WICHITA, Kan. (AP) -- The chairman and chief executive officer of Hawker Beechcraft Corp. warned its employees that it must take unspecified actions to ensure that the company is prepared for a "very challenging period" amid the turmoil in global financial markets.
In a letter to workers, CEO James Schuster said that Hawker Beechcraft is a highly leveraged company carrying nearly $2.4 billion in debt. He noted that its interest expense this year will be close to $190 million, equivalent to more than $500,000 a day.
"The best way to think about it in my mind is that we must plan for the worst and be positioned for the best," Schuster wrote. "This includes addressing the uncertainty, challenges and opportunities ahead. In doing so, we ensure the long term success of this wonderful company."
Schuster said employees will be advised over the coming weeks of "necessary actions," although he did not specify what they might be.
Hawker Beechcraft spokesman Andrew Broom confirmed the letter was mailed to employees last week but declined to comment Tuesday on whether it meant layoffs were imminent.
"It was just talking about what is going on in these economic times -- that we are planning for everything," Broom said.
Union officials had not yet talked to the company, Machinists spokesman Bob Wood said.
Hawker Beechcraft employs more than 9,000 people worldwide. About 7,000 work at the company's Wichita plant.
"The business jet industry is the first aviation segment to be hit hard by the finance crisis," said Richard Aboulafia, an aerospace analyst with the Teal Group. "Jetliners and business jets are very different from a financing standpoint -- and business jets are much tougher. They are the first segment to get hit, and it is much worse if you have a serious debt problem."
Hawker Beechcraft is more vulnerable to economic downturns than other major aircraft manufacturers because it is owned by banks, Aboulafia said.
"It is good to have the critical mass of a large company and the long-term commitment to aerospace of that large company. ... A company that is part of an aerospace company has a lot less to worry about," he said.
Schuster wrote that the Hawker Beechcraft's debt burden required it to be exceptionally diligent in the management of its business.
That means, he said, that it is more important than ever to focus on fundamentals: delivering aircraft on time and on budget; improving quality and reducing warranty cost; completing product development programs on schedule; improving productivity; and providing customer support.
While the company has enjoyed one of the greatest market expansions in general aviation history, it now faces market conditions characterized as wildly uncertain, he wrote.
