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Again?

Beechcraft Corporation for Sale

Beechcraft Corporation, the U.S. planemaker whose aircraft have trained military pilots since World War II, is for sale again, according to people with knowledge of the matter.

Credit Suisse Group AG is contacting potential suitors about their interest in acquiring Beechcraft, said the sources, who asked not to be identified because the discussions are private. Beechcraft may fetch about $1.5 billion, another person said. Cessna Aircraft parent Textron Inc. (TXT) is among companies exploring a bid, said two of the people.

Beechcraft could be attractive to companies focused on smaller defense and general aviation aircraft after shedding debt from an earlier leveraged buyout and shutting a struggling jet unit, said Richard Aboulafia, aerospace analyst with Teal Group, a Fairfax, Virginia-based consultant.

“You get military trainers, you get the world’s most popular turboprop aircraft,” Aboulafia said in a phone interview.

Slumping demand for private jets and curbs on U.S. defense spending led the company, formerly known as Hawker Beechcraft, to file for bankruptcy in May 2012. Negotiations to sell it for $1.79 billion to a Chinese buyer collapsed months later. Beechcraft exited court protection in February and has publicly said it’s selling Hawker assets to focus on propeller-driven and military planes.

‘Good fit’

At the right price Beechcraft could be a good fit for Textron, whose holdings include Bell helicopters, military drones and Cessna aircraft, Textron CEO Scott Donnelly said during a July 2012 quarterly earnings call after the Chinese bid for Beechcraft was made public.

“I think some of the assets of the company are interesting and would be a good fit in our company and that we could do the right thing for their existing customers and our customers — it would all work,” Donnelly said at the time.

Beechcraft’s twine-engine King Air turboprops would compliment Cessna’s single-engine Caravan line, especially after Beechcraft landed a $788 million order in August, said Brian Foley, who heads Brian Foley Associates, a Sparta, New Jersey consultant.

The King Air division is Beechcraft’s most valuable asset and biggest driver of its profits, Foley said in a phone interview.

“They practically rule the twin-engine general aviation market,” he said. “They have a very good brand, loyal customer following.”

A spokesman for Credit Suisse declined to comment. Nicole Alexander, a spokeswoman for Beechcraft, and David Sylvestre, a spokesman for Providence, Rhode Island-based Textron, both declined to comment.

Cessna, Bombardier

Beechcraft, based in Wichita, Kansas, is now controlled by its former creditors. Centerbridge Partners LP, Sankaty Advisors LLC and Angelo, Gordon & Co. are among the funds that own a combined stake of about 90 percent and took control following the bankruptcy, according to the company. Before bankruptcy, Hawker Beechcraft was owned by Goldman Sachs Group Inc. and Onex Corp. (OCX)

Negotiations to sell Hawker Beechcraft to Superior Aviation Beijing Co. ended in 2012 while the company was reorganizing, partly because of questions about the Chinese company’s financing people familiar with the process said at the time.

Recovery in Demand

Beechcraft, whose competitors include Canada’s Bombardier Inc. (BBD/B) and Brazil’s Embraer SA (EMBR3), is now seeing a recovery in demand and estimates first-half deliveries rose 67 percent to 115 airplanes. King Air sales will help drive up revenue and earnings “materially” this year and the next, Standard & Poor’s said in April.

Signs of a recovery are also evident in worldwide aircraft shipments tracked by the General Aviation Manufacturers Association, a trade group. Deliveries of multi-engine turboprops rose 71 percent in the first half of 2013 versus a year earlier and single-engine turboprop deliveries rose 3.8 percent. Piston-engine airplanes increased 16 percent, while business jet shipments fell 4.1 percent.

“We’ve already turned the corner,” said Foley, who described business jets as a lagging indicator for the sector.

Any deal involving Beechcraft’s defense assets being sold to non-U.S. suitors would be subject to a review from the Committee on Foreign Investment in the U.S.

Beechcraft had previously announced plans to sell by the end of the year assets from its shuttered Hawker and Premier IA jet units, including certificates, spare parts and a manufacturing plant. Foley said he expects those assets to still be sold separately from the rest of the company.

 

Beechcraft King Air 350i

Steve Greenwald

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