Hawker Beechcraft reports third quarter results

Hawker Beechcraft Acquisition
Company has reported a decrease in revenues during the third quarter of 2011 as
compared to the same period of 2010. However, the Company realised an
improvement to gross margin, operating loss, and net loss for the third quarter
of 2011 as compared to the same period of 2010.

“We continue to improve our
operating cost structure primarily by the investments we are making to
drive costs out of the business,” said Bill Boisture, Hawker Beechcraft
chairman and chief executive officer. “However, we continue to feel the effects
of the depressed light-jet market, which is evidenced by fewer deliveries in
our Business and General Aviation (B&GA) segment this quarter.”

The Company reported net
sales for the three months ended 30 September 2011, of $518.8 million, a
decrease of $75.9 million as compared to net sales of $594.7 million in the
same period of 2010.

During the three months
ended 30 September 2011, the Company recorded an operating loss of $42.2
million, an improvement of $39.2 million as compared to an operating loss of
$81.4 million during the same period of 2010.

On 30 September 2011, the available
liquidity was $336.0 million as compared to $382.4 million on 30 June 2011. The
decrease was due to a variety of factors, including temporary supply
disruptions in addition to seasonal inventory increases in preparation for
deliveries during the fourth quarter of 2011.

During the third quarter,
the Company drew a total of $75.0 million on its revolving credit facility in
order to keep a prudent amount of cash on hand as it worked through supply
issues and accumulated inventory. The Company paid back $25.0 million in the
quarter, leaving $50.0 million outstanding at quarter-end. The Company may make
additional draws on the revolver, which currently has approximately $189.3
million of availability, in order to maintain an appropriate supply of cash for
day-to-day operations.

The Company’s backlog was
$1.3 billion on 30 September 2011, as compared to $1.4 billion on 30 June 2011,
with deliveries of $519 million, new orders of $526 million and cancellations
of $30 million. Approximately, 28 percent of the backlog on 30 September 2011,
represented orders that are not expected to be delivered in the next 12 months.

The Company reported 38
deliveries in the third quarter of 2011 as compared to 49 deliveries in the
same period of 2010. The primary contributor to the difference in deliveries
was supply disruptions that have affected production of the King Air, Hawker
4000 and piston aircraft, causing deferral of some deliveries that were
expected to occur in the third quarter. The Hawker 4000 supply disruption has
been resolved and deliveries have resumed in the United States, but the Company is
still awaiting approvals from agencies in other countries before it will be
able to deliver Hawker 4000 aircraft in these areas. The supply disruptions
related to King Air and piston aircraft are expected to continue in the fourth
quarter of this year, resulting in fewer deliveries than planned. Year-to-date
aircraft deliveries in the B&GA segment are down with 127 planes delivered
in 2011 as compared to 137 deliveries in the same period of 2010.

The B&GA segment
reported sales of $283.2 million in the third quarter of 2011; a decrease of
$53.6 million as compared to sales of $336.8 million in the same period of
2010. The majority of this decrease was due to fewer deliveries of aircraft.
The supply disruptions described above have contributed to this decrease.

The B&GA segment
recorded an operating loss of $75.4 million for the third quarter of 2011; an
improvement of $49.1 million as compared to $124.5 million during the same
period of 2010. This improvement is due primarily to one-time charges made
during the third quarter of 2010. 

“We continue to experience
lower demand in our B&GA segment due to a lack of confidence in the global
economic environment,” Boisture said. “However, with the supplier issues
resolved and the recent FAA certification of the Hawker 4000 Upgrade and
Enhancement (U&E) program, we have resumed deliveries of our flagship
aircraft and it is already receiving great reviews in the
marketplace.”          

The Global Customer Support
(GCS) segment reported sales of $126.7 million in the third quarter of 2011; a
decrease of $8.9 million as compared to $135.6 million during the same period
of 2010. The decrease in revenue was primarily due to a temporary disruption in
the business that occurred in connection with the implementation of the
Company’s computer system upgrade. This disruption was short in nature and
ordinary operations have resumed. Year-to-date sales for 2011 are $387.5
million; an increase of $1.7 million as compared to $385.8 million during the
same period of 2010.

The GCS segment recorded
operating income of $20.7 million for the third quarter of 2011; a decrease of
$2.3 million as compared to $23.0 million during same period of 2010.
Year-to-date operating income for 2011 is $68.9 million; an increase of $4.8
million as compared to $64.1 million during the same period of 2010.

“We had another successful
quarter in our GCS organization,” Boisture said. “Our aftermarket upgrade
programs including the 400XPR, 800XPR and King Air 200GTR continue to gain
acceptance in the marketplace. In Q3 we received both FAA and EASA
certification on the 800XPR and deliveries have commenced. We also recently announced
last month at the National Business Aviation Association (NBAA) Convention an
order of up to twelve 800XPR aircraft to XOJET, with seven of those
aircraft scheduled to be delivered this year. GCS will also open a new
factory-owned service center in Monterrey,
Mexico, in the
spring of 2012 – an investment that further demonstrates our commitment to
support our customers throughout the globe.”