Hi'ya Bill, this is Vern.
Industrial espionage is rampant throughout the world and here is a transcript of a recording we did not hear from a bug that does not exist in Vern Raburn's office.
Vern: Get the Director of Cash Flow in here, my payroll check bounced. We are delivering airplanes, what's the problem?
DCF: The problem is, the first several hundred orders were booked at $875,000. According to the July 2006 Economist article, most were backed by a $125,000 deposit. Your June 2002 press release told me the deposits no longer had to go into an escrow account and so we spent the money.
Vern: Holy cow! That's over $150 million. We did some real work with that money. Romanced the aviation press and bought ourselves a Collier Trophy. Yes indeed!
Now, why did my check bounce?
DCF: Look at the numbers.
When an airplane rolls off the assembly line we call the customer. He pays us the balance due on his contract, $875,000 less the $125,000 deposit. We net $750,000 on an airplane that is costing us over a million dollars to build. We lose $25 million for every 100 airplanes we deliver.
How many of these low ball contracts exist?
Vern: I dunno. Get me the Contracts Manager, we need to know how many of these money losing suckers are hanging over our heads.
CM: You claimed 160 orders for 2002, in 2003.....
Vern: I don't care what we claimed. Those numbers were just for the gullible press.
Get me the Marketing Manager, maybe we can cancel these early orders.
MM: We tried to convince some of the early buyers to cancel. Told them the airplane falls well short of the predicted performance goals. For many, their situations have changed and don't need the airplane anymore. Others are put off by operating costs which have tripled since they signed the order and the $4-5 per gallon cost of jet fuel which may go even higher. And we know, the air taxi operators are under funded and have a tough sell at $3 per mile rates.
Vern: Good, cancel their orders and let's get on with the program.
MM: Sorry but these early buyers don't want to cancel. They can steal the airplane for $875,000 and offer early delivery to the same guy I am trying to sell a 2010 delivery for $1,495,000 and put a few hundred thousand in their pockets to boot.
Vern: There's always the IPO. Get me the Finance Director.
Secretary: OK, but first, the Director of Supply Chain is desperate to see you.
Vern: Send the b_____ in.
DSC: I am getting calls from Pratt in Canada, Enaer in Chile, Fuji in Japan, Hispano-Suiza in France and all parts in between.
They all believed you when you assured them we would deliver 100 units in 2006, 1,000 units in 2007. Instead, the airplane are just trickling off the Albuquerque assembly lines and these suppliers have inventory coming out their ying-yang and want to be paid.
Vern: Get the Director of Public Relations in here, he can tell the world we don't really have 2,400+ orders and don't intend to produce 1,000 units per year.
DPR: What about the press release we have prepared for the IPO? What will Wall Street say?
Vern: Get me the Director of Finance, he is working on the IPO.
DOF: We have to start with truth and due diligence.....
Vern: Get Bill Gates on the phone, what's another half-billion dollars anyway.