Hawker Beechcraft Acquisition Company, LLC (HBAC) reported lower sales and operating income during the three months ending Sept. 28, 2008, as compared to the same period in 2007 primarily resulting from a four-week strike in August by the International Association of Machinists (IAM).
Net sales for the three months ending Sept. 28, 2008, were $783.3 million, a decrease of $87.7 million compared to the third quarter of 2007. Aircraft deliveries were significantly impacted by the strike.
During the quarter, the Company delivered 86 business and general aviation aircraft consisting of 34 jet, 33 turboprop and 19 piston aircraft, as compared to the 106 aircraft during the same period in 2007.
During the three months ending Sept. 28, 2008, the Company recorded operating income of $15.3 million, compared to an operating income of $62.1 million during the third quarter of 2007.
The strike resulted in lower business and general aviation aircraft deliveries and reduced production in the Company’s trainer segment, impacting overall operating income.
Also included in the third quarter 2008 results was a $25.3 million charge associated with increased costs to conform specific early-production Hawker 4000 units to the final type design and to establish standard production processes.
Operating cash flow consumed during the nine months ending Sept. 28, 2008, was $159.7 million. This is primarily due to an increase in material receipts to support an increase in production rates coupled with reduced aircraft deliveries during the period as a result of the strike.
Net bookings for the three months ending Sept. 28, 2008, totaled $1.2 billion, resulting in a record backlog of $7.9 billion at the end of the third quarter of 2008.
“This was a difficult quarter as the reduced aircraft deliveries impacted our financial results significantly,” said Jim Schuster, chairman and CEO of Hawker Beechcraft Corporation. “We are also closely monitoring global economic conditions to assess the impact on our industry.
"Going forward, we will be proactive in responding to the evolving economic realities while continuing to provide the industry’s best products, services and support.”
In response to the weakness in the global economy and overall economic outlook, HBC informed employees on Oct. 31, 2008, that reductions in workforce would be required as adjustments are made to aircraft production rates.
The change in aircraft production reflects anticipation of reduced demand for new aircraft, spares and maintenance services. The financial impact resulting from the planned reductions is not anticipated to be significant.
Financial and other information for the three months ending Sept. 28, 2008, is available on the Company’s Web site at www.hawkerbeechcraft.com. An earnings call will be held on Tuesday, Nov. 11, 2008, at 9 a.m. CDT.