Thursday, April 05, 2007

From the poetic pen of black tulip

The enduring faith of Eclipse Aircraft supporters warrants more examination. If the face of multiple setbacks and a shadowy future, the faithful labor on - arduous workers toiling in the vineyard of aviation.


Is this a business, a religion or a cult? Don't dismiss the thought, as it could have significant financial implications. Religious organizations don't pay taxes. When the income comes rolling in - four hundred planes this year, a thousand next - then profits will eventually offset the massive billion-dollar tax loss carryforward.

Why pay taxes when the Eclipse story has all the makings of a religious organization - belief in the supernatural, an enduring faith in the face of adversity, the ability to weather persecution, a willingness to proselytize the infidels and messianic belief that 'depositor' equals 'owner.' Many are willing to forego the pleasures of earth (owning a nice airplane now) on the promise of aviation nirvana... a little jet so sublime and sweet that will force the great unwashed to their unclad knees.

Father Vern should reorganize Eclipse as a religion, eliminating the corporate tax burden and making deposits and payments charitable deductions.

Thus the story of the church will be told in a new context: "How do you tell when it is midnight in the chancery? (read hangar) "When the big hand touches the little hand."

May we hear from the altar boys on the blog?

Black Tulip

96 comments:

justpassing said...

Not as poetic as Black Tulip's...

http://www.nightstalkers.com/nspoems/arena.html

gadfly said...

Black Blossom

Some of your terminology has frightened away the normal bloggers’. In New Mexico, we occasionally have an “epiphany” while eating a “tortilla”, or “holy frijoles” (possibly due to some chili that was left out too long) . . . and tourists’ come in droves to see the imagined image on a corn pancake, or the stain on an adobe wall.

The local cult leader is sometimes called a “Shaman”, and his demon underling . . . sort of the “spirit” of the thing, was the “Kokapele” . . . (co-ca-PEL-le). They are not nice people . . . and the “ancient ones”, the “Anasazi”, and many modern natives of our land live in terror of these people. And I’m not referring to the “altar boys”.

And yes, we have the mix of religions called “Santeria” (a little known term) . . . alive and well in New Mexico, as well as in Central and South America, and the Carribean . . . and New Orleans (if you get my drift).

Well now, since I have broken the ice, as it were, others may enter the discussion after your excellent comments.

gadfly

a37pilot said...
This comment has been removed by the author.
Gunner said...

justpassing-
Are you HONESTLY comparing Vern Raburn to the legacy of SpecOps Warriors? Men who's failure often meant certain death? Men who fought, sweat, bled and valiantly died for nothing more than a classified "thank you"?

I really hope that's not what you're doing. Because, if it is, it might be the most obscene statement I've read this millennium.
Gunner

Plastic_Planes said...

As a former "altar boy" (of the E-Clips variety), I hereby say that I will forever be branded with a scarlet "E" for telling them to get thyselves to the eternal fires (I think the last thing I said to my boss was "go to He11").

Is there a penance I must make? Am I forever doomed? Nah, I just found a new priest and am happy to know I was "saved".

Really, though, a true mark of a religious zealot is their unwavering faith in their cause. There are those who still believe, and those whose disillusionment has led to other "faiths".

Now if only I could get those kool-aid stains of my best tie...

/s/

EclipseBlogger said...

Gunner, lighten up. Go shoot some seals.

gadfly said...

Let’s hope that Eclipse doesn’t offer a sacrifice to the local goddess, “Pache Mama” (Mother Earth, to the great unwashed).

Gunner said...

EB-
Are you flirting with me again?

Can't shoot Leopard Seals yet. I need to wait to get two more Bald Eagles for the appetizer. Yum.
Gunner

gadfly said...

Gunner

Those Bald Eagles don’t taste all that great . . . ‘kind of like halfway between a “Spotted Owl” and a “California Condor” . . . and they raise havoc on wind-screens at above 300 knots. But with a little “Hatch” Green Chili . . . who cares!

Koolaid-drinker1 said...

Slow news day ha boys?

KAD1 (AKA CAD1)

airtaximan said...

EB:

you said (and I swithced your comment to the religious section):

"You've already surmised that they need money, and revenue. What better way to collect some needed cash than to collect new deposits on fresh orders. It's all income, with only the sales expense - no vendors to pay in 30 days. New orders are part of the cash flow plan."

Well, EB...do they or do they not need money? I thought we clearly read an austerity program complete with "no more color photocopies"... what gives?

And now to the moral, as well as the practical issue with your suggestion it would be OK to use the deposit money as releif for current opeational financing instead of for the actual planes the deposits were made for:

Practical: using deposit money years ahead of the production of someones plane means that you are basically already out of business. You are so strapped for cash, that all depsoits received for years of production has been burt, and you need to use someones deposit to keep the lights on on buy parts for a/c 5-2500 with a freshy minted deposit. It is unreasonable to think that this sort of pyramid could be perpetuated. Please acknowledge this would indicate dire straits leading to certain bankruptcy, if it was really the plan. I sincerely doubt it. Delivering planes obtains more orders through confidence, more 60% deposits and more final payments...FAR in excess of a 10% down payment, right? If you are right, and they are doing this to raise cash becasue its the practical thing to do - they must be unable to deliver planes...more that a few, anyway. Again, I doubt they are in this terrible shape at this point.
2- Morally: do you think its OK to use a deposit on an airplane for anything other than covering the cost of that airplane? This could include overhead and parts during the production of the depositors plane. Y/N?

Ken Meyer said...

Well, here are some words of a true-believer from the Eclipse Owner's Forum that outline some good reasons for faith in the airplane--it flies nicely, and it still costs less to buy and less to operate than a CJ1:

"For a 1000 nm trip at ISA at HSC with pilot and 3 passengers at FL 410 the CJ1 takes 2+49 and consumes 2014 lbs of fuel vs 3+07 with 1151 lbs of fuel (Eclipse takes 18 minutes longer and burns 57% of the CJ1 fuel)

"Same 1000 nm trip at FL 350 2+42 with 2443 lbs for the CJ1 vs 2+53 and 1361 lbs for the Eclipse (Eclipse takes 10 minutes longer and burns 55.7% of the CJ1 fuel)

"Note: An Eclipse pilot could fly the 1000 nm trip at FL350 and arrive within 3 minutes of the CJ1 which is flying at FL 410 to save fuel. Even at that the Eclipse still burns only 67.5% of the CJ1 fuel burn!

"For a 500 nm trip at FL 290: for the CJ1 1+23 with 1516 lbs of fuel vs 1+30 and 840 lbs of fuel (7 minutes longer for the Eclipse with 55.4% of the fuel burn)

"NBAA IFR range 1300 for the CJ1 vs 1130 for the Eclipse
Full fuel payload CJ1 890 lbs for "typically equipped" vs 714 lbs for standard (less with options and LX).

"Here's the biggie! One CJ1 acquisition cost is about equivalent to buying a fleet of 3 Eclipse 500 aircraft.

"Bottom line- You really, really need to have that extra 130 nm of range or the extra couple of hundred lbs of full fuel useful load to justify 3 times the cost and almost twice the fuel burn to get there only a few minutes earlier. If not, you really, really need to have your head examined if considering a CJ!"


I'm not so sure I agree that considering a CJ1 puts you in the "get your head examined" category, but I do agree the Eclipse offers much of the performance of a CJ1 at one-third the cost upfront and just a bit more than one-half the cost ongoing. Those facts have made a lot of people want to drink the Kool Aid :)

Ken

P.S. Stan--thanks for the very kind comments; Shari and I appreciated them. I do have some thoughts on the mentoring I'll post some time when it feels right.

EclipseBlogger said...

I forwarded the CJ1-Eclipse analysis to a friend of mine that owns one. He had considered an Eclipse for a time, but need a larger aircraft that would allow 4 in the rear to conduct work while drinking cocktails. Although the aircraft may have similar missions, they clearly do not have the same utility in ALL missions. Here are his comments:

Interesting analysis.

The new Eclipse numbers are very impressive, but Ken's comparison doesn't tell the entire story. Here are some features and characteristics associated with CJ that are not found in the Eclipse.

1) Nose baggage (un-pressurized) capable of carrying 400lbs.
2) Interior cabin baggage capable of carrying 100lbs
3) Tail cone baggage area (large and unpressurized) capable of carrying 325lbs. In our airplane there is a special ski rack there, too.)
4) Comfortable club seating for four people. Max person payload equal to 6 people + pilot. (In some CJs it is a total of 8 people, but that looks a little tight to me.)
5) Flushing potty in the CJ
6) Large refreshment center in the CJ
7) Spoilers/speed brakes in the CJ. (Very handy for large angle descents.). I couldn't remember if the Eclipse had speed brakes.
8) Anti-ice wing in the CJ vs. boots. This is kind of a big deal according to the folks back at school who also teach the Citation 500 series.
9) A robust service network for the CJ. (The airplane can be serviced just about anywhere.)
10) Very few SBs for the CJ and almost zero ADs. (Unknown for the Eclipse.)
11) Many training options for the CJ. For the Eclipse, the training process is unclear.

The other thing is that the CJ is certified, flying, and available (new and used). I think when the Eclipse 500 is really finished and flying, the relative value equation may change. (I hope so!) In our case, the ~$500K more we are paying for our used CJ would probably still make sense even if the Eclipse was an option. Although one could argue that the CJ is overkill as a personal airplane, it really does have the creature comforts (including a better work environment in the back) that business travelers demand. The higher operating costs are an issue potentially, but in our budget this amounts to only about $80K more in pretax dollars per year.

