Hawker Beechcraft: “Substantial doubt about company’s ability to continue”

Hawker Beechcraft’s management team has warned
that there are concerns about the company’s future.

In its delayed 10K Annual Report it said:

 “As of December 31,
2011, Management has concluded that there is substantial doubt about the Company’s
ability to continue as a going concern.

This conclusion was reached based on a variety of factors,
including those described below. We determined not to pay our interest
obligations under the

Notes on April 2, 2012 and anticipate an inability to pay
interest on the Notes on future interest payment dates. Furthermore, we will be
required to repay or refinance our Senior Secured Credit Facilities and the
Senior Tranche Advance prior to the repayment of the Notes and we will be
required to repay or refinance the Senior Notes prior to the repayment of the
Senior Subordinated Notes.

The Company has suffered recurring operating losses resulting
in a significant net shareholder’s deficit that raises substantial doubt about
its ability to continue as a going concern. The Company is operating under a
forbearance agreement with its lenders which defers interest payment
obligations and provides relief from loan covenants through June 29, 2012. Due
to the fact that we have recurring negative cash flows from operations and
recurring losses from operations, we will need to seek additional financing.
There is substantial doubt that we will be able to obtain additional equity or
debt financing on favorable terms, or at all, in order to have sufficient
liquidity to meet our cash requirements for the next twelve months.

We have taken, and continue to take, various actions to
preserve our liquidity and cash position, including reduced production levels
to better meet expected demand; use of furloughs and work force reductions
consistent with the lower production levels; and other cost reduction efforts
including sharply reduced discretionary spending and deferrals of certain
product development activity. Our ability to pay principal and interest on our
debt, fund working capital and make capital expenditures depends on our future
performance and our ability to successfully restructure our balance sheet.

As of December 31, 2011, we were not in compliance with the
covenants under our Senior Secured Credit Facilities and had $0.3 million for additional
borrowings under our Revolving Credit Facility. We determined not to pay our
interest obligations under the Notes on April 2, 2012 and anticipate an
inability to pay interest on the Notes on future interest payment”

New plan coming

However, in a press statement, Steve Miller, CEO of Hawker Beechcraft, has said that Hawker
Beechcraft will announce a new plan to deal with its debt problems in the next
few weeks.

Miller said: “Today’s filing reflects the combined effect of the
prolonged weakness in our market that has continued to affect our business and
the heavy debt burden the company has operated under since 2007.  Hawker Beechcraft continues to work closely
with our lenders to restructure the company’s balance sheet, and to do so as
quickly as possible. In the coming weeks, we expect to decide on a path forward
for Hawker Beechcraft that will include a plan that will put the company on
firm financial footing and better position Hawker Beechcraft for the
future.  As we move forward with this
process, we remain steadfast in our commitment to building, selling and
servicing the best airplanes for our civilian and military customers.”