Can the Plan Work?
There are two schools of thought on the future of the company.
The first is that the circumstances that resulted in the company’s bankruptcy filing will haunt its future path. The layoffs, relative lack of product development over the past many years, uncertainty on the part of potential customers (due in part to the cancelation of the warranties on the Premier 1A and Hawker 4000), reluctance of investors to underwrite development and the caution of vendors in supplying needed parts and materials will all weigh on the company.
The flip side of that argument is the new Beechcraft will emerge from Chapter 11 without the crippling debt and without the cost of supporting its money-losing jet side of the business. The new company will therefore be a better bet for investors, customers and vendors alike.
The funding side of that equation looks to be under control, as its new owners agreed to support product development of the new lineup. HBC’s vice president of marketing and communications, Ron Gunnarson, told Flying “it’s well-understood what the return on that investment will be,” because, he agreed, there’s no longer the crippling debt associated with the company.
Can this transformation play out? Looking at the history of such things, it’s a good bet that it can. The most recent case of a company with a good lineup and lots of debt that came out of Chapter 11 in good shape, refocused on its most profitable products, was Piper. Its lineup, moreover, was composed most notably of the PA-46, in different iterations, Mirage, -Meridian and, eventually, Matrix. While it didn’t discontinue its light singles and twins, it effectively put several of them on hiatus. In some years, Piper’s sales were 90 percent by dollar value PA-46 sales. One Piper official told Flying Piper (New Piper at the time) was “essentially a PA-46 company.”
With a lineup running from the Bonanza at about $800,000, the B-58 Baron, the C-90, 250 and 350 King Airs, along with the special mission King Air, Beechcraft will have a range of airplanes that were profitable even during the downturn.