Hawker sale raises concerns

By Chen Dujuan Source:Global Times Published: 2012-7-13 0:35:12

US analysts expressed concerns over a potential sale of a struggling US aircraft maker to a Chinese firm as it may lead to thousands of job cuts, despite an assurance by the Chinese firm to save American jobs.

Kansas-based aircraft producer Hawker Beechcraft announced Monday that it has entered into a $1.79 billion exclusivity agreement with Chinese aerospace manufacturer Superior Aviation Beijing Co for the sale of its general aviation operations. The defense unit of the US manufacturer is not included in the deal.

US analysts were skeptical that Superior would relocate the production facility to China,  which will lead to big job cuts, but Hawker CEO Steve Miller said Monday that "Superior is committed to maintaining Hawker Beechcraft's strong presence in the US and retaining its current employee base and experienced management team.

Superior Aviation was not available for comment Thursday, but its Chairman Cheng Shenzong was quoted by Shanghai-based Oriental Morning Post Thursday as saying that he has no plans to relocate the facility to China, and that Superior would maintain Hawker's team and absorb its technologies to begin with.

There are also other obstacles for the deal, Wu Hui, general manager of the merger & acquisition (M&A) department at Beijing-based CCID Consulting, told the Global Times Thursday.

"Foreign governments are always cautious about acquisition of their assets by Chinese companies with government background, especially in sensitive sectors like aviation, and it becomes more difficult when a government-backed company is the bidder," Wu said.

Superior is owned 60 percent by private investors and 40 percent by a company backed by the Beijing Municipal Government.

Yang Xuezhe, an industry consultant at Beijing-based Adfaith Management Consulting, said the deal would probably go through because the barriers are reducing as China and the US have increased communication in the areas of economic and defense cooperation.

The deal was approved by China's National Development and Reform Commission and is still subject to approval from the US Committee on Foreign Investment and the US Bankruptcy Court.

US analysts were also skeptical of Superior's ability to help Hawker out of difficulty.

"That (China) market isn't all that big, it has good growth rates, but in terms of being able to sustain the company, no," Richard Aboulafia with Teal Group was quoted by the Associated Press as saying.

General aviation, mainly private and business jets, has long been neglected in China and would see a boom as the State Council issued encouraging guidelines for the sector on Thursday.

"This emerging sector and related industries are expected to become a 1 trillion yuan ($159 million) market," Yang said. "It is high time for Superior to complete the deal as the booming Chinese market is big enough to bail out Hawker."

"However, even if the deal is finalized, its success is far from assured as the cultural integration of the new company would be a much more difficult task for the Chinese firm," Wu noted.

 



Posted in: Companies

blog comments powered by Disqus