Hawker-Beechcraft Bankruptcy

WarriorPilot

WarriorPilot

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warriorpilot
Bad news folks !
Hawker Beechcraft just filed for chapter 11
:(
Hawker Beechcraft Thursday announced that it has filed for Chapter 11 bankruptcy protection, having entered agreements to eliminate $2.5 billion in debt and securing financing that will allow it to pay its employees, for now. Last year, Hawker lost over $600 million, but company officials remain publicly optimistic about the viability of the company. "Restructuring our balance sheet and recapitalizing the company in partnership with our debt holders will dramatically improve Hawker Beechcraft's ability to compete in a rapidly changing environment," CEO Robert Miller said in a statement. Restructuring won't just impact Hawker, which last week announced 350 layoffs, but will also impact suppliers. The company says it will continue to operate "in the normal course of business" and fill all orders for available products.
 
I dont think this is bad news, except maybe for some of the bond-holders and HBC pensioners and workers.

The way I understand it this is a similar pre-packaged deal like the automotive bankruptcies where the bond-holders and pension recipients turn their bonds into an equity position in the company.
So, Onex and Goldman Sachs who didn't own the company in the first place loose a lot of their voting rights. The bondholders loose some of the face value of their bonds (60% ?) and exchange them for stock. The pension either gets dumped on the guarantee corporation or it gets 're-structured (= stolen).
I dont think the operations of the company are going to be affected to a great extent, what is up in the air right now is what happens to warrranty claims and deposits that people have made on future aircraft. I suspect that the judge will allow them to credit the deposits, maybe even the warranties. Not doing so would jeopardize future sales.
 
weilke said:
I dont think this is bad news, except maybe for some of the bond-holders and HBC pensioners and workers.

The way I understand it this is a similar pre-packaged deal like the automotive bankruptcies where the bond-holders and pension recipients turn their bonds into an equity position in the company.
So, Onex and Goldman Sachs who didn't own the company in the first place loose a lot of their voting rights. The bondholders loose some of the face value of their bonds (60% ?) and exchange them for stock. The pension either gets dumped on the guarantee corporation or it gets 're-structured (= stolen).
I dont think the operations of the company are going to be affected to a great extent, what is up in the air right now is what happens to warrranty claims and deposits that people have made on future aircraft. I suspect that the judge will allow them to credit the deposits, maybe even the warranties. Not doing so would jeopardize future sales.
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this is not like those Banks. This will affect the General Aviation, dealers and suppliers. Domino Effect?
:rolleyes2:
 
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WarriorPilot said:
this is not like those Banks. This will affect the General Aviation, dealers and suppliers. Domino Effect?
:rolleyes2:
Click to expand...

Why would it affect those if the company itself continues to exist and produce aircraft and parts ?

This is a re-shuffling of paperwork, not a dissolution of the company.

I dont even believe that they have any dealers, they sell factory direct with field sales reps. The service centers will remain in business by supporting the existing fleet.
 
I would buy a new Bonanza if I could afford one. :sad:

Cirrus? Cessna 400? Seriously, those don't even have retractable landing gear. :rofl:
 
Jim Logajan said:
Could have been worse: Chapter 7.
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Could still happen. If the judge doesn't sign off on it or some of the stakeholders block the deal. Their union is not known to be very smart, could well be that they drive the thing into chapter 7 over some perceived disrespect or hurt feelings.
 
weilke said:
Could still happen. If the judge doesn't sign off on it or some of the stakeholders block the deal. Their union is not known to be very smart, could well be that they drive the thing into chapter 7 over some perceived disrespect or hurt feelings.
Click to expand...

I could see that in better times. But in economic doldrums and a weak labor market, the Union isn't going to risk being busted or replaced by another.
 
weilke said:
Could still happen. If the judge doesn't sign off on it or some of the stakeholders block the deal. Their union is not known to be very smart, could well be that they drive the thing into chapter 7 over some perceived disrespect or hurt feelings.
Click to expand...

Of course, the Judge can convert Chapter 11 to Chapter 7 at any time. It happened to WorldComm, Enrom, Eclipse Aviation, etc.
:rolleyes2:
 
weilke said:
I dont think this is bad news, except maybe for some of the bond-holders and HBC pensioners and workers.

