Plane Conversations

This past week I had the privilege of taking a tour of the Hawker Beechcraft factory and corporate headquarters in Wichita Kansas.

The tour started at our home base in Tennessee with a flight to Wichita on a new Hawker 4000. The aircraft is impressive and I will post soon with video and more information on this new generation, state of the art, mid size business jet.

Our company has operated Beechcraft King Airs for over 25 years, and much of my flying time is logged in various Barons and Bonanzas, so I have been a fan of Beechcraft for a long time.

The King Air series aircraft are without argument the most successful turboprop ever built with a production run spanning 5 decades.

The King Air C90GTX / B200GT / 350I series aircraft are still in production for civilian and military applications. All are evolved from the original King Air that first rolled of the line in 1965.   

Hawker Beech’s jet aircraft in production include the Hawker 4000, Hawker 900XP,  Hawker 750, Hawker 400XP and the Premier 1A/II. The Hawker 750 and 900 series aircraft are evolutions of the original Hawker jets manufactured in the UK and are the best selling series of business jets in the world.   

Hawker Beech also manufacturers variations of the military T-6 trainer, which is the primary trainer for both the navy and air force pilot programs.

The Beech Baron G58 twin engine and Bonanza G36 single engine piston aircraft round out the line of aircraft in production.     

Arriving to the factory at Hawker Beech’s airport in Wichita, our first stop was the delivery hangar, where new aircraft were in the final stage of delivery to the new owners.  There is a large American flag on one wall, prominently displayed as reminder that these aircraft going all over the world are made in America.

Wichita is the number one city for growing exports and Hawker Beech plays a big part. The percentage of aircraft exported now exceeds the percentage staying in the US and this will continue to increase as the demand for business aircraft worldwide grows faster than in the US.

One of the things that interests me most is innovation in our business and Hawker Beechcraft has done that with their new Hawker 4000. The Hawker 4000 has a   composite fuselage and uses composites in combination with traditional metal structures in other areas of the airframe. Composites are lighter but stronger than metal structure allowing savings in weight and increases in fuel efficiency and performance, as well as reduced maintenance costs.

Use of composites in aircraft sturctures is here to stay as evidenced by the Boeing 787 having a composite fuselage.

What impressed me most from the whole tour is the sense of pride emanating from the employees, from the senior management to the people on the floor. These people are proud of what they make and should rightly be proud of the 75 plus year legacy of excellence in aircraft manufacturing.

A lot has been said about the competitiveness of the US aircraft manufacturing industry in the global market.

A current issue that Hawker Beech has to deal with is to what degree they move production out of the US to save costs. The unions in Wichita are fighting for the jobs to remain US and the decisions will be difficult. Hawker Beech must remain price competitive and at the same time they cannot afford to lose the skill and aggregated knowledge of the workforce in Wichita. 

There is a positive and determined corporate culture that I admire with the leadership and employees at Hawker Beech. That will keep them in the competitive game of aircraft manufacturing well into the future.

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So is there a typical trip in business aviation? Not really.  But they do all share a common demoninator: trips using business jets save time over other modes of travel.

I was able to experience this again first hand last week, when our CFO, VP of Maintenance and I took one of our aircraft to go see a good client and friend in Fayetteville, Arkansas.  As we planned the trip, we looked at the options of how to best get there. Our options included driving,  an airline flight out of Nashville and connecting through Dallas, or taking one of our aircraft. By car, our travel time would have been about nine hours.  By airline, it would have been about four and a half hours.  In either case, the trip would have required us to stay overnight to make our meeting times.  The airfare on the airlines is between $1100 and $1300 per person round trip; so, three of us could have cost close to $4000, or about $4400, including hotel rooms and additional meals. Nashville to Fayetteville is not a low fare market.   

We have access to our charter aircraft and small flight school aircraft that I can pilot; so, we even had to decide which aircraft to take if we chose to fly ourselves. In a Cirrus, the flight would be tow hours, thirty minutes, while in a twin-engine turboprop the flight time would be an hour, fifty minutes.  Because the Cirrus was not available, we scheduled the turborop.  

We departed at 6:35am which meant I had to get to the airport at 6:20 - no early arrival required and the plane would not have left without me had I been a few minutes late.

