Hawker Beech Warns Shareholders

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Hawker Beechcraft has warned shareholders it may not be able to stay in business in its current form. "Management has concluded that there is substantial doubt about the Company's ability to continue as a going concern," the company said in a delayed year-end filing with the Securities and Exchange Commission. The company had earlier warned the ominous warning was coming. The Form 10-K filing bluntly assesses the company's future prospects and it's not a pretty picture. Many analysts have determined a Chapter 11 reorganization is inevitable. The company is awash in red ink and has lost almost $1 billion in the last two years against a shrinking backlog of about $1.13 billion. It has more than $2.3 billion in debt, has already missed some interest payments and may miss more. "Due to the fact that we have recurring negative cash flows from operations and recurring losses from operations, we will need to seek additional financing," the filing states. 'There is substantial doubt that we will be able to obtain additional equity or debt financing on favorable terms, or at all, in order to have sufficient liquidity to meet our cash requirements for the next twelve months." New CEO Steve Miller spun the financials as positively as he could, saying the company will "decide on a path forward for Hawker Beechcraft that will include a plan that will put the company on firm financial footing and better position Hawker Beechcraft for the future."

There are diminishing options available to Miller to turn the company around. The filing mentions selling off assets and equity, renegotiating its debt and finally Chapter 11 bankruptcy as the options open to it. The debt load is cited as a key factor in the company's financial woes and much of its cash flow goes to servicing that debt.

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