No flight track wavering, says Hawker Beechcraft

Plane maker Hawker Beechcraft Corporation (HBC) has said its debt crisis would not impact its business in India. The US-based HBC manufactures King Air turboprop planes and Hawker jets. It has a 58 per cent share of business aircraft registered in India.

According to recent media reports from the US, the company had hired law firms specialising in bankruptcy and restructuring, as slower growth impacts earnings.

Shawn W Vick, CEO of Hawker Beechcraft Inter-national Service Company, ruled out any fallout on customers. "There will be no impact in India. There will be no impact to our customers,'' he stated.

He confirmed the company had hired two law firms to advise on financial restructuring and refused to comment on filing for bankruptcy. Vick said the company was concluding fresh debt terms with its lenders and an announcement was expected this week. The company has total debt of $2 billion. Hawker is owned by investment firms Goldman Sachs and Onex.

There are 150-160 Hawker Beechcraft planes in India, 28 being jet aircraft, and turboprop King Airs making the rest. The plane maker competes with Pilatus in the turboprop market and with Bombardier and Cessna in the mid-size jet market in India.

Vick said he was confident of increasing the business from India. Over the past five years, the company has sold a little over 40 planes here and it hopes to keep the momentum. Vick refused to disclose specific figures on order backlog and targets.

"I see continuing strong growth in the King Air product line, largely because of entry-level jets offered by other manufactuers do not have payload or performance capabilities. People are buying those airplanes and finding out that they cannot carry their passengers over long distance. They are coming back to us and buying King Air," he said.

"2010 and 2011 were not as good as the previous years but we are optimistic about the future,'' said Daniel Keady, the company's vice-president, sales (Asia Pacific-India). "We had two order cancellations from India last year but recovered one of those. As the market recovers, we will see the customer coming back."

"The company is not going bust. That is misinformation and is proffered by competitors," Vick said.

"We have no intention at this point in time to do anything other than to build and service the planes. I am very enthusiastic about our future. We have excellent products and have 37,000.customers around the globe. We have invested heavily during the downturn in creating capabilities in the business. We have taken market share globally and we are addressing the debt that was placed on this business when there was a very different marketplace. Tens and thousands of companies around the world have addressed their balance sheets and its just our turn now,'' he told Business Standard.

Private jet makers are focusing on India despite various challenges to the general aviation sector here, such as customs duties, lack of facilities at smaller airports and so on.

"The government has to invest in infrastructure but no one should expect this to be resolved quickly,'' Vick said. "We have been working with government bodies to make things happen but it won't happen overnight."

SOURCE

Government warns could cancel Kingfisher Airlines license

he embattled airline, which has debts of $1.3 billion, is scrambling to raise funds after banks refused to lend more for its day-to-day operations.

A big cutback in flights has reduced its revenue, leaving the carrier controlled by flamboyant liquor baron Vijay Mallya with little cash to pay staff, airports, tax authorities and lenders.

"If he gives a plan and says I have that many planes, that much schedule, then why should we cancel?," Aviation Minister Ajit Singh said ahead of Mallya's meeting with the regulator to submit a recovery plan for the carrier.

"The problem is, (in the) last two to three months, he has given several plans and he has not adhered to any of them," Singh said, warning that the airline was liable for prosecution over unpaid taxes.

"If passenger safety is compromised we'll not let any airline fly. Safety norms also involves financial viability," Singh said.

Kingfisher said it had submitted an interim plan to operate 20 planes on between 110 and 125 domestic routes a day, and halt international flights by April 10. The carrier's fleet, which earlier had 64 planes, now has 47.

"We have not submitted an ambitious plan. We have submitted a holding plan," Mallya told reporters.

The company has said it is in talks with potential investors, some of which would require India to allow foreign carriers to own up to 49 percent of Indian airlines, a change the government is considering.

"Some of the potential investments depend on the change in FDI (foreign direct investment) policy but there are other investors we are in discussions with," Kingfisher Chief Executive Sanjay Aggarwal told reporters.

Cancellations have already disrupted the travel plans of thousand of passengers across the country and pushed up fares.

SOURCE

UNFRIENDLY SKIES

Shares of Kingfisher Airlines, which has a market capitalisation of about $200 million, hit an all-time low in early trade on Tuesday before closing 5.5 percent lower.

Kingfisher has never made a profit in a struggling Indian airline industry that is saddled with high fuel costs, stiff competition and low fares.

Five of India's six airlines are in the red and domestic carriers are likely to lose a total of $2.5 billion in the year through March, according to the Centre for Asia-Pacific Aviation (CAPA), an industry consultancy.

