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 carrier Qantas.

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 market analyst.

Industry observers say to expect a sale before the end of the year.

FMI: www.raytheon.com