We arrived in Fayetteville, Arkansas, at 8:30 am. Our client picked us up at the airport and we drove to his office, about ten minutes away. After a two hour meeting covering a wide range of business issues,  we drove to look at the other airports in the region. We took a little time to stop off at a legendary local restaurant, Herman’s, and enjoy a plate of their famous ribs. After lunch, it was time to go home; so, with business concluded, we were back on the aircraft at 1:30 pm and back in the office at Smyrna at 3:30 pm. We had accomplished a fill day of business on the road and arrived home with a couple of hours left in the day to wrap up more issues.

Our two hours in the aircraft each way provided the additional benefit of discreet and secluded time with my colleagues to catch up on issues of the day. A lot of business gets done in the secluded cabin of business aircraft.  

The day after the trip I was back in the office, rested from a night’s sleep in my own bed, and ready to take on the world again – certainly not the same feeling I have after two or three days on the road shuffling though the airline system.

These type trips happen thousands of times every day in this country; but, when I experience it myself, I am reminded again what business aviation is all about.  The rate on the Cirrus would have been $2800.00, saving us $1600.00.  The rate on the turbo-prop to a retail customer would have been about $5200.00.  With the savings or with the extra $800.00, we gained a full day in the office for three senior executives who were well-rested and productive upon our return.  That extra day is worth it at twice the price.

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And still delivering aircraft at a good pace….

Our company started operating the new Embraer Phenom 100 in November 2009. We now have two Phenom 100s in our fleet and have delivered six more to owner/ operators in the United States and Europe.

The new very light jet has had a few growing pains with reliability issues, mostly centered on the software that drives the diagnostics systems, but all in all it is a great aircraft. These type issues are typical of a new design aircraft in the first year and we expect that with the support being offered by Embraer, it will be a productive and efficient addition to our fleet.

Over the past few months, I have written several posts about Embraer and what they are doing in the business jet market.  Based on the March 19, Bloomberg online article by Fabiola Moura and Robin Stringer, it looks as though Embraer is still on track to become a world competitor in the business jet market while maintaining a strong position in the airline market as well. Excerpts from the article below state that they will deliver 137 business jets in 2010,  which is impressive in this economy.

Empresa Brasileira de Aeronautica SA, the world’s fourth-largest aircraft maker climbed the most in two months after fourth-quarter earnings beat analysts’ estimates, boosted by a record delivery of 91 planes.

Embraer, as the Sao Jose dos Campos, Brazil-based company is known, reaffirmed its 2010 forecast of $5 billion in net revenue and said it had a fourth-quarter profit of 167.5 million reais ($93 million). The 23 centavos a share profit compares with a loss of 40.5 million reais, or 5 centavos a share, under Brazilian accounting standards, a year earlier, Embraer said in a statement posted on its Web site yesterday.

Commercial aviation will make up $2.6 billion of sales this year, Embraer said. Executive aviation will provide $1.1 billion, with the remainder of its $5 billion forecasted net revenue coming from defense and other businesses.

Embraer aims to deliver 227 aircraft in 2010, including 90 commercial jets and 137 executive planes, and said it will invest $300 million in its operation this year.

The company’s backlog of airplane orders dropped to 265 last year from 400 in 2007. The company doesn’t expect plane orders to return to those levels until 2013, Executive Vice President Mauro Kern said in an interview last month.

This is a tough economy for aviation at all levels of the supply chain and especially for the manufacturers. Profitability in aircraft manufacturing takes tough decisions about overhead and costs control while still maintaining a competitive edge with investment in product development for the long future. I do not envy the leadership of this company managing in this economy.

Interestingly, as positive as the business jet delivery numbers are, because of fewer regional jet orders, the company does not see a return to 2007 aircraft delivery levels until 2013.

I would agree with that forecast.  Based on what I see happening right now, there are buyers for new aircraft and used aircraft, but the demand is nothing like it was three years ago. There is still a glut in the market of used aircraft and the prices have been depressed to the point where buyers must be looking more at used versus new. In the three decades I have been in this business, I have never seen used aircraft prices fall so hard.  Until the inventory levels of aircraft for sale drops significantly, the industry cannot see a recovery to the levels we have seen in the past.

The manufacturers who continue to innovate in product design and efficiency while controlling costs to deliver a better aircraft at a lower price point will be the winners over the long haul. It seems the guys at Embraer have that figured out so far.  If you’d like to see it for yourself and are in the Nashville, Tennessee, area on Wednesday, March 31, join us at the John C. Tune airport between 3:00 and 7:00 PM for an Open House, featuring the Embraer Phenom 300.

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