Eclipse Lawsuit - Guest Reporter
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.