Hawker Beechcraft reports first half 2011 results

Hawker Beechcraft Acquisition
Company has reported higher deliveries for the first half of 2011 as compared
to the same period of 2010. The Company ended the second quarter of 2011 with
$487 million in new orders versus $80 million in cancellations, the ninth
consecutive quarter in which new orders exceeded cancellations. In addition,
gross margin improved to $79.4 million in the second quarter of 2011 versus
$72.5 million in the second quarter of 2010.

“Our aircraft deliveries
increased for the first half of this year as compared to what we saw in the
first half of 2010,” said Bill Boisture, Hawker Beechcraft chairman and chief
executive. “Continuous improvement in EBITDA over the last four quarters is
also an indication of the success of the investments we are making to drive
efficiencies into our business. However, we continue to post losses driven
primarily by performance in the Business and General Aviation (B&GA)
segment.”

Year-to-date aircraft
deliveries in the B&GA segment are basically flat with 89 planes delivered
in 2011 versus 88 deliveries in the same period of 2010. The company reported
44 deliveries in the second quarter of 2011 versus 54 deliveries in the same
period of 2010. The primary contributor to the difference in deliveries was an
unusually high volume of 17 piston deliveries in the second quarter of 2010 as
compared to the more typical level of 9 deliveries in the second quarter of
2011. The company has also experienced supply disruptions that have affected
production of Hawker 4000 and King Air aircraft, causing deferral of some
planned Hawker 4000 deliveries in the second quarter. The company currently
anticipates resolution of the supply issues during the third and fourth
quarters of 2011, but expects this will also result in fewer than planned
deliveries of Hawker 4000 and King Air aircraft in the second half of the year.

The B&GA segment
reported sales of $291.9 million in the second quarter 2011; a decrease of
$61.6 million as compared to sales of $353.5 million in the same period of
2010. More than half of this decrease was due to a reduction in revenues from
the sale of used aircraft received as trade-ins, highlighting the Company’s
continued low inventory of pre-owned aircraft. In addition, a higher percentage
of lower priced aircraft were delivered in the second quarter of 2011 as
compared to the same period of 2010.  

The B&GA segment
recorded an operating loss of $64.9 million for the second quarter of 2011; an
improvement of $8.4 million as compared to $73.3 million during the same period
of 2010. Gross margin in this segment also improved by $3.8 million versus the
second quarter of 2010.

“Ongoing market concerns in Europe and around the globe continue to dampen confidence
of buyers worldwide, which is evidenced by the continued softness in our
primary segments, especially the light and mid jet market,” Boisture said. “Our
decreased jet deliveries are reflective of this and are not dissimilar to what
is being experienced throughout the industry. However, we continue to see
strong demand for our Beechcraft products, including special mission
applications for the King Air lineup, which is a positive reflection of the
diversification of our product portfolio.” 

The Global Customer Support
(GCS) segment reported sales of $141.2 million in the second quarter of 2011;
an increase of $6.7 million as compared to $134.5 million during the same
period of 2010. The increase in revenue was primarily due to increased
maintenance services.

The GCS segment recorded
operating income of $26.1 million for the second quarter of 2011; an increase
of $5.4 million as compared to $20.7 million during same period of 2010.
Year-to-date operating income of $48.2 million in 2011 also increased by $7.1
million versus year-to-date 2010 operating income of $41.1 million.

“We continue to capitalize
on opportunities to improve the customer experience through our GCS
organization,” Boisture said. “One of the key ways we are doing this is by
fulfilling customer requests for upgrade options on fielded aircraft, including
an announcement at the European Business Aviation Convention and Exhibition of
the new King Air 200GTR. This aftermarket upgrade joins the Hawker 800XPR and
Hawker 400XPR programs, both of which continue to generate great interest in
the marketplace. Further, Hawker Beechcraft Services announced plans recently
for a new facility in Wilmington to service
customers in the Northeast US.

“Overall, we continue to
operate in a very difficult environment,” Boisture said. “We face aggressive
foreign competition and forecasted weak market demand. Despite this, we are
continuing to invest in projects to transform ourselves into a leaner and more
efficient manufacturer and in our people through training and education
programs. These things combined will help us emerge from this downturn as a
stronger, more agile company delivering incredible quality to our customers
around the globe.”