They talk about how to grow the business."
Hawker Beechcraft is benefiting from a general aviation market that is on "a 10-year tear", says Schuster. He believes international demand for business aviation is "changing the dynamics of the GA market for ever - we are no longer dependent on the North American market".
But more work remains. "We are about half done with what we need to do," Schuster says. "Our cost structure is not yet optimised, we are not delivering every aircraft perfectly, we want our product support to be recognised as the best, and we need to build an international support structure."
With Hawker 4000 deliveries to begin this year, for the first time in a long time there is no new aircraft programme consuming a lot of company resources. "We have a roadmap of product development based on our existing platforms, and we do not expect another clean-sheet aircraft for the time being," he says, adding the new owners are "absolutely prepared" to back product development "if it makes sense".
That is unlikely to include a very light jet. "That is not an appealing market. They are all struggling," says Schuster. "Our King Airs line up to the VLJ in every respect except speed, and can only continue to do well."
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Source: Flight International