Gunner said...

Well, if we can compare the "soon to be certified Eclipse" to the long in service CJ1, it's only fair to bring in The Ringer. Let's compare the Eclipse to an aircraft closer to its class. One with a similar track record and performance verification.

The "soon to be certified" Moller carries about the same payload as the Eclipse, operates on Ethanol, travels in the high 30's at 350kts, takes off from your driveway, gets about 20 mpg and costs a fraction of the price of an Eclipse.

One can only argue against the Moller by claiming it's performance numbers are "hyped promise"....which, of course, begs the obvious question.

Gunner

Black Tulip said...

Gadfly,

Thanks for bringing back memories of New Mexico. We lived there 1983 to 1984. One place I couldn't get to is right up the road from you. In the hills behind Cerillos is supposed to be one of the oldest mines in America. I read the early Indians built fires along the turquoise vein and then used water and thermal shock to liberate the blue mineral. The Spanish picked up this on their arrival. The site was on private land and I never got back there. Gadfly, have you been?

I remember a couple of other things about the area. A carpenter's level is used to make sure that no surface in an adobe dwelling is completely level. The pronunciation of a short truck with an open back is "pea-cup." Most of all I miss the red and green Hatch chili.

Black Tulip

Stan Blankenship said...

eb,

I would add two other considerations to the CJ1 and Eclipse comparison...risk and re-sale value.

There is not much chance the CJ1 will be orphaned, can't say the same for the Eclipse program.

As we have heard, many of the Eclipse system components are proprietary in nature; not off-the-shelf, but built with an Eclipse part number.

If this company goes belly up, support for these components will be hard to come by. Re-sale values will plummet.

Purchase a CJ1 and five years from now, if history is any indication, you might sell it for more than you paid for it.

airtaximan said...

EB,

Sounds like a fair comparison to me. Perhaps the e-clips is OK for family use...

I am personally unimpressed with the "technological revolution" that E-clips is supposed to be.

The introduction of the Citation CJ1 at the 1998 NBAA convention marked the succession of the most popular entry level business jet in recent history the CitationJet. The precurser was certified in 1991, and the new CJ1 added a few hundred pounds of payload and proline avionics (it was certified in about a year) -

that's 15 years ago (1991)...
$1 billion in e-clips development money ago...
a set of revolutionary avionics ago...
a revolutionary jet engine...
and
a lot of hot air ago - (not from the engine!)

This $billion is on top of thehundreds of millions of government money spent on revolutionary new a/c technologies...ago, as well...

Once could argue that e-clips represents very little improvement in value... its half the empty weight which WILL translate into durability issues, despite what anyone wants to belive - there's no free lunch in this design trade, sorry. So will the fact that they have left "no performance margin" trying to meet their guarantees, which will translate into long term degredation in performance - which translates into higher maintenance costs and maintenance requirements. There's no free lunch in this one, either.

The "much lower price" for E-clips is based on high rate production, not really evident in e-clips capability or market acceptability for the plane, IMHO. The technological improvements should be evident in value besides the much-advertised higher rate. Higher rate lowers cost in and of itself, this is not a reflection of technology, its learning curve, economies of scale, etc...

At conventional rate production of a hundred or two hundred planes a year...the price would probably approach $4 million...OK, $2-3 million in any case, like the Mustang, Phenom, etc...

Vive la revolutione!

Another thing... for transportation service, one would need to look at Cost Per Available Seat Mile...how many people can a CJ transport and how many missions can it accomlish with the load? What does it cost per seat mile, for a given number of trips per year? The e-clips Cost Per Seat Mile is HIGHER...making it less appropriate for a taxi-plane.
No taxi market, not high rate, no business.

In any case, there is little evidence that lower cost or any performance inmprovement has been achieved through technology...

Capiche?

JetProp Jockey said...

I am a business person and a pilot. In my opinion, Eclipse is alot closer to meeting it's performance specifications as an aircraft then being able to produce a working financial model. There has beel lots of discussion relative to backlog. Actually, an honest to goodness 2500 plane backlog could be the death of Eclipse if even at a production rate of 500+ per year (which I doubt long term) it is not possible to produce the machine at profitably $1.5MM per copy (plus all of the ones that must be sold for less). If the little bird does 90% of what it is proposed to do, you can sell a fair number at $2.5MM per copy, and make money at a couple hundred per year.

In the mean time, since noone on the outside can look at the balance sheet and see the current financial condition of the company, every depositer is an unsecured creditor, hoping they will get paid in the form of an aircraft. Unless I have missed something is reading the contract, if the company should need to go Chapter 7 or 11, the depositors would be looking at pennies on the dollar, just like any other unsecured creditor.

In my 24 years in manufacturing, I have only ever gotten more that $.05 on the dollar of unsecrued receivables except for one very unusual case where we were consicered a critial supplier during a reorganization.

If any of you guys who are current or past position holders have a different understanding of the security position of a deposit, please correct me.

Ken Meyer said...

EB wrote,
"I forwarded the CJ1-Eclipse analysis to a friend of mine that owns one. He had considered an Eclipse for a time, but need a larger aircraft that would allow 4 in the rear to conduct work while drinking cocktails. Although the aircraft may have similar missions, they clearly do not have the same utility in ALL missions."


See now we're getting somewhere useful on this blog--what plane is best for what mission?

I agree with most of what your friend wrote. If you want stretchout room for 4 in the back for long flights, CJ1 is the way to go.

External storage--mixed emotions. We've had several episodes of cosmetic goo-mess from doing just that at just FL250; I like my personal stuff inside the pressure vessel. It would be nice to have nose and tail storage for some things though.

The potty is an interesting item. You can of course get one with the Eclipse, but I doubt many will.

Pilots who have flown it extensively tell me spoilers aren't needed for the Eclipse; Vle is Vmo. Boots were selected for the Cessna 510--we could talk a week about deicing but the bottom line is there isn't enough bleed air in either the EA500 or the CE510 for bleed air wing deicing.

Training isn't uncertain; he's just uncertain about it :)

The main thing is size--CJ has a lot more; if you need it, that's a better choice.

But it's not without a price. Look at Controller.com and notice that $2.2 million buys you a 14-year-old CJ with 2500 or more hours on it. It will bear the evidence of its previous life; it will have old avionics (you can of course fix that problem, but at a big price, and even then it won't have the neat features of Avio). And it will need a lot of maintenance. I've owned a 14-year-old Cessna product, and they just cost a lot more to keep flying than a nice brand new airplane does.

So, $700K more and a 14-year-old plane is what you get. That's all fine if you need the space, but if you don't, it's a waste of resources. As it is to pay 70% more for every mile you fly.

Good stuff; it points out exactly why there is a niche for both planes--which one is right depends precisely upon what the buyer needs to accomplish with his plane.

Ken

airtaximan said...

Ken:

"Good stuff; it points out exactly why there is a niche for both planes--which one is right depends precisely upon what the buyer needs to accomplish with his plane."

Either the e-clips niche includes a large fleet of air taxi planes or your plane will be a lot more expensive to own and operate...than a 14 year old CJ. You'll see.

Stan Blankenship said...

The Wichita morning paper had an article on the Mustang delivery delays related to the Garmin system.

Quoting excerpts:

"It's just a minor software glitch that they had to correct.

It's already been fixed.

But to meet the company's standards, it takes several weeks to complete the testing of the software once the update has been completed.

Shipments are expected to begin sometime within the next few weeks.

Despite the delays, Cessna remains on track to deliver 40 airplanes this year."

End quote.

The Mustang has had a long delay just due to a minor software glitch. Imagine what the delay might be to change vendors for a cockpit display, write new software and get it certified!

airtaximan said...

Stan:

"just a minor software glitch"
"Already been fixed"
"Shipments will begin in the next few weeks"
"Despite the delays, Cessna remains on track to deliver 40 airplanes this year"

WHAT A BUNCH OF LYING SCUMBAGS!

shame on you
;)

EclipseBlogger said...

I guess maybe Capt Jim does lurk around here. Just released from ANN...

Whoa! Cessna Reins In Mustang Deliveries For Now
Fri, 06 Apr '07
Manufacturer: Avionics "Repair" Won't Hurt Delivery Goals
ANN REAL-TIME NEWS: 1305 EDT (Wichita, KS) -- Cessna has temporarily delayed planned deliveries of its new Citation Mustang in order to allow for software updates to the aircraft's G1000 avionics suite.

The Mustang comes equipped with a customized version of the Garmin G1000 glass panel avionics system, designed specifically for Cessna's "littlest BizJet."

"The problem's been resolved and we're testing it," Cessna spokeswoman Pia Bergqvist tells the Wichita Business Journal. She says it'll take a few weeks "before it's a done deal."
According to Cessna spokespersons who spoke to ANN this afternoon, the issue revolves around error messages that crop up as a result of arrival data conflicts. The software fix has already been vetted and flight testing is under way.

Cessna notes that only one Mustang has so far been delivered to a customer, who immediately leased it back to the manufacturer as a demo aircraft. Scheduled deliveries of the Mustang will be delayed only slightly, with aircraft ready to head out the door before the end of the month. Cessna hopes to deliver 40 Mustangs before the end of the year and Cessna remains confident that this problem won't put a dent in that schedule.

EclipseBlogger said...

