Summary
- Beechcraft faced financial struggles during 2008 crisis, filed for bankruptcy in 2012, and exited successfully in 2013.
- Post-bankruptcy, Beechcraft focused on prop and military aircraft, cost-cutting, and financing to stabilize.
- Textron acquired Beechcraft in 2013, merging with Cessna to form Textron Aviation, continuing production and development.
Civil and military aviation manufacturer Beechcraft was founded almost a full century ago and has produced some of the most reliable and beloved aircraft to grace our skies. Now a division of Textron Aviation, which also controls legendary planemaker Cessna, Beechcraft is known for developing iconic aircraft like the Beechcraft Bonanza, Baron and King Air, all of which remain in production several decades after their introduction.
Readers may recall the company’s major struggles beginning over 15 years ago during the 2008 financial crisis, which ultimately led to Beechcraft filing for Chapter 11 bankruptcy protection in 2012. By this point, the planemaker, renamed Hawker Beechcraft, had accumulated over $2.3 billion in debt and was forced to lay off over 1,000 workers as it struggled to stay afloat.
Photo: Spech | Shutterstock
Thankfully, the company managed to exit bankruptcy proceedings a year later, shedding much of its debt with a restructuring plan and securing new financing. This is the story of how Beechcraft escaped bankruptcy and got back on its feet.
Historical context
Beechcraft was founded in 1932 by husband-and-wife team Walter Beech and Olive Ann Beech, along with three other investors in Ted A. Wells, Kaye K. Shaul and Clinton G. Yankey. In 1980, defense giant Raytheon (now RTX Corporation) acquired Beechcraft and would eventually merge with British Aerospace’s (BAe) corporate jets division, which included the Hawker brand, best known for producing the Hawker Hurricane during World War II before transitioning to business jets.
However, by 2006, Raytheon wanted out of the planemaking business and sold its aircraft manufacturing company off to a Goldman Sachs-Onex Partners consortium, which renamed it Hawker Beechcraft. With the global financial crisis just around the corner, demand for new aircraft suddenly plummeted and the manufacturer found itself struggling.
Filing for Chapter 11 bankruptcy
In December 2011, the United States Air Force (USAF) awarded a lucrative Light Air Support (LAS) contract to a Sierra Nevada-Embraer bid, representing a massive blow to Hawker Beechcraft. The deal was worth an initial $427 million but could have potentially risen to around $1 billion depending on future orders – Hawker Beechcraft contested the decision, but it appeared the company’s demise was an inevitability.
Photo: Ryan Fletcher | Shutterstock
In May 2012, it emerged that Hawker Beechcraft had filed for Chapter 11 bankruptcy protection in New York. The company secured $400 million in Debtor-in-Possession (DIP) financing, allowing it to stay afloat while its restructuring took place – however, it would still end up laying off over 1,000 workers in 2012, along with other cost-cutting initiatives.
Early on in the proceedings, Hawker Beechcraft agreed to a deal with Chinese firm Superior Aviation Beijing worth an estimated $1.8 billion. However, this deal broke down, and the company eventually devised a way to exit bankruptcy proceedings early the next year.
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Emerging from bankruptcy
In February 2013, Beechcraft formally announced its exit from Chapter 11 proceedings after its restructuring plan was approved by the United States Bankruptcy Court for the Southern District of New York. As part of the deal, former owners Goldman Sachs and Onex Partners would retain a small equity stake in the restructured company.
Photo: Benthemouse | Shutterstock
According to Financier Worldwide, around 90% of Beechcraft’s new investors were financial institutions who were secured creditors during its bankruptcy. CEO Bill Boisture would keep his position at the helm, although a brand-new board of directors was appointed. Key changes at the reorganized firm included:
- Dropping its loss-making Hawker business jet division
- Focusing on turboprop, piston and military aircraft
- Considerable cost-cutting measures
- $600 million in financing from JP Morgan Chase Bank and Credit Suisse
As it emerged from bankruptcy, the company had around 5,400 employees, of which 3,300 were located at its Wichita headquarters. However, the new entity would face a blow early on after its appeal for the $1 billion LAS contract was rejected in June 2013 and once again awarded to Sierra Nevada and Embraer for its A-29 Super Tucano.
Photo: Ryan Fletcher | Shutterstock
If Beechcraft had won this contract, it would have created around 700 jobs. However, the company refocused its efforts on its popular turboprop and piston planes, like the King Air, Bonanza, and Baron, and dropping its flailing business jet operations helped cut a lot of loose weight.
Beechcraft today
Just months later, the company was bought by Textron in December 2013, with the $1.4 billion acquisition including its discontinued Hawker business jet range. Textron formed a new entity, Textron Aviation, which included Beechcraft, Hawker and Wichita-based Cessna, although the Hawker brand would effectively be phased out.
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Nowadays, the company continues to produce its beloved King Air turboprop range, along with the piston-powered Baron and Bonanza. Additionally, its military contributions include the T-6 Texan II trainer and the AT-6 Wolverine. It is also in the process of introducing a new, clean-sheet turboprop, the Beechcraft Denali, which recently began formal flight testing ahead of its FAA certification.
Have you ever piloted or flown in a Beechcraft aircraft? Let us know your stories in the comments.