Monday, September 25, 2006

TC Update - Guest Reporter

Eclipse Insider said...

Eclipse is finishing F&R as we speak. In fact, they just had an all hands celebration at the ABQ Convention Center this past Saturday for the TC.


It was kind of amusing to see all the “we did it” and “FAA Certified” posters plastered around the room considering they’re not done yet. However, according to Vern, they have ~40 flight hours remaining before they can officially pop the cork.

They are also planning the same celebration this Saturday for all their customers and major investors. I think that group would be a little less forgiving if they don’t get it done and still have a party.

9:11 AM, September 25, 2006


10 comments:

Eclipse Insider said...

Eclipse Community Celebrates as Eclipse 500

Earns Full FAA Type Certification

Eclipse customers, investors, partners and employees gather in
Albuquerque as major company milestone is achieved

ALBUQUERQUE, NM — September­­­­ 30, 2006 — Today Eclipse Aviation, manufacturer of the world’s first very light jet (VLJ), received the full Type Certification for the Eclipse 500 from the Federal Aviation Administration (FAA). The Type Certificate was presented to Eclipse at its company headquarters in Albuquerque, New Mexico during a customer celebration that is being held this weekend.

“In spite of the hurdles we’ve encountered and those that still lie ahead, this is a day to reflect on what has been accomplished,” said Vern Raburn, president and CEO of Eclipse Aviation. “We successfully launched a new aviation company, developed and certified a truly revolutionary aircraft and created a whole new market segment that helped return relevancy and growth to general aviation.”

This FAA Type Certification clears the Eclipse 500 throughout the full operating envelope with:

· Single pilot operations

· Day and night operations

· Visual and instrument flight rules (VFR/IFR) operations

· Group reduced vertical separation minimum (RVSM) certification

In addition to this Eclipse 500 certification, the FAA has qualified the Eclipse 500 to noise levels well below Stage 4 limits.

The Eclipse 500 manufacturing line is tooled and designed for high-volume, low-cost production, and Eclipse will start delivering customer aircraft shortly. Over the next few years, the company will focus on fulfilling the over 2,500 orders customers have already placed for this revolutionary jet.

“To all the members of the Eclipse community who are gathered with us today in Albuquerque, and those that are with us in spirit around the world, I want to express my deep gratitude for all the innovative thinking, unwavering encouragement and arduous work that made this unforgettable day possible,” said Peg Billson, COO of Eclipse Aviation.

To create the Eclipse 500, Eclipse used technologies and business practices forged in the technology industry to drive down cost while increasing performance. Eclipse has applied innovation across every facet of its business to offer customers a state-of-the-art jet for a fraction of the acquisition, operating and ownership costs of competitive aircraft. For just $1.52 million, Eclipse 500 delivers a maximum cruise speed of 370 knots, can carry up to six occupants, and has a generous range of 1,125 nautical miles. Designed to land at more than 10,000 airports around the U.S., the jet is setting records for low aircraft noise, engine smoke emissions and cabin sound.

flight guy said...

So what hurdles still lie ahead for the Eclipse 500?

How long before the thousands of jets are fabricated and shipped?

How long before Eclipse actually turns a profit?

How long before Vern goes public with the company?

How long will he remain?

These answers and more will probably be discovered on this blog. Keep reading and writing Stan.

Stan Blankenship said...

insider/flight guy,

Thanks to both for your input.

Am on the road...visiting another start-up company that I will write about later in the week.

The most interesting phase for Eclipse is ahead of us. As flight guy suggests, keep reading.

Eclipse Insider said...

Stan,

Thank you for giving us an outlet to post our opinions/knowledge of the program. My position makes it difficult to reveal too many details, however, I will try to provide updates when possible.

I agree that the fun is just starting. They are now scrambling to comprehend what it takes to build just a few aircraft let alone hundreds. Managing their supply chain, in my opinion, will be the biggest hurdle. They have so many single source suppliers that one minor slip will cause an avalanche of delays. Avidyne was a perfect example. Time will tell.

Insider

twinpilot said...

This is the perfect time for Vern to do the IPO. (I don't think I am telling him anything) They have a certified airplane and a big order book. The stock market is at an all time high.

Eclipse has not yet demonstrated that they will have trouble making airplanes or making money.

The major investors have to wait up to two years before selling their stock at the big profit they are expecting. With a big cash infusion from the IPO they will be able to hide the chaos and will be able to hype the company (they are pretty good at that now) and throw money at the problems so they can deliver some airplanes over the next couple of years. Enough so the stock price doesn't drop. A lot of people will invest in Eclipse because they have heard the hype and think it is a hot stock. They don't know if the company will ever make a profit, but they will gamble that because the initial investors have every incentive to continue the hype and make some deliveries, the stock will go up and they will be able to sell it for more than they paid to someone who didn't get in on the ground floor.

By then, all of the initial investors will have cashed out and gone on to retirement or to starting another business they know nothing about. For them, this one is over, and it was a great success.

I can hear them now: This was a pretty good gig. We made a ton of money on our investment with that $837,000. airplane scam.

What can we come up with next?

AJ said...

