Hawker Beechcraft seeks to renege on warranties

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Associated Press

Posted on November 16, 2012 at 2:00 PM

Updated Friday, Nov 16 at 2:01 PM

WICHITA, Kan. (AP) — Hawker Beechcraft has asked a bankruptcy court to allow it to renege on warranties and other support obligations for its discontinued Hawker 4000 and Premier I and IA business jets, saying that support for those aircraft could cost it tens of millions of dollars.

The Wichita-based plane maker said in a court filing Thursday evening that the request was the result of the company's "sound business judgment" and is a critical step toward it emerging from bankruptcy protection.

The company contended that the warranty and maintenance support obligations, including engineering support, for the jets would be substantial over the next five years. If the court approves the request, it would cease honoring those obligations on Nov. 15.

In its motion, Hawker Beechcraft said it has always taken its commitments to its aircraft customers "with the utmost seriousness." It said it filed the request to back out of the warranties only after "extensive analysis" by company management and advisers in consultation with key Hawker Beechcraft creditors.

Hawker Beechcraft filed for bankruptcy protection in May and talks to sell its operations to China's Superior Aviation Beijing Co collapsed last month. It has said it now plans to emerge from bankruptcy protection as a slimmed down company in the first quarter of 2013.

The Thursday filing only affects the Hawker 4000 and Premier I and IA aircraft. But Hawker Beechcraft noted in it that it intends to also modify the existing support programs for the Hawker 900, 800, 850, 750 and 400 aircraft lines.

The decision on the support programs was first announced Oct. 29 at the National Business Aviation Association convention in Orlando, and the company has been communicating with customers about it for several weeks, Hawker Beechcraft spokeswoman Nicole Alexander said Friday.

Letters sent to customers noted Hawker Beechcraft was evaluating strategic alternatives for those aircraft. Hawker Beechcraft told customers that could result in the sale of some of those product lines or the closure of its entire jet business if no satisfactory bids were received.

The attorney representing the committee of some affected aircraft owners in the bankruptcy proceedings did not immediately respond to an email Friday seeking comment.

Hawker Beechcraft told the court that warranties covering engines and avionics on Hawker 4000 and Premier I and IA jets are provided directly by the manufacturers of those components. The company said it expects those warranties would be unaffected and would remain the responsibility of the respective suppliers.

Hawker Beechcraft said it is in discussions with several other companies to ensure service and maintenance for the Hawker 4000 and Premier lines.

A hearing was set for Nov. 29, with objections on the matter due Nov. 26.

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