"As a government, we don't want to shut down any industry. There are employees and customers involved. Kingfisher had 22 percent traffic. If we close it suddenly, where will the fares go?," Singh said.

Global industry body IATA has suspended Kingfisher from its settlement system, restricting bookings through overseas agents, hitting ticket sales. On Monday, the last of Kingfisher's independent directors resigned.

The carried needs at least $500 million immediately to keep flying and $800 million to return to full operations, according to CAPA.

Kingfisher's billionaire chairman owns one of the world's most expensive yachts as well as cricket and Formula One teams, but he has been unable to raise fresh equity for an airline that was once India's second biggest by passengers.

"Mallya has been talking a lot about capital but I think he's only doing it to calm the situation and postpone the problems. We have not seen any money," said a senior executive at a state-run bank, which recently downgraded Kingfisher's loan to non-performing status.

There are no provisions for companies to declare themselves legally bankrupt in India.

"Right now, it is a complicated situation. We are closely monitoring," said the banker, who requested anonymity as he was not allowed to talk about clients.

Cessna to develop a plan to build business jets in China

Reporting from Beijing- 

In the latest sign of China's rising importance in the global aviation industry, Cessna Aircraft Co. said it would develop a plan to build business jets with the state-owned Aviation Industry Corp. of China.

The announcement paves the way for Cessna of Wichita, Kan., to become the first U.S. aircraft maker to manufacture business jets in China, the fastest-growing market for the multimillion-dollar planes.

"We believe China represents a significant opportunity for growth," said Scott Donnelly, chief executive of Cessna's parent company, U.S. conglomerate Textron Inc., at a signing ceremony Friday at the Great Hall of the People in Beijing.

Plans for the joint venture, which includes a partnership with the city of Chengdu in western Sichuan province, call for setting up a manufacturing base to build existing Cessna aircraft models. In the next phase, the company would help develop China's first business jet to be sold abroad.

It's "intended to be a global product and one we would take around the world," Donnelly said.

The collaboration highlights the rapid emergence of China's business aviation sector, which has seen its fleet nearly triple in the last four years because of rising wealth and government support. Expansion has been so aggressive, industry officials fret about finding enough qualified pilots in the coming years.

Cessna's plans could give the company an edge in a highly competitive market that favors larger, more expensive jets such as those built by Savannah, Ga.-based Gulfstream Aerospace Corp. and Canada'sBombardier Inc.

Others looking to crack China's market includeFrance's Dassault Falcon, which has assembly operations in Little Rock, Ark., and Brazil'sEmbraer, which unveiled a jet emblazoned with movie star Jackie Chan's name at the Singapore Airshow last month.

The number of business jets in China is expected to grow to 2,360 in the next 20 years from just under 170 today, according to Bombardier.

The growth arrives at a time when sales remain sluggish in mature markets such as the U.S. and Europe.

More than a quarter of Gulfstream's backlog today is in Asia, most of it for China. As recently as 2000, the company didn't have a single jet in China. Today it has 40 and another 40 in Hong Kong. The company said the surge in international orders is one reason why it added 1,000 jobs in the U.S. last year.

"Things started slowly but it's really taken off in the last five years," said Jeff Miller, vice president of communications for Gulfstream.

China's business jet industry has grown in concert with the country's increasingly sophisticated business community, which must access markets in Africa and South America as well as reach corporate offices in Hong Kong, where many companies are publicly listed.

And like exotic cars, yachts and luxury real estate, China's super rich have set their sights on private jets as the next must-have accessory.

"There's a lot more money out there to buy these kinds of toys," said Rupert Hoogewerf, the Shanghai publisher of the Hurun list of the richest Chinese. "There's also a huge element of face involved. I met someone the other day who wants to buy two jets: one for his own use and the other for clients."

Chinese buyers have shown little interest in entry-level planes. Instead, they start at the so-called super mid-size jets that generally start around $20 million.

Hongkong Jet, a charter and management service for business jets in the former British territory, has among its fleet the long-range Gulfstream G550. The $50-million aircraft seats up to 18 passengers and can fly nonstop from Beijing to Los Angeles in about the same time it takes a commercial airliner to complete the journey.

Keeping the mostly mainland Chinese customers happy means outfitting planes with Wi-Fi and offering dining service. If the plane lands at a small airport with inferior catering facilities, attendants are dispatched to the nearest five-star hotel to bring back anything from caviar to wonton noodles.

"Our reputation is on the line, even when it comes to catering," said Chris Buchholz, CEO of Hongkong Jet, which expects to grow its fleet tenfold to about 100 aircraft.

SOURCE