This article was on the front page of the Albuquerque Journal today.

Wednesday, October 4, 2006
Firm Sues Eclipse Over Price

By Andrew Webb
Copyright © 2006 Albuquerque Journal; Journal Staff Writer
A European company that announced plans four years ago to buy 112 Eclipse business jets claims in a lawsuit that Eclipse delayed, then canceled delivery of the planes so it could sell them for more money.
Aviace Ltd., a Swiss startup that aims to launch a jet service and charter club, was one of Eclipse's first big customers.
After Aviace announced plans to buy 112 planes over several years, the agreed-upon price per plane ultimately was set at $1.045 million— nearly half a million less than today's price of $1.5 million.
The first deliveries to Aviace were to have begun with the 31st Eclipse 500 off the production line, according to the lawsuit filed last week in U.S. District Court in Albuquerque.
Aviace claims Eclipse breached the agreement by bumping its first delivery to No. 47, then canceling the order for failure to pay a production deposit of $634,305.
"Eclipse desires to terminate the purchase agreement so as to retain the aircraft under contract for sale to Aviace for Eclipse to resell for a profit greater than that to be obtained under the purchase agreement," Aviace claims.
Aviace contends production deposits were not required for the first few deliveries.
The lawsuit asks for Eclipse to either reinstate Aviace's delivery schedule, or pay unspecified compensatory and punitive damages to the Swiss firm.
Eclipse, which received its long-awaited Federal Aviation Administration type certification Saturday, has built a handful of customer planes.
But the company does not yet have production certification from the FAA and each aircraft must be inspected before delivery.
Eclipse spokesman Andrew Broom declined comment. The Albuquerque attorney representing Aviace did not return a call.
Eclipse, which is building the six-seat jets in Albuquerque, has been closely watched by the aviation industry.
With a price and operating cost considerably lower than for existing business jets, many believe the Eclipse 500 and a handful of other "very light jets" will make jet travel affordable to a new class of pilots and owners.
Aviace is one of several companies that has placed large orders. Several aim to build "air taxi" services, but others, including Aviace, have explored alternatives.
Aviace has said it planned to start fractional jet ownership— multiple owners sharing one plane— and charter services throughout Europe.
Originally, Eclipse was to have delivered the four aircraft to Aviace in 2004, eight in 2005, and 100 in 2006. Those dates, and those for all other Eclipse customers, were pushed back by nearly two years by a complicated engine swap in 2002.
Aviace says in the suit its "Most Favored Customer" status guaranteed its prices would not exceed the price granted to any other customer ordering equal or smaller quantities.
Aviace says it was required to pay only a $2.010 million deposit, equal to 20 percent of the cumulative list price, for the first 12 aircraft, with the balance to be paid on delivery. That payment was made in January 2005, the company said in the suit.
Furthermore, Aviace says that contrary to the purchase agreement, it was asked to pay a 50 percent production deposit of $634,305 six months before delivery.
Eclipse informed Aviace last month that it was canceling the order due to nonpayment of the $634,305 invoice, according to the suit.
The notice said that Eclipse reserved the right to reassign aircraft No. 47 to another customer and that Eclipse would keep $167,500 of Aviace's original deposit as damages.
Meanwhile Eclipse said Tuesday that the FAA has certified its repair and maintenance service center.
The certification, approved Monday, came just two days after the FAA fully certified Eclipse's E500 "very light jet," clearing it for delivery to customers.
The latest certification means the company can lead the repair and maintenance of any Eclipse 500 aircraft, the company said in a news release. The FAA also approved the company's station training manual.

Material from The Associated Press was included in this report.

http://www.abqjournal.com/

flight guy said...

Interesting article, twin pilot.

Stan talked about this in previous logs where Vern and company realized that they are losing money on every early order. To avoid this, according to Stan, Eclipse would try to cancel orders and rebook at the higher 2006 prices.

Stan Blankenship said...

insider,

Your comments are always welcome but keep your tracks covered!


twinpilot,

Like you, I think the IPO will come sooner rather than later.


aj

Good Scoop!

Whether or not the suit has merit remains to be seen, but it is not the kind of publicity Eclipse needs at this stage in the game.


flightguy,

Want to take a guess on how many Aviace type situations might be out there?

flight guy said...

Stan,

I would guess about 1000 orders are similar, with another 750 that have already been slipped back to later slots.

I have heard rumors from customers that they were involuntarily repositioned later in the delivery orders. Eclipse asked if they would mind being pushed back and had an immediate need for delivery.

Bambazonke said...

How many people in similar situations to Aviace? Well with only 700 or so individual orders, the rest being fleet purchasers I would say "A LOT".

I received a perspectus from Aviace to raise money for their positions, their projected option price on each plane was $1,042,000 at delivery, their projected net profit after their in house charges fees (which were considerable, their marketing and sales commissions for example were $24m) was north of $24 million. How many charter operaters will make this kind of money from charter ops over a lifetime let alone without the sweat and drama that goes into every dispatch? This has to be very tempting for them to cash in now while the Kool Aid is flowing, because once that bubble pops, there is going to be a different game in play in ABQ.