Hawker Bankruptcy Judge Favors Deal with China Buyer

The IAM repeated its warnings that an expedited sale of Hawker Beechcraft could jeopardize jobs, pensions and U.S. national security interests after a bankruptcy judge in New York approved a motion authorizing a 45-day period of exclusive negotiations between Hawker Beechcraft and Superior Aviation Beijing Co., Ltd.

“We are concerned that the judge did not require additional disclosure about the intentions of Hawker’s suitor, Superior Aviation Beijing Co., or its chairman Shenzong Cheng,” said IAM Aerospace Coordinator Ron Eldridge. “There are serious unanswered questions about Superior’s long-range plans for Hawker Beechcraft.”

In a letter delivered to key House and Senate committee chairmen, IAM President Tom Buffenbarger cited the 2007 joint venture between Cheng’s Quingdao Haili Helicopter Company (QHHC) and U.S. helicopter maker Brantly International, Inc. Within two years, Brantly was shut down and production moved to a Quingdao facility in eastern China.

Two years later, in 2011, Cheng unveiled the Qingdao Haili V750, the largest unmanned aerial drone ever produced in China and clearly developed from a Brantly B2B helicopter. The Qingdao Haili V750 can carry a variety of reconnaissance and surveillance equipment and could be used for civilian and military purposes.

“The potential sale of critical technologies with dual-use capacities to a little known company with Chinese government backing is deeply troubling and should spark great concern,” said Buffenbarger. “Congress should not be fooled by the empty promises of a company like Superior Aviation Beijing. American jobs, as well as our national security, are at risk. If the U.S. is to maintain its global leadership in aerospace, then Congress needs to exercise greater scrutiny that our national security is not compromised and that American workers and taxpayers are protected.”

While the transfer of U.S. technology and production to China is a serious worry, the proposed Hawker-Superior sale agreement is also explicitly conditioned upon the termination of all three of Hawker’s defined benefit pension plans, including the one for hourly employees in which Hawker’s IAM members participate.  Collectively, the three pension plans are underfunded by approximately $500 million. If Hawker’s pension plans are terminated, responsibility for the underfunding will fall on the Pension Benefit Guaranty Corporation (PBGC), an agency of the U.S. government. Although as a Hawker creditor, PBGC would share in a small portion of the proceeds from the proposed sale to Superior, the U.S. government, through the PBGC, could end up subsidizing the transfer of valuable technology to China to the tune of half a billion dollars.

“It is unconscionable that American workers would lose their hard-earned pension benefits, while the taxpayers fund the transfer of valuable technology that not only threatens our national security, but that would also undermine one of the last remaining industries in which the U.S. enjoys a positive balance of trade with the rest of the world,” said Buffenbarger.