Air Jet

Jet upgrade, transfer of work hamper Hawker

Hawker Beechcraft's chief executive said Thursday a software upgrade to its Hawker 4000 super midsize business jet and the transition of King Air work to Mexico contributed to supply chain disruptions and cash-flow problems in the company's second quarter.

Bill Boisture said in a conference call with analysts that those two issues impacted the company's performance in the quarter.

"Our results are affected significantly by the disruptions of deliveries of both the Hawker 4000 and the King Air," Boisture said in the call Thursday.

On Wednesday, Hawker reported a second-quarter loss of $51.3 million compared with a $74.8 million loss in the same quarter a year ago.

Boisture said deliveries of the 4000 have been affected by an upgrade in software to the airplane's navigation and other systems, made by Honeywell. The upgraded software requires certification by the Federal Aviation Administration and European Aviation Safety Agency.

"We have a line of sight to FAA certification in the next several weeks," he said. EASA certification is expected later this year.

"We will see our way out of these interruptions in deliveries," Boisture said.

Also, Boisture told analysts that the transition of the supply chain for the King Air from Wichita to third-party suppliers and to Hawker operations in Mexico hampered deliveries of the turboprop airplane.

"We have literally moved thousands of parts within our supply chain," he said. "As we did that on the King Air, our planning on certain components wasn't as good as it should have been."

He said the components issue should be "smooth" in the third and fourth quarters.

The supply issues affected incoming revenue.

"We took our foot off the gas and it had a direct effect on advanced payments," Patrick Kelly, Hawker's chief financial officer, told analysts.

Reach Jerry Siebenmark at 316-268-6576 or jsiebenmark@wichitaeagle.com.

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