Beechcraft eyes return to profit fuelled by mining group orders

Beechcraft has predicted it will return to profit this year, only months after emerging from bankruptcy protection, as it benefits from demand for its propeller-driven aircraft from the natural resource industry.

Bill Boisture, chief executive of the business aircraft manufacturer, said orders from mining and oil-drilling companies and the US defence department had bolstered the group. However, he accepted that the business aviation market would remain weak for some time as it endures weak demand and a glut of aircraft.

“Forecasters say for the next 10 to 14 months it looks about how it looks now,” Mr Boisture said. “There are reasons for optimism in certain areas, but there are offsetting problems in other parts of the world.”

The company is focusing on slower, but less fuel-hungry, basic piston-powered and faster turbo-prop aircraft. These are cheaper than their jet counterparts and can land almost anywhere.

Beechcraft has been building three of its flagship King Air turboprops a week since it emerged from bankruptcy, Mr Boisture said.

Among the biggest buyers of the aircraft were mining and other natural resource companies, which need aircraft that are capable of landing in remote areas with poorly-equipped airfields.

“The aircraft’s ability to fly for a long time without much support makes it ideal for places where lots of natural resource development is going on,” Mr Boisture said.

Beechcraft also announced on August 1 an order for up to 105 King Air 350i aircraft from Wheels Up, a new aircraft ownership club that offers members access to aircraft for trips around their region of the US. Including maintenance and other support work, Beechcraft valued the order at $1.4bn.

Beechcraft, formerly known as Hawker Beechcraft, emerged from nine months under bankruptcy protection in February. During that time it reorganised its pension and healthcare obligations and shed 85 per cent of its $2.2bn net debt.

The name change followed the closure of its Hawker business, which faced intense competition from large commercial jet manufacturers and specialists such as General Dynamics’ Gulfstream.

The bankruptcy attracted attention because the company spent several months discussing a potential sale to Superior Aviation Beijing, which said it would retain the Hawker jet business.

Executives at the company had grown concerned, Mr Boisture said, about whether the US government would approve the sensitive sale and whether Superior had the necessary approvals from the Chinese government. It eventually abandoned the Superior talks in the interests of exiting bankruptcy quickly to restore customer confidence.

That decision had been vindicated because the company – now controlled by its pre-bankruptcy creditors – would be profitable this year, Mr Boisture said.

“We’re emerging as a strong American manufacturing company, with a niche product focus,” he said.