Turnaround Expert Steve Miller Joins the Hawker Beechcraft Team
On February 7, Hawker Beechcraft Inc. announced it had appointed Robert S. “Steve” Miller, 70, CEO and that former Hawker Beechcraft CEO Bill Boisture “will remain as chairman of its operating subsidiary, Hawker Beechcraft Corporation.” Miller said he plans to remain chairman of American International Group and a director at Symantec, although he left his job as chairman of MidOcean Partners.
Miller told AIN, “I am CEO of the parent company, and Bill will remain in the title he has had of being, among other things, chairman of our principal operating subsidiary, Hawker Beechcraft Corporation.” Boisture will also remain as interim president of Hawker Beechcraft Defense Company, following the retirement of Jim Maslowski at the end of January. Hawker Beechcraft is owned by Onex Partners and GS Capital Partners.
“Bill is going to stay here and work with me as we approach the challenges in today’s depressed market,” Miller added. “He will focus on our government work while I do the general aviation work, but another way of describing it is that I’ll be looking at some of the financial challenges we’ve got in front of us. And Bill will continue to help me by focusing on designing, building and selling great aircraft. There’s nothing I can teach him about how to build great airplanes; he’s already doing it.”
Miller was instrumental in the turnaround of Chrysler in the early 1970s and many companies since then. He is author of the book The Turnaround Kid: What I Learned Rescuing America’s Most Troubled Companies.
“In a way this is my second [aviation] gig,” Miller said, “because in the late ’80s I was the vice chairman at Chrysler. I had Gulfstream Aerospace reporting to me. I learned a little bit about it back then, but I can’t claim to be an expert like Allen Paulson was or Bill Boisture is.”
One of the financial headwinds facing Hawker Beechcraft is $2.14 billion of outstanding debt coming due, some in 2014. “[That] happens to be an area where I’ve had a lot of experience,” Miller said, “dealing with financings and refinancing. But there is no doubt in my mind that we’ll be able to work our way through it. It’s obvious that we will need to rely on substantial financing even beyond the expiration of the current facilities, but if we can demonstrate that we know what we’re doing and we have a good vision for where we’re going, I’m sure the lenders are going to stay with us.”
Miller spoke to AIN on his first day on the new job, so it was too early for him to comment about his plans for strategic changes. “Bill [Boisture] has done an awful lot of the heavy lifting of getting the operations reconfigured to deal with today’s depressed market conditions,” he said. “And so there’s nothing that jumps out as obvious that’s got to be turned upside-down here. Instead, I’m helping to make sure to create the conditions where we’ve got high confidence in our financial footing so that we can inspire the confidence of our customers on a continued basis and allow the people of Hawker Beechcraft to continue focusing on serving their customers.” Miller doesn’t see any need to sell off parts of the company. “We’re going to keep this place together, continue with the product lines we’ve got and make sure we get the balance sheets structured in a way that supports us for years to come.”
Miller sees his greatest challenge as “[keeping] this company moving forward without any significant disruption. I’ll be focusing a lot on what we can do to sell more airplanes? I’ll be talking to our suppliers so we can earn their continued support, talking to the political leaders so they understand our situation and continue to support us. And of course talking to the sources of capital.”
The loss of the Air Force light air support contract doesn’t mean that the fight is over for Hawker Beechcraft and its AT-6. “We have the best and most appropriate product for the mission,” Miller said, “and we think [the Air Force] made a terrible decision and we intend to fight it and make sure the process comes back around to the right decision.”
Miller is famous for taking a $1 salary while working as chairman and CEO of Delphi, but he admitted that his salary won’t be that low at Hawker Beechcraft. In a public filing shortly after Miller started his new job, it was revealed that his salary will be $1.5 million per year, with bonuses for meeting and exceeding certain targets and $5 million as compensation for terminating his employment at MidOcean Partners.
He will also receive some equity in Hawker Beechcraft. According to the filing, “The Board of the Company has determined that Mr. Miller’s compensation package is competitive and represents a prudent investment relative to potential value creation at the company. Mr. Miller is a globally recognized expert at helping companies succeed in challenging markets. Augmenting Hawker Beechcraft’s management team with Mr. Miller’s experience has the potential to create value well in excess of his compensation.”
Miller took the $1 salary at Delphi to make a point with the factory workers that they were in the trenches together, and he has reached out to Hawker Beechcraft’s union leader, Steve Rooney, president of the Machinists District 70. “I thanked him for all his support,” Miller explained, “because he has worked cooperatively with the management here over the last couple of years as the business has been operationally restructured and there’s a new contract. It’s got a lot of joint agreements, it’s got participation in the financial ups and downs of the business, and all those things are crucial to our survival.
“Hawker Beechcraft is a great company with iconic brands and dedicated employees,” he said. “I’m honored to join and to help this company navigate through the challenges of the current general aviation market. With its inherently strong products, people and history, Hawker Beechcraft will remain an important presence in the aviation industry.”