LITTLE ROCK, Ark. (AP) — Aircraft manufacturer Hawker Beechcraft told 170 workers at a Little Rock factory Thursday that they would lose their jobs, trimming its U.S. workforce as it negotiates the sale of its business jet and general aviation operations to a Chinese company.
The Wichita, Kan.-based company issued a letter giving the employees 60 days of notice, as required by federal law. The factory, which customizes interiors of aircraft and performs repairs and maintenance, had about 450 workers before the layoff.
The layoff includes hourly and salaried workers who work at the facility at Little Rock's airport.
Gov. Mike Beebe said the news was unfortunate but noted the plant would remain open.
"I'm advised that it's a result of a slowdown in the industry. As you might imagine, our private aircraft industry suffered significantly throughout the course of the recession as well as high-end industries that tends to suffer even more. The good news is they're not shutting down, they're keeping some workforce," Beebe said.
Hawker Beechcraft filed for bankruptcy protection in May. Last month, it reached an "exclusive rights" agreement to negotiate the sale of its business jet and general aviation operations to a Chinese company, Superior Aviation Beijing Co., Ltd, for $1.8 billion.
The proposed sale was touted as saving thousands of jobs in Wichita and Little Rock. Excluded from the transaction was Hawker Beechcraft Defense Co., which would remain a separate entity.
The sale of the business jet unit would require regulatory approvals and the company would have to clear other hurdles. If the company reaches a sale agreement with Superior there still would be a competitive bankruptcy court auction seeking higher or better offers.
It was revealed at a bankruptcy court hearing last week that Hawker Beechcraft asked permission to pay a total of $5.3 million in bonuses to eight top executives, because it says they deserved the money. Judge Stuart Bernstein approved a $1.9 million bonus plan for 31 lower management-level employees, but his ruling on the executive bonuses was pending.
The International Association of Machinists and Aerospace Workers filed court papers asking the judge to turn away the bonus plan, as did the Justice Department's bankruptcy watchdog agency. The union also opposes the sale of the business jet unit.
Union spokesman Frank Larkin said the union doesn't represent the Little Rock workers but he expressed concern about the company's direction.
"In bankruptcy, everybody is worried about what the future holds," Larkin said.
Last November, Hawker Beechcraft sent a federally-required letter warning Little Rock workers of possible layoffs but said the plant had so much work that it would not have to shed employees. The Little Rock plant operates around the clock, according to the company website.
Thursday's letter was signed company CEO Steve Miller and Chairman Bill Boisture.
"This continues to be an unprecedented time for our company and our employees. We encourage you to uphold a pattern of respect and care for our impacted colleagues during this time," the letter said.
The letter notes that the company earlier told workers it has been working to "evaluate and balance production rates throughout a difficult and rapidly changing environment."
"Today, we are faced with additional challenging decisions that involve further resizing our work force," the letter said.
Hawker Beechcraft Corp. is owned by Onex Partners and GS Capital Partners, a Goldman Sachs private equity fund. The company has said if it reorganizes as a stand-alone company, it still would have to shutter its business jet operations.
A spokeswoman said the company wouldn't comment further about the layoff.