Wednesday, November 12, 2008

Hawker spooked

Ah, talk about oops.

Hawker is an aircraft firm that was owned by Raytheon (RTN) until a little bit ago. Hawker's sales are in the low billions. Recently, the downturn has made an impact. First, there were the issues related to exorbitant energy costs. Then, the credit crunch's changes to the face of the luxury market are problematic.

Hawker is interesting as in the same town there is a sister firm (SPR out of BA) who had a little better timing. But, one might say that the Hawker deal was influenced by the ease with which the sister firm enriched a small set of peoples (we need to count those impoverished by the deal, though).

Both of these were entities taken from a larger firm via a buyout which was led by a private equity company (OCX.TO) that had partners who were golden (GS, MS, et al) in the age just past. In fact, these golden firms have already changed its stripes (got a handout, to boot). Yet, the effect from the two buyouts linger in Wichita (not all these effects are listed here).

For SPR, those who bought into the IPO are holding stock that is, at least, half of what they paid. In many cases, the loss is much more. An IPO is how debt is spread. Oh, didn't we hear recently that some techniques for spreading risk didn't pan out as expected?

Hawker didn't get their IPO opportunity as the credit crunch came along and changed the context of the economy. What does Hawker have instead? Over $2B in debt that would take them years to pay even with the most austere of budgeting. So, this firm is not unlike someone with a mortgage that is too much for them to handle.

Why even mention Hawker along with oops? Well, they have had their recent talks with the press. Therefore, it's public knowledge that they owe big time and really have to strive to maintain the debt. Too, and more importantly, these two firms, in Wichita, can be juxtaposed for analysis.

There is a lot of overlap in their characteristics; it could be that the differences as far as the buyouts may be of more interest. These differences can be used to tell the tale of what went wrong with Wall Street, and others, between the tech bust and the current downturn.

Of course, the intent would be mainly to elucidate the issues such that reasonable discussion about fixes could help us to do better in the future. That is, some do want change that is an improvement such that they can live their working years, and retire, with a little grace. For the others, we need to somehow limit the effect of their gaming.

Remarks:

06/08/2015 -- Continuation of the theme. Yes, Hawker ought to have been spooked. But, management was trying to pay a ton load of debt by scraping pennies from the workers (penny wise, pound foolish goes the saying). But, by then, the interlopers had already gotten their jollies.

06/08/2014 -- Does time tell?

09/16/2013 -- This was written in 2008. Turns out that they ought to have been spooked. Why could not some of the brains have had better foresight?

09/16/2013 -- So, the five year retrospective time. Business week devotes a whole issue. It will be interesting to read all of the perspectives, WSJ, FT, etc. We will have to say some things about Raytheon's push out of Hawker and its subsequent bankruptcy. Like Spirit's split from Boeing, wishful thinking on the part of management and the company led to problematic results (for a lot of people).

05/07/2013 Case of the sucking of life out of a firm?

03/15/2013 -- Some controversy in the way SPR fired some people. See Weagle.

05/30/2012 -- As covered by flightblogger.

05/04/2012 -- A recent filing relates to this theme.

12/23/2010 -- Do oops continue to emerge? What might be considered not unlike 'blackmail' we see Kansas bellying up to the bar (millions in incentives) to save only 2/3rds of the jobs. Way to go!

01/27/2009 -- Lessons to be learned (as opposed to having been learnt) needs attention.

Modified: 06/08/2015

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