Cessna parent company Textron to buy Beechcraft for $1.4B
This Feb. 7 2012, file photo shows, the exterior of the Hawker Beechcraft headquarters in Wichita, Kan. (AP / The Wichita Eagle, Fernando Salazar)
Published Friday, December 27, 2013 12:21PM EST
Last Updated Friday, December 27, 2013 1:45PM EST
ST. LOUIS -- Textron Inc.'s CEO said Friday that his aviation company's $1.4 billion purchase of Beechcraft Corp. will require "restructuring and optimization of costs." But whether that includes job cuts at Beechcraft's home base in Kansas, or elsewhere, hasn't been decided.
Textron, Cessna Aircraft's parent company, announced late Thursday that it was purchasing Wichita, Kan.-based Beechcraft Corp. in a merger of big players in aviation. By mid-morning Friday, Textron's stock was up 1.1 per cent to $36.58 in trading on the New York Stock Exchange.
The move caps a turbulent year for Beechcraft, which has roughly 5,400 employees worldwide, including about 3,300 at its Wichita headquarters. The company emerged from bankruptcy 10 months ago largely freed from debt and its unprofitable Hawker business jet operations.
Textron's purchase is expected to close by the second half of 2014, probably around mid-year.
Textron's chairman and CEO, Scott C. Donnelly, acknowledged during an investors teleconference on Friday that Beechcraft employees have been through a lot over the past few years.
"From an employee's perspective, obviously we are going to need to go through restructuring and optimization of costs, but it's going to strengthen those King Air and T-6 and Baron and Bonanza products going forward," Donnelly said, referring to Beechcraft's lines of airplanes.
Textron, which is based in Providence, R.I., hasn't made a decision on whether layoffs will be necessary, company spokesman Dave Sylvestre said. He said a transition team was being formed, but until it begins its work, "it would be too early for us to speculate on what it means in terms of workforce size or plant consolidations or anything like that."
But he said that overall, the merger is good news for Wichita.
"Beechcraft now has a strong parent company, which means greater stability and investor capacity for Beechcraft," Sylvestre said.
Messages seeking comment from officials at the International Association of Machinists & Aerospace Workers in Wichita were not immediately returned. The office for IAM District 70 was closed for the holidays.
Beechcraft was founded in Kansas in the 1930s, then purchased by the Canadian investment firm Onex Partners and Goldman Sachs Group Inc.'s private equity arm in 2007. It has more than 36,000 aircraft in service, but struggles in the sluggish business jet market during the economic downturn forced the company to file for bankruptcy reorganization in May 2012.
The company, which emerged from bankruptcy on Feb. 19, has stopped making its unprofitable Hawker business jets to focus on turboprop and piston aircraft as well as trainers and light attack planes for the military.
"It's demonstrated that it was resilient to what was a very challenging time," Donnelly said.
Cessna also has strong ties to Wichita, founded there in 1927. It has built and delivered nearly 200,000 airplanes worldwide since then, including 6,500 Citation business jets, according to Textron. It also makes Caravan single-engine utility turboprops and single-engine piston aircraft, and provides aftermarket services including include parts, maintenance, inspection and repairs.
Donnelly lauded Beechcraft's line of King Air turboprop planes as complements to Cessna's Caravan and Citation jet lineup.
Beechcraft CEO Bill Boisture had said in recent months that he expected the company would sell at least its idled business jet assets by the end of 2013.
"Textron's experience in the industry and its willingness to invest in and maintain the iconic Beechcraft brand make it an ideal parent company, one that will help us continue to satisfy our customers and meet our business objectives at a faster pace," Boisture said in a statement on Thursday.