"just a minor software glitch"
"Already been fixed"
"Shipments will begin in the next few weeks"
"Despite the delays, Cessna remains on track to deliver 40 airplanes this year"


This sounds just like Vern. Maybe Cessna is coming out of the Dinosaur age of aviation!

airtaximan said...

CofA fishy, still:

Broom says,
"Flight International had to finalize their story on Thursday [March 29] for its April 2 publication. At that time, only one of the three [aircraft] had its C of A."

When asked are the airplanes CofCA, why didn't e-clips just say "upon delivery all planes will be CofA?"

Apparently they KNEW they were going to deliver 3 planes... even though 2 did not have CofA, yet.

This makes me a little curious. Here's why:
- How can you be 100% sure a plane WILL receive a CofA, if it does not have it yet?
- How can you be 100% sure you'll deliver 3 planes, if two do not yet have a CofA?
- How was FI smart enough and curious enough to even ASK?

anyone wish to try and explain?

airtaximan said...

EB,

I was going to write that...you took the words right out of my mouth!

Bambazonke said...

Stan,

When they deliver the Mustang do you know if it will it have DME, Radar, RVSM and FIKI. I understand that these options are quite novel on the VLJ and not easy to certify, so I was wondering how this dinosaur company would have these items completed before delivery. Also, do you know if they have to change their windows every 100 hours, if they have to inspect the rear spar fitting before each flight, and if they will be delivered with the interiors in the planes. I understand from the rumor mill, the EOB, that the Dayjet planes did not have the interiors completed when they took delivery and they were still working on the interiors on Monday, quote "One DayJet airplane that was delivered over the weekend was still there and they were working on the interior. The others were getting the 3rd AHRS installed. I was told that DayJet type training starts Monday" but then again this is a minor item that one would expect to be completed, particularly when you need to pull off a publicity stunt like getting more than one plane delivered in the first quarter.

Also would be interested to know how their Chapter 5 of the their POH looks, any anomalies on the numbers where the same figures appear for long range and High Speed Cruise? Seems that this is an acceptable situation for those that want to fly by data points.

I would expect your answer to be negative on all of these points because Vern said that Eclipse were kicking Cessna's butts in the last podcast recent recipient of the Collier Trophy and doyen of the light jet industry.

EclipseBlogger said...

ATM said... I was going to write that...you took the words right out of my mouth!

We're starting to think alike. Now I'm scared. Oh, the humanity!

EclipseBlogger said...

ATM said... How can you be 100% sure you'll deliver 3 planes, if two do not yet have a CofA?

Perhaps there was a minor discrepancy that was being taken care of. Once completed, all that was needed was a signature. I'm sure that as the final moments of the inspection approach, they have a better handle on whether of not the CofA will be granted, and in what time frame. The FAA is not working behind a curtain without interaction from Eclipse.

EclipseBlogger said...

BambaFlunk (sorry Gunner) said... Also would be interested to know how their Chapter 5 of the their POH looks, any anomalies on the numbers where the same figures appear for long range and High Speed Cruise? Seems that this is an acceptable situation for those that want to fly by data points.

You're still living in the past, and you have no idea what is going on outside of this blog. The DayJet aircraft are still of the "dinosaur" design. The new drag aeromods have not been installed on these aircraft. Therefore, they are still using the original, non-disclosed, version of the AFM in which the MGTOW is 5800 lbs, max cruise is 360 kts. They do not resemble the AFM performance specs that were just released.

preacher said...

Personally, if I wanted an older aircraft, it would be that big polished jet from "Hellfighters" with John Wayne.

That is just the epitome of smooooth.

Niner Zulu said...

The specs for the Eclipse are impressive; besides being new and high tech it actually meets 90% of my mission requirements and at a cost far less than the CJ1.

Trouble is, no one builds a plane like that yet. Especially not Eclipse.

Ken Meyer said...

AT wrote,
"Either the e-clips niche includes a large fleet of air taxi planes or your plane will be a lot more expensive to own and operate...than a 14 year old CJ. You'll see."


Actually, I doubt that, but time alone will tell.

However, I think you've brought up a critically important point for Eclipse buyers to think about. What would actually happen if Eclipse is unable to sell in the numbers some are predicting?

I think they'd just raise the price. Actually I think they'll do that anyway--the plane appears underpriced to me.

But suppose things really go bad and Eclipse closes its doors. What will happen to the owners of Eclipse 500 aircraft? How will they ever get maintenance? Parts? Other support?

That's the beauty of the Eclipse order book! Once they fulfill the 1500 firm orders that are on the books, it won't matter what happens to Eclipse as far as supporting the fleet is concerned. A bankruptcy is extremely unlikely because there is a good product that can be sold profitably. But let's say it happens. The court will sell off the right the proprietary aspects of support to some company that wants to make money repairing the fleet of Eclipse 500's. That's all that would happen. 1500 planes makes an attractive repair market!

Look what happened when Gulfstream orphaned all the twin Commanders back in 1985. Did you notice they're still flying? Over a thousand of them. A new company stepped forward to fill the vacuum because supporting a thousand airplanes is a money-making proposition.

Mooney is another example--not once, but three times I know of (1930, 1967 and 2001), Mooney has gone bankrupt. But their aircraft still fly, still have parts available, and still get the repairs they need.

I think this idea that Eclipse has got to sell a thousand planes a year or buyers of their airplane will be out of luck is completely false. Once the company sells 500 airplanes, buyers can be assured of ongoing support perpetually, and the number of firm orders is three times that without counting any of the options.

Ken

Gunner said...

Ken-
You make much sense on this. However, you're jumping a whole bunch of hurdles just to get to your initial assumption.

First off, you take it as a given that they have FIRM orders for 1500 planes. My own experience with them tells me otherwise.

Secondly, you assume that they really can build and certify 1,000 (or 600 or 400) aircraft per year. This has yet to be demonstrated.

Third, you assume the aircraft WILL perform as they claim; yet they haven't even released the A-Model AFM....why not? Performance guarantees have yet to be verifiably demonstrated, even to your satisfaction. The B-Model "preliminary" AFM is useless, except to lure more Depositors.

Thirdly, you assume the issues of windows, wheels, wing spars and an entire cockpit redesign are just a matter of a few fixes and a magic FAA stamp. They're not.

Lastly, you assume that we're not gonna see some significant AD's (perhaps disastrous AD's), due to all or any of the above, when the first 50 or 100 hit the skies. This is a new aircraft, Ken. And to most of us, it appears that significant shortcuts have been taken (eg: skin thickness and appropriate backup instruments to name just two).

Basically, you wish to start from a world where there's 500 or 1,000 happy customers tooling about the skies. There's a whole long way to go between today and THAT day.

Gunner

gadfly said...

Black Dutch Blossom

Quickly, to not get too far afield from the subject matter: No, I have not explored the “turquoise” mine. But our oldest daughter and her husband (and six kids) own a fifty-acre Christian conference camp, called “Camp Oro Quay”, directly across Highway 344 from Mount Oro Quay, almost two miles due east from “Golden, New Mexico”. Oro Quay was the oldest gold mine in North America . . . closed down about fifteen years ago because of the toxic waste problems related to gold mining, and the diminishing returns.

Another time, maybe we can relate our part in developing the “ultra sonic cutters” that cut turquoise for the jewelry industry, and the related technology we developed that spun off into precision cutting of hard products such as Coor’s and other micro-grain ceramics, and EDM tooling for jet engines . . . and plasma spraying of ceramics on jet engine parts/turbine blades to keep all these bloggers safe and secure while flying hither and yon. The interweaving of technologies is truly amazing. It is most rewarding to have played a significant part in such things.

‘Would that the leaders of the little jet had a better appreciation of what it takes to make a truly safe and viable aircraft.

gadfly

ColdWetMackarelofReality said...

Consider this the CWMOR Inquisition -

Do any of the would-be owners know if Eclipse has received Type Inspection Authorization (TIA) for ANY of the proposed mods (tip tanks, other aero-mods, structural fixes for wing bushing or transparencies) yet?

Do any of the would-be owners know if the DAR who has been involved in signing off on Eclipse planes still has the 'delegated' authority?

Do any of the would-be owners know if the FAA recently 'offered' to 'help' Eclipse 'work through the paperwork issues' related to getting a TIA (which is required before the FAA pilots will board an aircraft and BEGIN flight test for credit towards certification, supplemental, amended or otherwise)?

Do any of the would-be owners know if there is a released, FAA Approved Section 5, for the currently certified baseline model?

Do any of would-be owners know if Eclipse is modifying aircraft on the production line to the "A" Model aero-mods status AT-RISK by choosing to make and install parts BEFORE the mods are actally certified by the FAA?

Do any of the would-be owners know if the recent Avio NfG TSO announcement actually amounts to a hill of beans given that the original Avio was certified as part of the aircraft?

Do any of the would-be owners know if any of the Avio NfG components are flying in an Eclipse yet?

Do any of the would-be owners know anything about rumors of wing skin quality issues?

Do any of the would-be owners know anything about rumors of brakes locking up on landing resulting in blown tires, with a news\film crew on board for at least one occasion?

airtaximan said...

Ken:

You are a funny guy...your imagination gets the better of you, and you fearlessly leap to rosey conclusions after chastising all of us here for making assumptions and predictions about what we think might be going on in ABQ when we hear/see something makes no sense...

Your post regarding how sweet everything will be after 1,000 planes are delivered even if E-clips is bankrupt or gone. Well...

