Court clears Hawker Beechcraft to discuss sale to China's Superior Aviation

WICHITA aircraft maker Hawker Beechcraft Corp (HBC), which filed for bankruptcy protection under Chapter 11 in early May, has been given the go ahead by a US bankruptcy court to begin "exclusive negotiations" for China's Superior Aviation Beijing to acquire the civil aviation interests of the financially troubled group.

The negotiations with Superior prompted the International Association of Machinists and Aerospace Workers to express displeasure by filing papers on July 16 with the bankruptcy court to block the sale.

"The proposed sale of Hawker Beechcraft to a Chinese government-backed entity has broad implications for the US economy and national security," said IAM International president Tom Buffenbarger.

The court approval follows the announcement that HBC had reached a US$1.79 billion "exclusivity agreement" with Superior Aviation that might conclude in its acquisition of the Wichita original equipment manufacturer (OEM.) The negotiations with Superior Aviation are part of a process that includes sale of part or all of the company, the New Jersey's Aviation International News reported.

HBC said Superior will make payments over the next month to allow production of Hawker Beechcraft business jets to continue. An initial deposit of $25 million was required by July 20 and another $25 million was to be paid within 30 days.

The agreement would not include Hawker Beechcraft Defence Company (HBDC), which would continue to operate its T-6 trainer programme as a separate entity. HBDC would also continue to pursue final certification of its AT-6, which is being considered by the US Air Force for its light air support (LAS) programme. The LAS contract has an initial value of $355 million and over time might be worth as much as $1 billion.

However, if HBDC should be sold separately, as much as $400 million of the anticipated $1.79 billion purchase price of HBC would be refundable to Superior.

Hawker Beechcraft CEO Steve Miller said Superior Aviation has had a long-standing interest in the commercial aircraft business of Hawker Beechcraft and first approached the company several years ago regarding a "strategic partnership."

Mr Miller also alluded to Superior's previous experience operating a US business and said the Chinese firm has a "demonstrated ability to restore a business to profitability quickly after emerging from Chapter 11."

One of those US businesses is the former Superior Air Parts of Coppel, Texas. In 2008 Superior Air Parts, a part of bankrupt parent Thielert Aircraft Engines in Germany, saw most of its assets sold to Lycoming and the remainder to a Chinese technology group, now Weifang Tianxiang Technology in partnership with the People's Republic of China. According to Tim Archer, CEO of both Superior Aviation Beijing and Dallas-based Superior Air Parts, Superior Air Parts has been returned to profitability under Chinese ownership.

"At this time, pursuing the potential transaction with Superior is in the best interests of the company and its various stakeholders, including our creditors, our employees, our suppliers and our customers," Mr Miller added.

HBC chairman Bill Boisture described the offer from Superior as "the most attractive we received during the strategic review process," suggesting there were other less attractive proposals.

"There are opportunities for improvement within Africa, and while some parts of the world feel that potential for improvement is not very high. We feel differently," he said.

KQ CEO Titus Naikuni said the move by GHS Aviation would benefit the airline by boosting its profile in safety standards. "GHS and Kenya Airways partnership is set to bring into Africa the much needed professional standards that will be catalyst for safer African skies through tried and tested systems and products that have worked in many parts of the world," he said.