Hawker Beechcraft today 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.
Hawker Beechcraft is based in Wichita Kansas with other plants in England, Mexico and Arkansas. Hawker Beechcraft can trace its Kansas roots to Beech Aircraft Corp., a company founded by Walter and Olive Ann Beech that began making aircraft in the 1930s. Beech Aircraft became a subsidiary of Massachusetts-based Raytheon Co. in 1980 but continued to build its planes in Wichita until the 2007 sale to Hawker Beechcraft Corp.
Hawker Beechcraft Corp., which is owned by Onex Partners and GS Capital Partners, a Goldman Sachs private equity fund, has struggled with tepid demand for its military planes and business jets over the past few years.
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.
The company will now work to restructure its balance sheet and recapitalize. It will continue with its bid to win a Light Air Support contract from the U.S. Air Force for its AT-6. Hawker says that more than two-thirds of its bank and senior bond debt holders have given support to its prearranged restructuring plan. If the court confirms the company's reorganization and consummates the plan, equity ownership in Hawker will be transferred to the company's debt holders.