Think of the low operating-cost value proposition you are buying. Now impute the cost after your balls are in a sling and someone who needs to make money on replacement parts, maintenance and repairs takes over from Vern.

Bye-Bye (already-being-inflated- and-no-one-has-even-used-it-yet) JetIncomplete...

Your low-operating cost e-jet could easily double in operating cost. Easily.

Still think you've made a nice little argument for clear skies after bankruptcy?

airtaximan said...

EB, you say:
"Perhaps there was a minor discrepancy that was being taken care of. Once completed, all that was needed was a signature. I'm sure that as the final moments of the inspection approach, they have a better handle on whether of not the CofA will be granted, and in what time frame. The FAA is not working behind a curtain without interaction from Eclipse."

A couple of things come to mind, although what you write should be the case:
1- someone here now says there was at least one plane with no interior...WOWO! if this is tru, I can't imagine how they could know the plane was going to get CofA. (I said IF)
2- Vern has claimed deliveries in a few days a few weeks ago, and many deliveries in the past... If you really believe they have a better handle over time, and the FAA is not "working behind a curtain" why has E-clips been so darn dreadful at predicting deliveries , even some a few days away, in the past?

I kinda wish you were right - I smell something really nasty and stinky with the 2 Dayjet planes. Especially if entire interiors were missing, and SOMEHOW they managed to obtain a signature.

SOMEHOW...

airtaximan said...

where are the other 2 planes in the line?

- missing parts?
- missing paperwork?
- missing entire interiors?
- missing a customer?
- missing a reason to somehow push the FAA into signing them off, becasue they have no fleet order?

What's going on?

bill e. goat said...

ATM said:
using deposit money years ahead of the production of someones plane means that you are basically already out of business.

Goat:
Sort of. I suppose every start-up manufacturer (as opposed to service industry), that is not leveraging "garage operation" products, has negative cash flow for a while.

ATM:
It is unreasonable to think that this sort of pyramid could be perpetuated.

Goat:
I concur, sort of. The dice are rolling. The key is, how LONG can the current scheme be perpetuated...Long enough? I'm not sure. (Long enough to design, test, certify, produce the next product, because they'll never make money on this one).

ATM:
Delivering planes obtains...more 60% deposits and more final payments...FAR in excess of a 10% down payment, right

Goat: Sort of. The catch here is, like EB said, to get 10%, requires 1% expenditure (advertising). To get 60%, requires, well, a 60% (or more) expenditure (real hardware, labor, and overhead).

ATM:
(higher seat-mile costs) making it less appropriate for a taxi-plane. No taxi market, not high rate, no business.

Goat:
I agree- this is the central issue. What will be the next product? (I think Vern has already "written off" the air taxi scheme, and has got to be trying to figure out how to save the company with another, read profitable, model.

The E-500 is a fine enough airplane, just not fine enough to make Eclipse profitable. Like someone else said earlier, "sure we'll always loose money on every one, but we'll make up for it with volume".

So the question Vern has to be asking himself is, "how can I get out of this E-500 mess, and move on to the E-whatever". It would seem like bankruptcy would be the only way, this would allow him to ditch the "backlog" of E-500 orders (be it a few hundred; if it is a couple thousand, that is even MORE incentive to ditch the E-500- UNLESS the price is bumped to $2M+, for ALL the existing orders).

What this would do to current depositors, I don't know. Cut them a deal on the next model? Why, and compromise it's profitability? "Interesting time" ahead, I think.

Ken says:
That's the beauty of the Eclipse order book! Once they fulfill the 1500 firm orders that are on the books, it won't matter what happens to Eclipse as far as supporting the fleet is concerned.

Goat:
Sort of. The problem is, if they loose money on EVERY airplane, why build more?

Ken said:
A bankruptcy is extremely unlikely because there is a good product that can be sold profitably.

Goat:
It CAN be sold profitably, but not for the existing orders between $1.0 $1.5M. Make it $2M+, and yes. But how do you get there from here??? I don't know. It would seem bankruptcy is a only way. Rely on the good will and patience of owners-in-waiting to bump the price? Enough good will to have enough “enthusiasts” swallow a 30 to 100 percent bump? Like I said, bankruptcy...

(I think it would still be a reasonable investment at the higher price, maybe that's the way it will play out...).

Ken said:
But let's say it (bankruptcy) happens. The court will sell off the right the proprietary aspects of support to some company that wants to make money repairing the fleet of Eclipse 500's. That's all that would happen.

Goat:
I agree. I think that would "free" Eclipse-NG to use the infrastructure (developed by Eclipse-pre-NG) to concentrate on a profitable model.

Ken: 1500 planes makes an attractive repair market!

Goat:
Back to what I said above. The key is, how LONG can the current scheme be perpetuated...Long enough to build enough E-500's to make a viable (lucrative) after-market support network.? I'm not sure.

The technical details of our favorite jet are on the way to resolution (ahem, given enough time and money, things Vern seems to keep coming up with).

The real question is, if the air taxi market doesn't materialize (maybe even if it does; and they are obligated to sell aircraft at $1.5M or below), what is the business plan???

And, after constant befuddlement over their finances, I have some suspicion that perhaps this is just an experiment, being written off as "lessons learned”. Maybe the big money guys will kick in enough bucks to keep it going, even if they figure it will never make a profit- maybe they'll keep it afloat, with the hopes of eventually breaking even, somehow. This would represent the best case for the depositors, I believe.

Gunner said...

"And, after constant befuddlement over their finances, I have some suspicion that perhaps this is just an experiment, being written off as "lessons learned”. Maybe the big money guys will kick in enough bucks to keep it going, even if they figure it will never make a profit- maybe they'll keep it afloat, with the hopes of eventually breaking even, somehow.

Ummm, and their "experiment" would have been started for what purpose, under those assumptions?
Gunner

bill e. goat said...

RE: "written off" experiments:

1999 press release: Teledesic has raised more than $1.5 billion from investors such as Microsoft chairman Bill Gates, Saudi Prince Alwaleed bin Talal, The Boeing Company, and Motorola).

From Wiki:

Teledesic Corporation was a company founded in the 1990s to build a commercial broadband satellite constellation for Internet services.

The original 1995 proposal was extremely ambitious, costing over US$9 billion originally planning 840 active satellites with in-orbit spares at an altitude of 700 km.

In 1997 the scheme was scaled back to 288 active satellites at 1400 km

...and was later scaled back further in complexity and number of satellites as the projected market demand continued to decrease.

Teledesic's merger with ICO Global Communications led to McCaw's companies taking control of ICO,

...which has successfully launched one test satellite.

bill e. goat said...

Gunner:
Ummm, and their "experiment" would have been started for what purpose, under those assumptions?

Goat:
I think the assumption was, they'd get rich quick. (instead of get poor, slowly :).

I think Vern "believed his own press releases". Crazy talk back then, as you point out, the NASA GAP CRAP. "7500 hr tbo", something like 4xxx mtow, back in GAP days, I think. Pretty intoxicating stuff. Reality just didn't work out that way.

Saw a quote attributed to James Dean (or maybe it was Vern):
Dream like you'll live forever
Live like you'll die today.

Guess their's nothing wrong with dreaming (but live on other people's money! :)

Gunner said...

In that case, I agree with where you're coming from.
Gunner

bill e. goat said...
This comment has been removed by the author.
gadfly said...

Back when I was a kid, just before Christmas or our birthdays, my cousin and I would open a Sear’s or Montgomery Ward catalog . . . and we would take turns choosing what we would like . . . toys, guns, that sort of thing. It didn’t matter much . . . there was a war on, and no-one had any money, but it filled our imaginations with what we thought we would like! (We were about seven or eight years old . . . before you wonder which sections were of interest.)

In like manner, I would be interested in what this blogger group would choose, as a mode of daily or weekly commute . . . sometime in the not too distant future, for your selves, and for those whom you hold to be most dear.

Let’s say, money is no object. The daily flight is less than 600 miles, but at least 400 miles. Each day or week you, or your loved ones, fly, you leave by 8AM and must arrive at destination at 10 or 11AM . . . and wish to be home by 6PM Friday evening, without fail. At least something along those lines of a commute. And let’s say that the “E500" is the nearest at both ends. All other aircraft are at least twenty minutes farther away, at both ends, so “top cruise speed” is not an issue . . . and someone else owns and pilots the aircraft.

Assume all issues of the E500 are at least “signed off” . . . everything. And based on your honest assessment of all you know about Eclipse:

Question: Which plane would you choose for yourself?

Question: Which plane would you choose for your wife and kids?

Question: Which plane would you choose for your most valuable business associate?

Question: Which plane would you choose for a “most valuable” customer?

Question: Which plane would you find yourself falling asleep, with no concern over safety, and having the “pilot” say, “Hey, we’re back . . . time to wake up.”

Answer the questions today . . . but keep them to yourself.

In a few weeks, answer the questions again . . . and share them, if you wish.

It will have no value other than “wishing” for something on the pages of a Sear’s catalog. But by Christmas . . . rather by “Oskosh” it might be most revealing as to the ultimate future of the Eclipse VLJ, both as a “taxi”, and as a personal plane of pleasure . . . sooner or later, the novelty will wear thin, and reality will, indeed, set in.

And, if nothing else, you might learn about your own motives in this discussion.

gadfly

lumar said...

Bill says:

'It would seem like bankruptcy would be the only way...'

It is the only way and it will happen soon now!

Gunner said...

