Beechcraft emerges from bankruptcy

It's now focused on its turboprop and piston aircraft and its military work — but the country faces potentially massive defense cutbacks.

The prospect of the government's defense retrenchment comes at a crucial time for the Wichita, Kansas, company, as it competes for a US$354 million U.S. government contract to build aircraft for use in Afghanistan. The high-stakes “light air support” contract could ultimately be worth nearly US$1 billion, depending on future orders.

The single-engine turboprop, dubbed the AT-6, that Beechcraft proposes to build under the LAS contract is crucial for the company. It hasn't been put into production yet, but CEO Bill Boisture told The Associated Press Tuesday that building such a plane is a major objective this year. Winning a customer to launch production is one of the top three goals to get Beechcraft “off on the right foot” in 2013, the company told its employees.

“We have good prospects for that happening,” Boisture, who had been chairman of Hawker Beechcraft, said in an interview at the company's Wichita headquarters. “If the LAS contract is not awarded, or we don't win for some reason, we would have to take some small, interim steps until we have achieved a launch customer. But we will go forward with the program.”

Beechcraft is exiting bankruptcy with roughly 5,400 employees worldwide, including about 3,300 at its headquarters. Boisture said he anticipated those employment levels to remain stable.

The company has long said the AT-6 government contract would generate about 700 jobs, but on Tuesday Boisture said it is “not useful” to speculate about whether all those would be additional jobs if the company won the LAS contract, or whether there would be more layoffs if the company did not get it.

In addition to the getting a launch customer for the AT6 program, employees gathered at companywide meetings on Tuesday were told that Beechcraft's other major objectives included making sure that the world markets know that “Beechcraft is back — that it is well-capitalized, soundly financed and able to develop new products” and re-establishing its sales network for the business and general aviation planes it still builds.

The renamed company's formal announcement that it is exiting bankruptcy comes two weeks after its reorganization plan was approved by the U.S. Bankruptcy Court in the Southern District of New York. Beechcraft's debt was cut and creditors agreed to US$600 million in exit financing. That could help it to better compete in the special mission, trainer and light attack airplane markets while continuing its turboprop and piston airplane manufacturing.

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