Sun, Nov 26, 2006
Biz Jet Division Will Go To Highest Bidder
Raytheon Company is
nearing a deal to sell its general aviation unit, Raytheon Aircraft
Company (RAC). The defense contractor is reportedly asking $3
billion for its Wichita-based division which produces and sells
Beechcraft and Hawker aircraft.
In the final running are three firms specializing in buy outs:
the Carlyle Group, Cerberus Capital Management and Onex
Corporation. Onex is also in on the recent bid to buy out Aussie
Onex is making quite a splash in the aviation buyout scene. It
purchased Boeing's commercial aircraft division last year for about
$1.2 billion. The unit -- now known as Spirit AeroSystems Holdings
Inc -- builds commercial aircraft components for new manufacture
and replacement parts. Boeing said it wanted to focus on building
large aircraft instead of components. Spirit raised nearly $1.5
billion in an initial public offering last week.
Raytheon announce plans to sell the division in July this year.
Its stated reason is a desire to focus on defense products such as
the Tomahawk cruise missile.
Industry observers note RAC's share of the biz jet market has
dropped from 20% to 16% even as it recorded near-record sales this
past NBAA convention. The division racked up 112 orders worth
nearly $1 billion. The company has orders for some 260 planes this
year which could push revenue over $3 billion.
Despite that seeming success, RAC is earning less than its
competitors. Experts say the company's problems with new jet
development hinder its profit potential. Indeed, the company's
recent success with FAA-certification of its new Hawker
4000 was overshadowed by the ten-year effort -- one of
the longest certification efforts in history according to one
Industry observers say to expect a sale before the end of the
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