Many keep talking "bankruptcy" as though it's a Get Out of Jail Free Card.

Bankruptcy, in a Venture Capital pursuit, where you have to attract MORE Venture Capital to move on?

Bankruptcy in this industry? Where, engines, avionics and other key suppliers number in the Less-Than-Six category?

Bankruptcy, at startup, in this industry? Where your lifeblood is people willing to BELIEVE in your ability to keep them safe in the reverse equivalent of a submarine at depth?

Yup, bankruptcy is a possibility. But it is hardly a fix-all; hardly a "solution". This is not your local furniture store.
Gunner

lumar said...

Gunner,

you say: (Bankrupty) ... is hardly a fix-all; hardly a "solution".

Right, but:

1. You can't fix the Eclipse-problems any more

2. There is no other sulution

So Vern, stop it!

gadfly said...

Gunner

‘Speaking from experience (been there, done that), whether a submarine is at “depth”, or simply cannot reach the surface for any of many reasons, what happens to any one submariner, happens to everyone on the boat . . . even the captain. In the case of Eclipse, somehow I think that the “captain” will not be on equal terms with the “crew” . . . and for whatever reason, that might not be a good thing. And it won’t be the people on board who are hurt most, but those who remain back in port.

And Lumar, you are correct. There comes a time for a submarine to either make a run for it, or surface. Either way, the breathable air is gone, and there are no other options. Hopefully, the “enemy” will be merciful.

gadfly

bill e. goat said...

Gadfly,

...will the Moller be certified by Christmas? :0

Money IS an object though. Whether deciding between a Global 5000 and Global Express, or deciding between a Toyota Camry and Toyota Avalon.

The price range of available aircraft spans an order of magnitude (or two or three). To say price doesn't matter, well, who wouldn't chose to spend an order of magnitude more time with their loved ones, and would, except for financial constraints.

Chevy, Mercedes, C-182, Bonanza, Baron, Eclipse, King Air, Citation, Lear 45, Gulfstream.

Finances DO matter. So does safety. Risk management. It's all about balance. What you need to do, what you want to do. For yourself, for others.

Finances and risk. Whether it's that 600 mile trip, or "I'm skipping the sales meeting to stay home for my kid's birthday".

Is a professionally-crewed 605 safer than an Eclipse?, yes. Is an Eclipse safer than a piston twin?, yes.

But seriously, good question. I think we should all give it thought- it will be interesting to see what comes up.

lumar said...

Hi Gadfly

What a cruzial comparison! But this discribes the situation. Can we imagine, that ONE employee is motivated working for Eclipse anymore?

We all hoped at a time that Eclipse can do an revolution in GA. They could not.

Now it is time to wake up. Unfortunately

lumar said...

Bill,

you can't compare Moller and Eclipse.

1. Moller is a dreamer, a crazy freak. Vern has a realistic product and many beleived on it.

2. Moller has a income, his Skycar is a hobby. Vern has just debts and a huge problem coming with the disappointed Eclipse-beleivers (and investors).

3. Mollers Skyscreamer is a unnecessary product (like the German Cargolifter) and Eclipse would be a nice, sexy little jet.

PS. There is a need for a 'Personal Jet' but more in the style of the D-Jet.

bill e. goat said...

This is all completely hypothetical, so I don't want to get anyone stressed out. But as a mental exercise:

Perhaps others more knowledgeable can please comment on this, but it would seem to be to the current investor's interests to declare bankruptcy, if they are just pouring good money after bad, and loosing money on each sale.

Gunner said:
Bankruptcy, in a Venture Capital pursuit, where you have to attract MORE Venture Capital to move on?

Goat:
In the big picture (beyond the next few months), I don't think it's a case of needing more capital, it's a case of needing less liability (the existing sales contracts). Would say bankruptcy would be a way for Eclipse to get out of it's sales contracts? I'm not sure how things would play out between the interests of the investors, and the interests of the stiffed purchasers, in a hypothetical Eclipse-NG world. I'm sure some of our fellow bloggers have some experience in this scenario, I would appreciate their comments.

Regarding future manufacturing operations, I'd be surprised if any suppliers are extending them credit right now anyway, so in a post-bankruptcy-world, it would be business as usual for the suppliers- cash and carry, I should think. (Yes, there would need to be a cash reserve to get through a second start up, but hey, they survived a second first flight, right? :)

bill e. goat said...

Lumar,
You are quite correct- you can't compare Moller and Eclipse.

Eclipse has a much nicer on-line gift shop, and the music is better on their web site too.

(On the other hand, Moller does come in more colors, and has pedigree and tradition (okay, of failure, make that "tradional values" :)

http://www.moller.com/files/fm_ancest.pdf

p.s., I'd more charitably describe Moller as a tinker-er, rather than a scammer (not to imply that Vern is either of the above... :).

http://www.moller.com/hist.htm

Gunner said...

Billy-
In answer to your question regarding investors and bankruptcy, let's make the reasonable assumption that Eclipse is going to lose money on every jet it sells for less than $2 million. (Even Ken suspects it's underpriced.)

That said, in a Chapter 11 reorg, the last thing you want to do is to discard your own customers. Solution (if the Bankruptcy Court will allow): You turn to each deposit holder and offer to credit their Deposit toward a $2.2 (or $2.7) million price; otherwise they stand in line for their money (ie: pound sand, people). So yes, there is some limited advantage to the investors; but it's offset by the fact that you can no longer just pen non-deposit contracts and loss sales to guys like DayJet. There is oversight and transparency. No more favorite son contracts from suppliers that have already been burned once and who can now really SEE the order book.

But all of this brings us back to the underlying question: will the actual product be well received if produced (whether today or under reorg)? If not, the market will fail it, no matter how many reorgs you do. On paper, the EA-500 makes much sense for guys like Ken, NinerZulu, myself and others...and there's lots of us out there. But what is this jet, in reality?

Certainly Vern knew in '04 that he had to cut costs as much as possible; no Mecedes here....not at Taurus prices. We see evidence of this in issues of quality control (skins) and manufacturing (wing twist and wing spars). So we write all that off and start from scratch, manufacturing wise.

Having bit that bullet, the question is, does the actual design have real value? We know there are problems with the windows; we've heard there are problems with the brakes and tires, with practically servicing avionics and with the rigging of the electrical harness; at this point in time, Avio does not work; there are no mechanical backup instruments.

So, have corners been cut on design? I'd suggest not in the beginning. But, at the point that Vern started LYING about FSW as some revolutionary cost savings technology, he HAD to know it was all marketing hype; had to know that he was, in fact, blowing money that might have been used by the designers on a marketing shell game. If he was willing to play that game, what else might have been going on in the design rooms?

There is nothing spectacular or revolutionary about this little jet, other than the concept and the promise. The concept is a small, tight PERSONAL jet...such an item will sell (just ask Diamond; or Ken; or NinerZ; or Air Jordan). But the promise is for a hearty, robust commercial air vehicle, produced at the rate of 1,000 per year.

Nope, I just don't think there's enough meat in the design of this aircraft to make it a viable, low cost alternative....even as a personal jet. I think corners have been cut; and to go back and clean that up is to start from the initial design stages. Now, where's the viability after a Chapter 11 reorg?

Gunner

lumar said...

Sometimes, I say to my (intellectual) friends in Europe: You know, Americans generally like to keep things simple and stupid!

Not so for the Eclipse500...

Lets speculate, that there is a restart after the coming collaps. People actually knows about the numerous problems concerning this high-tech-aircraft. They will not sign a order anymore!

If Eclipse really want to sell this Jet, it needs a redesign to be a bigger AND a simpler aircraft.

Gunner said...

Bigger? I think not; then they become a startup competing with the likes of Cessna, Embraer and HondaJet.

No, the basic premise is sound: build a very small, very fast, very cost-efficient Personal Jet and you will see aircraft owners like Ken and others trade up (myself included). You couldn't GIVE many of us the the maintenance headaches of an onboard lav for a 3 hour plane; many of us pay to haul a bunch of empty seats around every where we go.

The basic premise was sound. The need to make aviation history on it is what has warped this project into unrecognizable form.
Gunner

airtaximan said...

L & G:
"If Eclipse really want to sell this Jet, it needs a redesign to be a bigger AND a simpler aircraft"

What E-clips' demonstrated core competency(ies) and competitive advanatge in the marketplace?

Then you can argue about how they can re-design and find their place in the market... I do not think many doors are left open at this point. There are around 12-15 Personal/VL/micro/-jets in development.

Some by large very experienced companies.

How can E-clips compete?

a37pilot said...
This comment has been removed by the author.
Ken Meyer said...

I notice you all like to slap each other on the back with stuff like, "Oh, smart guy, you're right; it's bankruptcy for sure. Aren't we glad!!!"

You have your own little world. Unfortunately for you, yours is a fantasy world. Take a look at Controller.com and notice the prices are higher and the available aircraft are fewer--seven fewer listings than a month ago.

Here's Mike Press' view of the market (and remember, he knows this market intimately):

"The secondary market prices for Eclipse reached an all time low in February and early March but now are climbing back up to factory pricing. Eclipse has started delivering airplanes and will soon secure their production certificate which will allow them to deliver more and at a faster rate. Media news has been positive and the buyers are coming back into the secondary market. Prices for late 2007 and early 2008 deliveries have climbed back above $1.5M

The forecast for the secondary market is bullish. Sentiment has changed with sellers and they are more willing to wait for their asking prices. With more Eclipse deliveries in the coming months and Eclipse forecasting their production certificate soon, the secondary Eclipse market should continue to accelerate with prices rising."


