Tuesday, August 14, 2007




Bill E. Goat Recently Dreamed...

He was CEO of Eclipse and in charge of parties and announcements. His accomplishments:

We have a Provisional TC. It's granted, via Executive Order, by the FAA administrator, under duress of losing her job.

We have Full TC. It's granted over the officially filed grienvances of FAA test pilots and engineers.

The first DayJet airplanes have C of A's though we had to have the FAA pull out some of the regular inspectors, while they brought in "ringers".

Let's Celebrate.

Today we go public. The investors have sunk in $1.5B dollars, and are breathing down our neck.

We lose money on every airplane we sell.

Our customers have been waiting years for their airplanes, and will continue to wait for years.

The employee stock options are worthless.

The few airplanes we have delivered will have to be recalled.

Let's celebrate some more!

336 comments:

1 – 200 of 336   Newer›   Newest»
Stan Blankenship said...

Stan's on vacation, you guys obviously are not.

My wife and I are bunked up in a lakefront log cabin in the Ozarks.

Happy to have electricity and indoor plumbing, also happy there is no cell phone signal or web access.

Six Romeo said...

Think Vern has sold the rights to his story yet? John Travolta will have to geek it up a bit, but he can play an A-hole pretty well...

How about if Moller buys Eclipse and Sino-Swearingen. New name, Fantasy Aviation. Keeping unrealistic hopes alive. Or, Mirage Aviation: Amusing aircraft you can see, but not touch.

gadfly said...

No. The "Toyota" version would be called the "EclipScion", built in China (who better understands "stir fried"?), and sold to teenage pilots through a Wal-Mart distributorship.

gadfly

mirage00 said...

Now now boys and girls...

Nothing has changed with our little jet. Airplanes are still being delivered, Airplanes are flying IFR above 25000 feet, the issue list continues to shorten and this blogs trend continues southward.

I remain amused

double 00

Six Romeo said...

If you believe Ken, it is so fuel efficient, and it contains revolutionary electronics. How about AirPrius!

I think Cessna beat Eclipse to Wal-Mart: http://tinyurl.com/3dcmr9

airsafetyman said...

Throughout most of WWII the Brewster Buffalo was "still being delivered" until someone mercifully shut it down.

Gunner said...

Now that we know, from the source, that the company lives hand-to-mouth; now that we know, from common sense, that it's gotta produce a couple (few?) hundred jets at absurdly low income, given the original prices and the fact that Ken and Alexa's Progress Payments have disappeared, let's focus for a bit on Worst Case Scenario.

If the well runs dry and Vern throws in the towel, what becomes of the company? The Faithful would argue that the certified plane, itself, has great value and will never be orphaned.

So, let's try to get into the mindset of a realistic, potential buyer....Toyota. They have the financial ability, the technical, manufacturing and marketing expertise and one Hell of a good reason to enter this market (HondaJet).

How would a (mostly QUALITATIVE) thumbnail of the assets and liabilities look to Toyota:

Assets:
- Certified Jet...that alone is probably worth about $250 Mill to Toyota (a bit more than it would cost them to develop one themselves); also assumes they wish to market to the cheap seats end of the spectrum. Honda didn't.

- Property, Plant and Equipment: Negligible

- Goodwill: Zero. Any goodwill that comes to the table comes from the name "Toyota", not "Eclipse

- Vendor contracts: Negligible. Shaky at best and probably not nearly as good as might be negotiated by a company with so many other lines of business to leverage from.

- Aerospace Expertise: Good for a couple tens of millions. HotDog and others have hinted that some of the best left long ago.

- Management Expertise: With the exception of Peg Bilson (who could easily be hired or replaced), I place management expertise in the liability column.

- Order Book: That's worth something, but only to the extent of profitable orders. Take out Air Taxi and below-cost early orders and it ain't much.


Liabilities:
- Current Investment and Loans: Unless these guys are willing to settle for pennies on the dollar, the company faces Chapter 11...and a Toyota could design and certify its own jet long before that mess was untangled. Current investors need to be satisfied. HUGE Liability

- Order Book: Funding of Deposits and Progress Payments already pissed away. Figure it conservatively at $200 million. Honoring of purchase contracts below believable cost: add in another $100 Million.

- Avio NG: Negligible liability, countered by negligible asset. I'd sell it to Vern for pennies.

- Product Liability: Let's face it. This is not Cessna or Embraer. This is Vern Raburn's Eclipse Aviation. The potential product liability in the design and manufacture is nearly unlimited.

No, I think Toyota would pretty much pass. If they wanted into this business, they could start from scratch (and already have) and be certified with a clean sheet design and the risks known to them in the time it would take to clean up Vern's mess.

Buy just the design asset out of bankruptcy? Well, that would depend if the buyer believed, as Ken does, that this is a revolutionary vs conventional jet.

Gunner

Six Romeo said...

Hyundai already has the Santa Fe and Tucson. Get ready for their first foray into aviation...
The Hyundai Albuquerque.

Okay, I'll stop now.

hummer said...

Stan
Hopefully you're on Norfolk Lake. . .
the most beautiful lake in the midwest and one of my favorites.

sparky said...

M00,

Is it hard to type with your head that firmly entrenched in the sand, or do you keep it elsewhere?

airtaximan said...

M00(ron) said

"nothing has changed...."

AS IF THIS IS GOOD NEWS!

Carry on! Blinders on! M00ve forward...M00ve backwards, its all the same GOOD news.

cj3driver said...

Moo,

How about giving us your thoughts on the CondeNast article.

http://www.portfolio.com/executives/features/2007/08/13/Jets-of-the-Future#page1


Do you agree that Eclipse was out of money in June?

hummer said...

Can someone explain why it takes
1,400 employees to make less than
two aircraft a month?