The way I understand it this is a similar pre-packaged deal like the automotive bankruptcies where the bond-holders and pension recipients turn their bonds into an equity position in the company.
So, Onex and Goldman Sachs who didn't own the company in the first place loose a lot of their voting rights. The bondholders loose some of the face value of their bonds (60% ?) and exchange them for stock. The pension either gets dumped on the guarantee corporation or it gets 're-structured (= stolen).
I dont think the operations of the company are going to be affected to a great extent, what is up in the air right now is what happens to warrranty claims and deposits that people have made on future aircraft. I suspect that the judge will allow them to credit the deposits, maybe even the warranties. Not doing so would jeopardize future sales.
Click to expand...

There was an important component in the auto bankruptcies that doesn't appear to exist here. That was the Auto Supplier Support Program (ASSP). The ASSP used $5B of TARP to guarantee payments to auto suppliers in the event GM or Chrysler was unable to pay. ASSP acted as a buffer to maintain liquidity.

I have not heard of an ASSP-type arrangement in the HBC bankruptcy.
 
Maybe their union could get a bailout like GM's did?
 
ebacon said:
There was an important component in the auto bankruptcies that doesn't appear to exist here. That was the Auto Supplier Support Program (ASSP). The ASSP used $5B of TARP to guarantee payments to auto suppliers in the event GM or Chrysler was unable to pay. ASSP acted as a buffer to maintain liquidity.

I have not heard of an ASSP-type arrangement in the HBC bankruptcy.
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Not sure I am following here.

Do you think there will be a domino effect of failures of Garmin, P&W and Continental because they have to write off some of their AR with HBC as part of the chapter 11 ? Maybe some mom+pop shop that turns a $200 bushing for beech and gets most of their business from them, but overall I suspect the ripple effect of a small manufacturer like HBC struggling will be limited.
 
weilke said:
Not sure I am following here.

Do you think there will be a domino effect of failures of Garmin, P&W and Continental because they have to write off some of their AR with HBC as part of the chapter 11 ? Maybe some mom+pop shop that turns a $200 bushing for beech and gets most of their business from them, but overall I suspect the ripple effect of a small manufacturer like HBC struggling will be limited.
Click to expand...

Makes me wonder if they will continue to build/support the piston line... :(

Quite frankly, if I were an investor, I would be clamoring for them to shut that loser down. How many Bonanzas did they sell last year? 10?
 
Jay Honeck said:
Quite frankly, if I were an investor, I would be clamoring for them to shut that loser down. How many Bonanzas did they sell last year? 10?
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14 :(

The reason they keep them around is the vain hope that occasionally someone will step up from a G36 to a King Air or Premier.

Cessna deliverd 1 (one) Corvallis TT last year (that may be an artifac of shifting production to mexico though).
 
weilke said:
Not sure I am following here.

Do you think there will be a domino effect of failures of Garmin, P&W and Continental because they have to write off some of their AR with HBC as part of the chapter 11 ? Maybe some mom+pop shop that turns a $200 bushing for beech and gets most of their business from them, but overall I suspect the ripple effect of a small manufacturer like HBC struggling will be limited.
Click to expand...

You are most likely correct. I don't know how big of a slice HBC has of the bizjet pie and how the mess would trickle down to suppliers. I was merely pointing out a material difference between the automotive bankruptcies, which were treated special by congress, and HBCs traditional CH11 filing.
 
ebacon said:
You are most likely correct. I don't know how big of a slice HBC has of the bizjet pie and how the mess would trickle down to suppliers. I was merely pointing out a material difference between the automotive bankruptcies, which were treated special by congress, and HBCs traditional CH11 filing.
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According to the 2011 GAMA report:

All bizjet deliveries worldwide: 681

HBC delivered
5 Premier
1 400XP
5 750s
1 800XP
0 850XP
11 900XP
7 4000
_______
= 30

4.4% of the market. Barely a blip if they disappear.

Gulfstream/IAI 107
Dassault 63
Embraer 99
Airbus 7
Boeing 8
Bombardier/Lear 182
Cessna 183
 
All good possibilities, but never underestimate the stupidity of a union executive...
Many a good paying job has gone extinct because some union executives wanted to demonstrate their 'power'...
 
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