People just don't see the doom and gloom you thrive on. They're voting with their wallets, and I'm making good money on the position I bought when sentiment was bad :)

Ken

Gunner said...

C'mon, Ken. You're quoting Mike Press saying that EARLY positions can STILL be purchased below factory price. And you call that rosy?!

Of course, people will speculate on this jet, knowing it's underpriced compared to what it claims it will someday be. (Even you admitted that.) The secondary market has had its ebbs and flows, yes. But the fact remains that this market has still not caught up to the price you pay for standing at the BACK of the line...what's that? SN 2,501?

Gunner

airtaximan said...

on the question of bigger or smaller...

Depends on what the market is for the plane, and what you think about air taxi.

If there is anything "new" in the air taxi markets Dayjet is proposing, is their ability to attract more than 1 customer (not passenger, some travel in pairs, etc...but customer) to the plane at a time. Otherwise, its just charter, right?

If the max is 2 or 3 passengers, based on attracting 1 or 2 or 3 customers to a flight, then perhaps the E-clips is OK...but not the best. I think the amount of inconvenience getting different groups to travel together is probably not worth it. Dayjet is imposing a stop along the way (ha ha ha!) and hours of wiggleroom in order to obtain a cheap seat price. How convenient is THAT?

Somehow, I think if they get another shot at the market, they will:

1- remain focused on a large market for scale and lower cost -air taxi
2- go smaller in size and try for single pilot, and 2-3 passengers. This ratio works economically.
3- use a prop or whatever technology they can find to be able to fly at lower altitudes more cost effectively. (Perhaps the Advanced Ducted Prop...just a hunch)

This is a little confusing for me, becasue then its really just cheap, personalized charter...not "air taxi" where multiple customers are on the same plane (novel, like the airlines!)

All the computing power over there at Dayjet might have directed them to a strange answer. Without hubs and spokes, there probably isn't much possibility of putting multiple passenger from different groups on a single plane. Otherwise, they'd be going for a larger plane.

Maybe its the price. At $3 per mile, all you have is charter...maybe there's no large market at $3?

Confusing...

airtaximan said...

Ken:
Congratulations on your profit from your "can of beans"... BOG slap on the back for that one!!

the 7 positions that are no longer on the market - they sold? They decided now they want the plane? They are waiting until the price rises even more? What happend? Did they sell cheap? Who knows?
..Big slap on the back for THAT one too!!!

"With more Eclipse deliveries in the coming months and Eclipse forecasting their production certificate soon, the secondary Eclipse market should continue to accelerate with prices rising"

Now another BIG slap on the back for this one...BUT WAIT, its the 5th time we've heard this exact news before since last year...

I want to know where the 2 planes that dayjet did not take off the production line..where are these planes? I'm just curious as to why 2 planes in the line did not get certified in order and delivered...no big slap on the back...just a curiosity.

Any clue?

twinpilot said...

Does anyone remember when Piper filed for Chapter 7 back in 1991 or 1992? Anyone who had deposit money with the company became a creditor and got pennies on the dollar. Any vendor who was owed money became a creditor and got pennies on the dollar. There may have been some ability to pay the creditors but the lawyers ate that up very quickly, with the help of their pal the judge.

The new owners came in with a low bid and got everything of value for pennies. Then they started over with no debt, and no tail of liability. The vendors were happy to work with them because this is a new company, not the same people who stiffed them, and they soon realize they have themselves to blame for supplying their products without getting paid. So, everything works out well for the new piper and the new company owners. It takes some capital but it works out well for everyone except the depositors/creditors.

Speaking of depositors, if E-clips files chapter 7 the depositors will soon realize they have themselves to blame for paying the deposit with no security and many will get back on board with an order for the New E-clips at the new price of 1.95 million. After all it was always at risk money and they could afford to loose it. (It might be a little more difficult for the guys who are out 600K) They want a new personal jet and now they can buy one from a company that has every opportunity to be profitable.

cherokee driver said...

Ken

Mike Press's position in the secondary market isn't exactly un-biased. I believe he is attempting to make a profit from it. He can actually help his profits by causing the peaks and valleys to be higher or lower. Because he is a self proclaimed expert on the secondary market he has the best of both worlds by "predicting" those peaks and valleys himself. You have to ask your self if those predictions are based on actual market indicators or the direction he would like to prod it.

airtaximan said...

Ken:

I am really impresed with Mike Press. He does a great service and a nice report.

He seems to know a lot about what's going on at E-clips, too. $50 million more to keep the boat floating, recently...nice to know.

Also his comment: "the realism of this delivery ramp up and production schedule is still suspect and whether Eclipse can meet it won’t be known for another few months. It is highly dependent on Eclipse receiving production certification in the next two months and whether the suppliers can keep up with this schedule"

Terrific commentary... so, $50 million might not be enough...but something tells me Vern can find more!

Lastly, there have been around 35 E-clips listing (including all of them, not just individual sales) on Controller, and there still are...just as a reference point. Maybe at one point there were a bunch more, but 35 seems to be the number from Oct, Nov, Dec, Jan, Feb, etc... approximately. I see no big shift.

If you really have a profit, I'd take it, and play the game some more. Buy low, sell high.

BIG SLAP ON THE BACK every time you sell high!!

lumar said...

Come on, Ken - don't be ridiculous!

As the Eclipse is actually presented in the market - it will not be sold to owner-pilots. If there is only ONE real client, flying this aircraft himself, please tell us.

Sometime one has to admit, that the game is over.

airtaximan said...

c-driver:

Its funny how Ken shows up with Mike's report and claims he's making money on the position he bought low...

Makes you think twice about the motivation...there and here..

But, you already knew that!

lumar said...

Hi Gunner,

If I say 'bigger', I am talking about a longer fuselage. This is not a complete redesign - just a stretch and would help to have more room, the Eclipse's lack.

airtaximan said...

lumar,

how many ads can you buy and how many sales trips to europe can you go on for $50 million, plus some 60% payments - notwithstanding the hobby requiring 1,000 people actually trying to complete the design and build and certify planes?

If CWMack is right, there are approximately 35 open positions in the first 100...and if this EVER comes out - the fat lady will be doing an OPERA, loud and clear.

- generate customers for at least the first 100 positions, or its curtains.

IMHO

PS. I thought it was Dayjet who got $50large...Vern too? Man, these guys are GOOD!

- remember, no color copies...

airtaximan said...

lumar:

the e-500 is a point design. You cannot simply streach (add a plug) in this plane. Its a complete re-design. Take 4 years, $200,000,000 more, just for that on a good day.
- Today's not a good day.

Planet eX said...

I agree with Airtaximan...the Eclipse fuselage does not lend itself to a stretch by adding plugs fore and aft of the wing...hell, there isn't a constant section in the entire airframe. Compare it to the CJ1/CJ2/CJ3 and you'll see what I mean. Constant fuselage sections that allow the addition of plugs to extend the fuselage.

With the Eclipse, you'd have to redesign the fuselage from aft of the cockpit on back to stretch it.

ColdWetMackarelofReality said...

The Eclipse 500 is NOT scalable at all guys.

Not only is the fuselage a constant compound curve as the others have already pointed out, I believe the 2100 lb growth from the original concept, still using the SAME wing has probably exhausted any growth potential there.

No, growth = new airplane, PERIOD.

Adding bigger tip tanks for more range is eventually a losing proposition as well, the speeds are not really fast enough to warrant attempting cross country range.

And a potty? Come on, that would be like trying to have a bathroom in BMW 745i, remember this is not a stand-up cabin.

Do ANY of the promised options even exist yet?

lumar said...

About the fuselage:

I agree with you all that a 'stretch' like on a Citation 500 (or II/V) can not be done with the eclipse - the reasons mentionned above are correct.

But: Even in that case, to lenghten the cabin is not such a big deal (4 years or so is a joke!)

Another problem is the wingload and/or the limited engine-thrust.

I am clear: I do not think to a 7 Pax-Standup-Cabin or so, just some more room ...

PS. We had a potty in our C425 - I used it ONCE in 5 years for a young lady - but without it's a NO GO!

bill e. goat said...

Gunner said:
the last thing you want to do is to discard your own customers. Solution (if the Bankruptcy Court will allow): You turn to each deposit holder and offer to credit their Deposit toward a $2.x million dollar price.

Goat:
I agree. The problem for the company will be, mass desertion from the order book. Guys who bought in at $1 Mil, probably won't saddle up for a $2M ride.

A lot were speculators- their incentive (quick buck) is gone. A lot were, hypothetical or real, air taxi types- the airplane isn't quite going to work for them, technically, and the price will complicate things, they're out of the picture. That leaves individual owner-operators. Some will go for a 30 to 100% price increase, but I'd say half will not (the price, still attractive up front, and good operating expenses).

So, no speculators buying, no air taxi guys buying, only half the individual operators buying; that leaves, probably 200-300 aircraft per year at $2.1 M or so. The company can survive, and perhaps prosper, with that arrangement.

The problem is, how do you unload contractual obligations for 1000 to 2500 money losers. The big B.

Gunner:
(after bankruptcy) there is oversight and transparency. No more favorite son contracts from suppliers that have already been burned once and who can now really SEE the order book.

Goat:
Right on! THAT is what is required for true investor, supplier, and customer confidence.

Gunner said:
But all of this brings us back to the underlying question: will the actual product be well received if produced (whether today or under reorg)?

