Back into Focus
In the previous post, Boenning & Scattergood scaled back their expectations for Eclipse and IS&S. Whytech furthers the B & S position with two pointed questions and his answers:
Here are the big picture issues:
1. Can Eclipse continue to raise the capital necessary to buy the time necessary to get the airplane right, ramp production, and get the service centers stocked and staffed to a level to support the fleet?
My experience as a private equity investor says maybe, but probably not. Eclipse investors and Board are very near the limit of their patience with this project. Savvy new investors putting in substantial capital at this point are going to write the rules, and they won't be kind to current investors and management, IMHO.
My back of the envelope calculations indicate that another $500 million minimum will be required to see this through, allowing for the kind of uncertainties which have surfaced to date, especially delays, which are the primary driver of cash burn at this time. Capital (time) will solve the technical/certification issues eventually.
2. Is the market there to sustain the business model?
IMO, no, but I have been wrong on such issues as many at least as may time as I have been right.
When the owner/non-pilot comes to understand the limited utility of the EA500, and the time and dollar investment required to use a private aircraft as a routine traveling machine, this market will be gone. "Millionaires" will not want to ride around squeezed into this little airplane if they can afford anything more comfortable and status enhancing.