Cessna-Textron is buying Beechcraft for $1.4B
 

Cessna parent Textron acquiring Beechcraft, report says

(D. Voorhis, 12/20/2013, Wichita Eagle) The Financial Times reported Friday that Cessna Aircraft’s parent, Textron, has acquired Beechcraft for about $1.4 billion. In a move that promises a newfound stability for two of Wichita’s struggling aircraft makers, Cessna Aircraft parent Textron has reportedly acquired Beechcraft for nearly $1.4 billion, according to the Financial Times. Neither company is commenting on the report. Cessna and Beechcraft suffered after demand for light jets and piston aircraft started collapsing in 2008. Beechcraft went into bankruptcy in May 2012 and put its Hawker jet business up for sale. Beechcraft emerged from bankruptcy in February. The Financial Times, citing people familiar with the deal, said Beechcraft hired Credit Suisse in October to sound out potential buyers. Other parties rumored to have been interested include Brazil’s Embraer and Indian firm Mahindra & Mahindra. Centerbridge Partners LP, Sankaty Advisors LLC and Angelo Gordon & Co. own about 90 percent of Beechcraft. Reaction to the reported sale has generally been positive. Textron’s stock was up 14.5 percent on Friday as investors bet that the company would see a strong upside from the reported deal. The deal is good for Wichita, too, said aviation analyst Wayne Plucker of Frost & Sullivan. Although the two companies were surviving in the short term, the long term was always more of a question. “The potential viability of Beechcraft was always kind of a crap shoot,” he said. The company has good products, but it was just too small of a player in a depressed market. And Cessna is only somewhat better, with sales of its mainstay light jets remaining weak. A combined company could pick and choose its strongest offerings and prune back some weaker models, he said. That will likely lead to some job cuts, he said. "With a reduction in models there is likely to be a workforce reduction,” Plucker said, “But it doesn’t look draconian.” Richard Aboulafia, an aircraft analyst with Teal Group, agreed this is good move for both, but not a solution to their problems. For Beechcraft, it offers a significant upside. “This is nothing but a good thing,” Aboulafia said. “It may not be hugely successful one – that depends on the market – but it stabilizes the company (long-term) because, frankly, it’s tough to make it as a niche player in aerospace no matter how good your products are.”

For Cessna, he said, it offers a chance to improve margins by selling a wider range of popular products more efficiently. That means consolidation and cost cutting at the combined company. "This is an enduring down market and restructuring is the smartest solution to survive it,” he said. “That means shrinking capacity, it means stabilization.” Frank Molina, president of the local Machinist Union, said he’s strongly encouraged by the report because it makes both operations stronger. “If there is actually validity to this, I think it would be a great thing for Beech and Cessna and the city of Wichita,” he said. Hawker Beechcraft was the weakest of the world’s big general aviation companies because of its weak line of jets and from the heavy debt load it carried from its $3.3 billion sale to Goldman Sachs and Onex Corp. in 2007. When the market turned down in 2008, Hawker Beechcraft struggled to survive. It filed for Chapter 11 bankruptcy in May 2012, wiped out its equity owners and came to be controlled by its creditors. Company officials last year negotiated a sale to China-based Superior Aviation Beijing Co. for $1.79 billion, but that sale fell apart. In December, the bankruptcy court approved a plan for the company to end jet production and emerge as a smaller, stand-alone company called Beechcraft Corp. The company would focus on its King Air, Baron and Bonanza lines and defense and after-market business. Beechcraft emerged from bankruptcy in February. Beechcraft has performed relatively well since then. In October, it reported that it delivered more aircraft in the first three quarters than any year since 2008. On the other hand, Cessna has had a pretty discouraging 2013. It has seen losses during the last three quarters. The company’s overall deliveries by unit were down 22 percent through the third quarter and its billings were down 26 percent, according to data from the General Aviation Manufacturers Association.Throughout 2013, Beechcraft continued to explore the sale of its assets. In October, Beechcraft CEO Bill Boisture said that he was talking to a buyer who wanted Beechcraft’s Plant 3 composite-manufacturing facility to make composite components, but likely wouldn’t restart production of Hawker jets. Last week, Boisture confirmed that Beechcraft was on the verge of a deal.

Better than china I suppose.

My son thinks this means the end of the Bonanza. I hope not, but it's a possibility. We'll see.

Another Boisture-guided corporate calamity?

The only airplane Cessna bought as an acquired item I know of, the Lance Columbia was "cessnized" to blend into existing model lines, but with an entire model line acquisition it seems unlikely they will spend much money converting the Beechcraft line over to Cessna. New nameplates maybe but I could see them not even bothering with that much. And I doubt they will drop any model that was selling well at Beechcraft. Although sales were not exactly hot, Bonanzas and Barons have enjoyed fair to good sales in recent years. Of those two models, I think they are more likely to drop the Baron because it is not a spin resistant airplane and Cessna has had it with lawsuits over piston twins.

Will it be a CeBe20, CE20, or CB20!

Not sure how I feel about the whole acquisition, but I'm inclined to think that they might leave the namesake and products alone mainly due to the King Air line.

As per AvWeb yesterday:

Textron, the parent company of Cessna and Bell Helicopter, has confirmed it will purchase Beechcraft Corp. for approximately $1.4 billion in cash, in a press release issued late on Thursday. "The acquisition of Beechcraft is a tremendous opportunity to extend our general aviation business," said Textron CEO Scott Donnelly. "From our customers' perspective, this creates a broader selection of aircraft and a larger service footprint.... The iconic King Air product line perfectly complements our Caravan and Citation jet line-up and our combined global service network will deliver the superior level of services expected by our Cessna, Beechcraft and Hawker customers." The acquisition is good news for Hawker Beechcraft 4000 and Premier 1A owners whose aircraft had been orphaned by Hawker Beechcraft's emergence from bankruptcy earlier this year.

In its own news release, Beechcraft said the deal includes type certificates for the jets, which the emergent company abandoned. "Maintenance services for the aircraft will continue through Beechcraft’s factory-owned service center network, Hawker Beechcraft Services, and Authorized Service Centers around the world with Hawker 4000 and Premier ratings," Beechcraft said in its news release." Beechcraft will continue to provide uninterrupted service and support for all Hawker 4000 and Premier aircraft." Until a couple of weeks ago, Beechcraft was intent on selling the jet business to a composite structures business but sources told AVweb that negotiations for that deal were abruptly called off in mid December, about the same time that rumors of the Textron deal began circulating. More details on the deal are expected Friday.

Textron will release more details about the acquisition on Friday. The purchase had been reported about a week ago but Textron officials would not confirm it until the Thursday announcement.

If I was Piper, I'd be nervous.

They are in their own world anyways, this is from my own personal experience in my dealings with the factory, and multiple levels of emplyee's.

Maybe they will turn the Bonanza into a high-wing?