Goat:
this is where we diverge. I think you say no, I say yes.

Gunner said:
Certainly Vern knew in '04 that he had to cut costs as much as possible...We see evidence of this in issues of quality control (skins) and manufacturing (wing twist and wing spars).

Goat:
You bring up an interesting point. I was curious why Vern outsourced the wing to Japan. True, they do have an impressive history of wing building (Fuji, Kawasaki and Mitsubishi build wings for Boeing, Lear, and Raytheon.

(Ten years ago Boeing claimed wings were an inhouse technical treasure, that would never be outsourced- times change...).

But when Eclipse did it- pragmatic change, or was that the first crack in the financial house of glass???

I don't know, pragmatic, or the first sign of faltering finances...

Gunner said:
Having bit that bullet, the question is, does the actual design have real value?

Goat:
I'd say yes. You point out many problem areas, but I'd say these are teething issues, which can be improved adequately with design modifications, not complete redesign. (Maybe, maybe not, time will tell).

Gunner:
So, have corners been cut on design? I'd suggest not in the beginning. But, at the point that Vern started LYING about FSW as some revolutionary cost savings technology, he HAD to know it was all marketing hype;

Goat:
I think you are right, Vern probably sensed that FSW was a moot technology. Not a tangible difference for the volumes that will probably exist. But, he had already invested in it, but back in 2004, if you can't show off an airplane, show off manufacturing technology. A little “buzz” to keep investors and customers “on board”. Hype, yeah. BS, well, not really (it did divert R&D resource funding away from design and later flight test and certification though).

Gunner:
There is nothing spectacular or revolutionary about this little jet, other than the concept and the promise. The concept is a small, tight PERSONAL jet...such an item will sell (just ask Diamond; or Ken; or NinerZ; or Air Jordan).

Goat:
I agree.

Gunner:
But the promise is for a hearty, robust commercial air vehicle, produced at the rate of 1,000 per year.

Goat:
Well, that WAS the promise. (the question is, how besides bankruptcy can get out of that contractual promise). The new defacto promise is, as you said, a small, tight PERSONAL jet.

Gunner said:
I just don't think there's enough meat in the design of this aircraft to make it a viable, low cost alternative....even as a personal jet. I think corners have been cut; and to go back and clean that up is to start from the initial design stages. Now, where's the viability after a Chapter 11 reorg?

Goat:
You are correct about viability, IF the airplane has to be redesigned extensively. I would contend that it WILL NOT have to be redesigned extensively to meet the defacto market of light use individual operators, and occasional light duty commercial applications.

I would contend that technically, it is adequate, in fact, pleasantly capable in that arena, and will sell quite well there (again, 200 to 300 airplanes/year).

To me, the question isn't about the technical functionality (acknowledged reduced, from an air taxi standpoint); it is the financial issue of being obligated to sell at a loss.

bill e. goat said...

Lumar said:
Sometimes, I say to my (intellectual) friends in Europe: You know, Americans generally like to keep things simple and stupid!

Goat:
I don't quite understand what you mean, but thanks for the compliment!

Lumar said:
Lets speculate, that there is a restart after the coming collapse. People actually knows about the numerous problems concerning this high-tech-aircraft. They will not sign a order anymore!

Goat:
I think the problems are somewhat exaggerated. Vern has contributed to this, with his exaggerated, unrealistic sales predictions, and exaggerated and unrealistic schedules. It is natural to suspect technical capability has been exaggerated and is unrealistic (hence, unsafe) as well.

But, I don't think this is the case- with the caveat that the avionics must be improved (and this is in work presently. It can be accomplished, relatively affordably, and relatively quickly, late 2007, probably).

The issue is, given the track record of mismanagement, how much time and money is he going to spend getting there. The worse case, technically, would be, “Okay, we're going to Garmin”. Nothing technically daunting about that. Just, a schedule hit, and budget hit, for the redesign, and recert effort. But technically, completely doable.

What gets lost in this is how well many key aspects of the plane work, that would otherwise cancel the program- the (new) engines work dandy, the flying qualities are good, and structurally it is good (Eclipse needs to reassure the industry regarding this- maybe have 30 people stand on the wing, like the old Cessna photo- ha- but seriously, how is the fatigue test going- is it done? Has it started?

I think it would be beneficial to have some aviation editors fly it was well. Maybe Vern is holding his card close so as not to spoil the big “coming out” party, but I think at this point, it would be advantageous and reassuring to all, to have some independent pilot reports.

http://www.cessna.com/about_cessna/history.chtml#

Lumar:
If Eclipse really want to sell this Jet, it needs a redesign to be a bigger AND a simpler aircraft.

Goat:
Lumar, To Vern, “go big or go home” implied technology (and press releases- ha!). It is a relatively simple airplane already, in almost every aspect. Just getting the avionics to work is the issue.

Gunner said:
Bigger? I think not; then they become a startup competing with the likes of Cessna, Embraer and HondaJet.

Goat:
Yep. I think perhaps Safire was the “sweet spot” size wise, in between the E-500 and Mustang, if I am correct. I think it might be too expensive to redesign for this marginal increase in size at this point, however. And spectrum has a great plane (on paper anyway) for the next size above the Mustang.

(Maybe there is a niche between the Mustang and Spectrum though- not sure if others are targeting that area, probably so, if it exists...)

ATM said:
there are around 12-15 Personal/VL/micro/-jets in development. Some by large very experienced companies.

Goat:
Yep, it's tough sledding in the upsize market for Eclipse. Volume was there best hope of being competitive. I think they can do it on product, but just not as profitably.

ATM said:
the e-500 is a point design. You cannot simply streach (add a plug) in this plane. Its a complete re-design. Take 4 years, $200,000,000 more, just for that on a good day.
- Today's not a good day.

Goat:
I think you are right- I'm not so sure of the time or money, but I think it would not be practical to change the cabin size. The next model will also be a point design, I should think.

bill e. goat said...

A37pilot said:
Who knows what motivates VR other than pure ego....Whatever happens, my guess is VR moves on and leaves the mess for somebody else to clean up.

Goat:
I think Vern was driven by profit, (and who among us wouldn't dig the heck out of being the CEO of wonder jet, inc.).

I don't think ego clouded his judgement, I think deliberate ignorance of conventional aircraft design, test, certification, and manufacturing clouded his decisions.

To his credit, I think he does feel a sense of responsibility to the customer.

A37pilot said:
Whatever happens, my guess is VR moves on and leaves the mess for somebody else to clean up.

Goat:
I think there is nothing Vern would rather do. I do think he is trying to salvage the situation, for the best interests of the investors, customers, and employees though. It has to be a headache right now.

I think we all have to give a nod for not doing a “cut and run”.

bill e. goat said...

Ken said:
I notice you all like to slap each other on the back with stuff like, "Oh, smart guy, you're right; it's bankruptcy for sure. Aren't we glad!!!"

Goat:
You're right to some degree. But, there is also concern rather than glee for a lot of us.

Concern for the investor, and the infrastructure they have financed won't be abandoned and sit empty;

Concern for the purchasers, that this won't implode on them;

Concern for the employees, that there hard work rewarded, and jobs will be perpetuated, either by Eclipse, or Eclipse-NG.

bill e. goat said...

Ken said:

“Take a look at Controller.com and notice the prices are higher...

“The secondary market prices for Eclipse...

“buyers are coming back into the secondary market...

“The forecast for the secondary market is bullish...

“the secondary Eclipse market should continue to accelerate with prices rising...

“ I'm making good money on the position I bought when sentiment was bad...

Goat:
Thanks, you make my point, precisely and exquisitely.

The SECONDARY market is great. But Eclipse doesn't sell on the secondary market, they sell on the primary market. And IF (I don't know) they lose money on every sale, because the primary prices are too low- unsustainable low- how can they stay in business?

The secondary sales guys are making out like bandits- but it doesn't help Eclipse! Eclipse has signed contracts to sell 2500 aircraft, maybe at loss. Unless the sales numbers are bogus- in which case, maybe they only sell 800 at loss. How can they stay in business either way?

I want them to. And I think they will, it just would seem the contracts will have to be renegotiated some way.

I guess it boils down to, are the economics of scale really going to work, and how big is the order book, really.

Or are the investors going to fund the enterprise anyway, even if it is not profitable, with the hopes of the E-xyz making money.

(By the way, I DO think the E-500 will stay in production, either Eclipse, Eclipse-NG, or whoever. Hopefully in ABQ, with the same fine folks they currently have. I DO believe it is a good plane, and somebody will continue to make it, so the aftermarket support network will be adequate).

bill e. goat said...

Gotta get "hopping" along.
Everyone have a nice weekend.

Gadfly, could you summarize our current financial debate? (Any “buzz” from your fellow flies in ABQ?) -thanks.

gadfly said...

‘Sorry, Goat,

When it comes to finances I’m like the art thief caught just blocks away from the Louvre with the stalled panel truck. As they led him off he was heard to say, “No Monet to buy Degas to make the Van Gogh”.

Now to listen to today’s Saturday Met Opera!

gadfly

Stan Blankenship said...

Never realized goats were such analytical animals!

airtaximan said...

prolific, too.

airtaximan said...

Something to ponder:

Given all the suggestions of a new, larger, better plane...

And all the questions regarding Vern's order book size, really...

Something comes to mind.

A business philosophy, of sorts - from another industry...

