Hawker Beechcraft expressed disappointment in learning that on September 13, Moody’s Investment Service downgraded the Wichita-based OEM’s corporate family rating from Caa2 to Caa1.
The decision, according to Moody’s analyst Edwin Wiest, reflects Hawker Beechcraft’s “mounting retained deficit and our view that the soft economy dims chances for profitability anytime soon.” Wiest also noted that cash fell to $143 million by June 30, 2011, from $423 million on Dec. 31, 2010, “with a substantial cash-flow deficit after interest, working capital and capital expenditures.” As a result, Moody’s lowered Hawker Beechcraft’s speculative grade liquidity rating from SGL-4 to SGL-3.
Moody’s further pointed out that while Hawker Beechcraft has “aggressively lowered overhead and cut production costs, the revenue outlook seems weak.”
In response to the downgrade, Hawker Beechcraft noted, “Many of the factors that led to the rating change are economic forces facing all aircraft manufacturers, especially manufacturers of light to medium-size business jets, which continue to be the hardest hit segments.”
Further, it claimed that Moody’s analysis did not consider a broader revenue base, including focus on continued growth of the company’s Global Customer Support service, global sales of Hawker Beechcraft’s AT-6 trainer and its attack variant, and continued focus on special missions solutions through products like the King Air 350ER.
“The company will continue to invest today in its products, manufacturing and service segments to ensure it is prepared to maximize a return to the “new normal” market for corporate, personal and military aircraft,” the statement concluded.