Hawker Beechcraft Confident It Will Exit Bankruptcy This Month

Aviation International News » February 2013
February 1, 2013, 5:10 AM

At press time Hawker Beechcraft was expected on January 31 to seek confirmation of its plan of reorganization from bankruptcy court, allowing the company to emerge [from bankruptcy] some time in February, which is when the name change to Beechcraft Corp. will also become effective.

According to a source at the Wichita-based OEM, a number of hurdles remained to be cleared before the January 31 hearing. These included a court ruling on Hawker Beechcraft’s settlement with the Pension Benefit Guaranty Corp. and the International Association of Machinists and its proposed exit financing structure.

Upon emerging from bankruptcy, Beechcraft will implement a business plan focusing on its turboprop, piston, special-mission and training/attack aircraft and its parts, maintenance, repairs and refurbishment businesses, “all of which are profitable and have high growth potential,” according to a spokesperson.

In a separate issue, Hawker Beechcraft had anticipated a ruling on January 17 authorizing the company to assume an early agreement with Pilatus, resolving a claim by the Swiss OEM against the U.S. manufacturer. As of press time that issue had not been resolved.

Pilatus had alleged that Hawker Beechcraft continued to build and deliver T-6 trainers before and following the May bankruptcy filing without paying royalties on intellectual property in production of the aircraft. Both the T-6 and its AT-6 light attack variant are based on a Pilatus design.

The court approved a “cure amount” totaling slightly more than $7.5 million, to be paid to Pilatus “as soon as is reasonably practicable” following the company’s emergence from bankruptcy. It further noted that payment will constitute “a cure of all defaults arising under the Pilatus agreement.” For its part, Hawker Beechcraft has denied that the agreement is an admission that it owes royalties to Pilatus, or that it has used “protectable intellectual property” owned by Pilatus.

Trimming Employee Rolls, Pension Plans

In other news from a separate filing, Hawker Beechcraft had asked for court approval to alter underfunded pension plans covering some 9,500 non-union workers and retirees. The request was part of an agreement with the federal government’s Pension Benefit Guaranty Corp. (PBGC) and the OEM’s machinists’ union. Terms of the agreement require the PBGC to assume responsibility for the two terminated pensions, while Hawker Beechcraft will keep the pension plan covering 8,200 current and former union employees. In response to opposition by an ad hoc committee of retirees, Judge Stuart Bernstein reserved judgment on the pension matter at a hearing on January 17, saying he wanted to make sure retirees in the group knew the details of the settlement and had time to file an objection, if desired, before a ruling. He further expressed his intent to rule on the pension settlement the following week.

Also last month Hawker Beechcraft announced its intention to temporarily release approximately 240 hourly employees in a series of rolling furlough actions to be implemented throughout this year. According to a company spokeswoman, the furloughs stem from the Joint Primary Aircraft Training Systems (Jpats) negotiation process and the need to synchronize T-6 and AT-6 production to meet customer demand. T-6 trainer production is expected to slow soon, with the last of the aircraft to be delivered to the Navy in 2014. The AT-6 is a candidate for the U.S. Air Force light air support (LAS) competition, and selection of a winner is expected this month.

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