Ask yourself how someone who is first to market (E-clips) with the lowest cost product, loses the market?

What sort of a newfangled aerospace thinking results in this situation?

- Microsoft-thinking, applied to aerospace -

1) over-promise on functionality
2) volume at all cost - lowball the price (even let people steal the product and use it for a while)
3) foreclose competition with hype and "unattainable" product value claims

Vern is only surprised by one thing, today.
Despite all his efforts using the proven tactics outlined above, he HAS competition, today. STRONG, SMART, EXPERIENCED, WELL FINANCED COMPETITION.

Perhaps he did not think of anyone in aerospace as competition…Microsoft was truly at the formative stages of a new product revolution. Maybe VLJs are really NOT a revolution.
1- buyers are really pilots already – its really a large existing market
2- there are many well heeled companies serving the market already

Vern has acted as if he would be the only game in town. Today, even if he wanted to appreciably raise the price, he would experience compression. Many of his customers would flock to a competing product from a better-established and more reputable company. I do not think he counted on finding himself in this position. I don’t think he ever really thought he HAD to meet the performance.

One needs to ask, after so many years and so much money...why are they JUST NOW trying to improve the product so it comes closer to the promised performance guarantees? THEY HAVE TO... if they were the only game in town, they wouldn't even have to fix-up the plane. Bear in mind, none of these mods are rocket science, or have resulted from new technologies or other break through. All of the performance shortfalls have been known for many years.

Bottom line. If there was no competition (or little) Vern would have the market with whatever POC he put out, really- I believe he thought this would be his position. Today, the market is being divided between many players, with competing products. Customers have a choice. Less expensive, more expensive, bigger, smaller, etc.. The private pilot market is all divided up, and he has a fraction of what he expected, and much less room to maneuver.

The only play he has left is the air taxi market. The only element of value he can add to the market is perhaps - higher volume. He was the only one to dare betting on higher rate production. If he cannot do this, he’s gone.

If he's the only one who can develop a production rate sufficient (I doubt this) to support a large common fleet, and air taxi customers get out of their cars and into Dayjet's Eclipses, he has a chance. His value to the market is in higher rate - that's it. He could even eventually extract a higher price from Ed, if he is the fleet provider. That’s a big problem relying on one supplier for your equipment. Any issue, even one that arises at the whim of the supplier, let alone a quality issue…your entire fleet is down, more expensive, etc…

But, I do not see the market for that plane as a taxi-plane. I just don’t.

Just my opinion.

airtaximan said...

QUESTION:

It's been a week, are DAYJET's plane flying?

Have they flown once yet?

Any clue?

** what about planes number 4 and 5 in the line...have they been cofa and delivered?

lumar said...

Gentlemen

You all sounds exited - myself, I am cool and I just say: It's over...

Gunner said...

AT-
The concept was, I think, a different side of the Microsoft type marketing. It was originally the BEST side: create a market where one didn't exist by making a previously expensive product affordable to the "masses".

Note, however, that Gates clearly understood his niche: software. He never tried to compete seriously as a hardware manufacturer. Vern, on the other hand, wanted it ALL. He started as a hardware manufacturer (jets), then decided he wanted to be a software giant also (Avio) and finally decided he wanted to be in the hardware service business also (no Certified Repair Facilities for Vern. He wants to do it ALL in house).

Certainly, if Vern can bring a revolutionary jet to market; a jet capable of hard use in commercial enterprises; at the comparative price of a single engine jet; PROFITABLY....then, this might work. He certainly would gain customers at the expense of the Mustangs (on one side) and the Turboprops (on the other).

But he doesn't seem to have accomplished that, at all. Rather, he seems to have developed a conventional jet, capable of light use (personal) once the bugs are worked out, at a loss on each unit. And my sense is that reliability has suffered along the way as he tried to drive costs toward price, rather than price from cost.

BeG's position that he is somehow to be commended for not "cutting and running" is something I couldn't agree with less. The very fact that Vern wanted it ALL speaks to the ego involved. Besides, where was he gonna go? He's already well into the pockets of every former financial patron. His personal ego shows thru in every statement he makes.
Gunner

a37pilot said...

Goat:
I agree. The problem for the company will be, mass desertion from the order book. Guys who bought in at $1 Mil, probably won't saddle up for a $2M ride.

Good point Goat, at $2M + most guys would probably start thinking about saddling up their Mustang

a37pilot said...

NEW 2007 ECLIPSE 500 $1,850,000 UT

S/N: SN 0048, TBD, IFR, S/N: EA500-000048, 0 TT, IFR, LX interior Price INCLUDES $130K in options. Early 07 delivery , 2007 Paint, 2007 Int , 6 Seats

S/N: 1393, (not assigned), 0 TT, Think you'll purchase an Eclipse 500? Buy our position AT COST! , 6 Seats

A sampling of Elcipse from the Dream on 1.85M you can have it any day now price , to the S/N 1393 the Kool Aid has worn off, reality has set in and I need to bail out price.

Ken Meyer said...

Goat wrote,
"The SECONDARY market is great. But Eclipse doesn't sell on the secondary market, they sell on the primary market. And IF (I don't know) they lose money on every sale, because the primary prices are too low- unsustainable low- how can they stay in business?"


Are you forgetting that the secondary market is our most visible window into demand for the aircraft? There was a palpable decrease in sentiment about the viability of Eclipse during February that has disappeared, and the secondary market is reflecting that. Prices are going up and inventory is going down. That's my point exactly.

I do agree that the sale of an aircraft on the secondary market does not directly help Eclipse, but it tells us that people wish to buy the plane, and interest in it is once again on the rise. Remember, Eclipse has been competing against itself for a while--trying to sell against early position holders who bought at very low prices purely for speculation and now want to realize their gains. Those people are able to make a profit even if they sell for a much lower price than Eclipse can. But that well is drying up.

So rising prices and decreasing inventory suggest the doom and gloom possibilities expressed here are vastly overstated.

There is another reason that the bankruptcy scenario some blog participants seem to have latched onto is extremely remote. It is history.

History?

Yes. History. Back in 2005, the company came to the realization that it couldn't make money on the aircraft it had contracted to sell, it simply raised the pricing on everyone's order. That triggered a refund event, but very few people bailed out. Nearly everyone simply accepted the higher price and went about their business. What's the point? The point is that if it were true that they're not able to make money on the 2500+ orders contracted for so far (a speculation, I hasten to point out, for which there is not one shred of evidence), they could simply raise the price again. After all, nobody complained that much the first time around. History.

Ken

Ken Meyer said...

a37 wrote,
"NEW 2007 ECLIPSE 500 $1,850,000 UT

S/N: SN 0048, TBD, IFR, S/N: EA500-000048, 0 TT, IFR, LX interior Price INCLUDES $130K in options. Early 07 delivery , 2007 Paint, 2007 Int , 6 Seats

S/N: 1393, (not assigned), 0 TT, Think you'll purchase an Eclipse 500? Buy our position AT COST! , 6 Seats"


Yes, those are both very telling. Neither one is at "fire-sale prices" as one might expect if sentiment were really low. The $1.85M one is well over factory pricing. Even the second, an unattractive position (since you can get a late 2008 position without assuming someone else's deal), wants a premium.

If they were dumping either of these in anticipation of bankruptcy, wouldn't the prices be much, much lower? Of course. That's exactly how we know the market doesn't agree with the Eclipse Aviation Critic bloggers :)

Ken

airtaximan said...

Ken when you say:
"There was a palpable decrease in sentiment about the viability of Eclipse during February that has disappeared, and the secondary market is reflecting that. Prices are going up and inventory is going down. That's my point exactly."
- This is a SHORT TERM TREND, just like the Sept, October timeframe. Better sell the BEANS now, and buy them back in a month or two...if the previous trend was accurate!

When you say:
"So rising prices and decreasing inventory suggest the doom and gloom possibilities expressed here are vastly overstated."

This is A LONG TERM TREND:
Keep buying and selling the BEANS...just hope you are making enough money along the way, and you are not holding a can of beans when the music stops playing.

BTW, to many, buying a plane is not like playing the stock market. But you seem to be pretty good at it! BIG SLAP ON THE BACK for that one!

airtaximan said...

Ken:
If you've been paying attention, bankruptcy has been rescheduled to a slightly later date.

Vern raised more cash - $50 Million. G_D bless him.

Give it a couple more months.

JetProp Jockey said...

Ken - notice that these are the listed prices - anyone know what a positon has actually sold for?

I just sold my house - accepted an offer about 15% under my original asking price - and it is actually there to touch and see.

Black Tulip said...

Eclipse Pricing...

The last few exchanges are largely a waste of bits, bytes, bauds and ink. To speculate on the future of Eclipse Aircraft based on price movements, plus or minus two months, of a future delivery position of a controversial aircraft? This isn't a commodity like soybeans, copper or sweet crude.

This is a multi-faceted situation. Some have a purely financial stake in Eclipse; and for those, the palms have become sweaty. Others have a combined financial/aviation interest. They dream of beating out the rest, by getting into an aircraft that they could never have afforded otherwise. A new jet at a new Baron price. The last have a purely aviation motive, "Airspeeds are alive, cross-checked at seventy knots, vee one, rotate, positive rate, gear up, vee two plus ten, flaps up, after takeoff checklist."

But all depend on keeping the dream alive, the plates spinning and seeing clearly that emperor's cloths are fine and beautiful.

The fluctuation of online prices for delivery positions doesn't mean very much.

Black Tulip