TEXT-S&P cuts Hawker Beechcraft rating to 'D'

Overview
-- In an 8-K filed with the SEC on April 2, 2012, Hawker Beechcraft Inc.
stated that it did not make the April 2, 2012, interest payment on its
unsecured and subordinated notes.
-- We are lowering our corporate credit rating on the business jet
manufacturer to 'D' and the issue ratings on the affected securities to 'D',
per our criteria.

Rating Action
On April 3, 2012, Standard & Poor's Ratings Services lowered its corporate
credit rating on Hawker Beechcraft Inc. to 'D'. We also lowered the issue
ratings on the company's unsecured and subordinated notes to 'D' from 'C'. The
recovery ratings on these issues remain '6', indicating likely negligible
(0-10%) recovery for noteholders, pending a further review of lenders'
recovery prospects. The 'D' issue rating and '4' recovery rating on the
company's secured credit facility are unchanged.

Rationale
Hawker Beechcraft did not make the approximately $28 million of interest
payments due April 2, 2012, on its unsecured and subordinated notes, as it
reported in an 8-K filed with the SEC yesterday. The indentures governing the
notes allow for a 30-day grace period for interest payments, but not paying on
the due date is a default under our criteria. In the filing, the company also
stated that it was not in compliance with the covenants in its secured credit
facility as of Dec. 31, 2011, and that it did not file its 10-K for 2011 on
time because of problems with its internal financial reporting systems. It
also stated that it expects the audit opinion in the 10-K will express
concerns by its auditors about the company's ability to continue as a going
concern. Finally, the company expects to report a net loss of $482 million in
2011, including more than $300 million of restructuring and asset impairment
charges.

We had lowered the corporate credit rating to 'SD' (selective default) on
April 2, 2012, because we believed Hawker Beechcraft did not make the
scheduled interest payment due March 30, 2012, on its secured credit facility.
On March 27, the company announced that it had reached a forbearance agreement
with 70% of its lenders that defers any interest or other payments due on its
secured credit facility through June 29, 2012. Although some of the lenders
had opted to not receive the scheduled interest payment, our criteria
considers this a default.

Related Criteria And Research
-- Hawker Beechcraft Downgraded To 'SD' (Selective Default) After Likely
Missed Interest Payment On Its Credit Facility, April 2, 2012
-- Hawker Beechcraft Downgraded To 'CC' On Forbearance Agreement; Outlook
Negative On The Likelihood Of A Selective Default, March 29, 2012
-- Timeliness of Payments: Grace Periods, Guarantees, And Use Of 'D' And
'SD' Ratings, Dec. 23, 2010
-- Key Credit Factors: Methodology And Assumptions On Risks In The
Aerospace And Defense Industries, June 24, 2009
-- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008

Ratings List
Downgraded; Recovery Ratings Unchanged
To From
Hawker Beechcraft Inc.
Corporate credit rating D/-- SD/--

Hawker Beechcraft Acquisition Co. LLC
Senior unsecured D C
Recovery rating 6 6
Subordinated D C
Recovery rating 6 6

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