BatP00 said...

I guess I don't understand all of the criticism. It's America - you get to spend your money however you want to. Will failure of the company prove your prescience in some way? Is is victory for you? Really, what's the point? They'll either make or not...why do you care?

sparky said...

Hummer,

1 to hold the panel, 1,399 to turn the FSW gantry.

Batp00,

in a word, vern.

airtaximan said...
This comment has been removed by the author.
mirage00 said...

Raburn had just completed five days of frantic, 4:30 a.m. conference calls to secure funding after the hedge fund Highland Capital Management decided not to invest in Eclipse. Highland requested two seats on Eclipse’s board, he says, and preferred creditor status in case the company had to be liquidated, a move that Raburn contends sunk the deal. “The assholes at Highland, they waited until the 23rd-and-a-half hour to make demands,” Raburn tells me. “It was clearly a premeditated attempt to put the company into bankruptcy.

We don't know how long prior to the "23rd hour" the financing was secured. So yes, if you are counting on funds to come in but the source of these funds waits 1,2,3,4,5,6 months???? to close a deal, then yes you could be exposed. BUT as everyone can see, people much smarter than you, have complete access to the financials and business models of this company, invested on the "24th hour".

So let’s talk about pitot tubes and RVSM again, shall we? I'll save the "Conspiracy" theory until Stan returns from vacation.

I remain amused

double 00

redtail said...

This is all absolutely no problem. We have it from the best authority, who claims he is NEVER wrong. AirTaxiMan has assured us all that the money supply is bottomless.

airtaximan said...

batpoo?

great question.

this has been a fabulous blog with a lot of opinions, criticisms and insight into what many of us would consider a very controversial program.

I am sure we would almost all like nothing more than success for the company - its just amazing to folks who are active in the industry that so much BS and hype has been cast our way.

The blog is entertaininig and insightful, and if you are an American, you know everyone is entitled to an opinion and free expression... so I ask:

why do you ask? would it be better if the folks on this blog were silenced? No, not for anyone.

we like to review the information provided through the press and conmunications, and figure out what's really going on- its never what is written, that's for sure!

enjoy.

airtaximan said...

Moo(ron)

"It was clearly a premeditated attempt to put the company into bankruptcy."

sounds like a murder mystery, not a conspiracy!

You make me laugh.
- Vern says they were savvy enough to wait and "bankrupt the company" by trying to place demands on the last day... how much more do you need M00?

BTW, an investor who backs out has not bankrupted the company - the guy who spent $1.x billion, produced a con-jet prototype instead of building planes with depositors money, and who has produced 20 planes while he projected 500, did.

Once again, you sem to love the finger-pointing...why?

airtaximan said...

redtail,

I've never said I'm never wrong...and I have said Vern's track-record shows he can raise money, againa nd again - I'll agree he has an endless supply...

So???

I think he's proven this, no? Has anyone else been able to pull of this level of financing for such a marginal business plan in aviation? Not even close!

He's a magician! Poof...money turns to sh_t! again and again and again!

It's amazing to watch. he has my admiration. The only thing he could do better is actually do what he says with the money. So far- he's been WAY off -making his constant stream of cash that much more amazing.

mirage00 said...

Airhead (since you seem to like the childish name calling game)

Vern says they were savvy enough to wait and "bankrupt the company" by trying to place demands on the last day...

Now now, here is the full quote.

"It was clearly a premeditated attempt to put the company into bankruptcy"

I remain amused

double 00

airtaximan said...

Mirage,

yup, I appologize for the childish name calling...sorry..

What does Vern mean when he says "attempt"?

I would think that in this case, the only other explanation is that they tried to gain some undue advantage over everyone else trying to place their funds in the e-clips investment, and that's why they misrepresented their position, then at the last minute tried to gain more board seats, etc..

BUT, Vern did not say this, he said "attempt to bankrupt" the company? How and why?

All in all, its childish fingerpointing, but I imagine he was very close to the brink, and his "retribution" remark makes it seem like, well...he's vindictive.

It seems like he was able to scratch together the money in time, so what's the harm? What's the big deal?

-I'd ask Vern, he brought it up, he's pissed and he was apparenly almost on the brink of bankruptcy...

otheriwse, like I said, he would have just said, it took us an extra month to raise the money...

NO?

mirage00 said...

Airtaximan,

Thanks for the apology. Accepted!

Yes, I'm sure they needed funds and it did probably come close to some necessary company announced action to avoid bankruptcy. We all need to realize that without access to the actual financials, we cannot make a call one way or another nor can we come to some conclusion regarding the cost to produce an E500, etc...

If investment capital is coming in at this time, the source must be seeing something of substance in the numbers that makes it appealing.

I remain amused

double 00

hummer said...

FLASH
IPO VMWARE (Not affiliated with Vern)
VMW
Opened at $29.00
Closed at $51.00
Up 76%
Gunner did you have any of it?

Gunner said...

I just love it.
We're not supposed guess the approximate cost to make the EA-50X, because Vern hasn't told us what it is? Got news for you, Mirage. Vern doesn't know either!!!!!

While we have less information than he, he has greater incentive to overlook reality than we. That makes our educated guess about as valid as his. One easy way to thumbnail those costs: look at the prices offered by VIABLE single and twin engine competitors then factor in Eclipse-specific efficiencies (none) and question whether Vern is correct in his statement, "This industry has been screwing customers for decades."

I'd guess the current costs of production are conservatively right around the current selling price...though finish reports and early AD's would indicate the Jet is pretty "cheap".
Gunner

Gunner said...

Hummer-
Nope, I had none of it. Wish I did, though. This company differs from Eclipse in a number of ways. Most notably $34.2 million in earnings on revenue of $297 million for the three months ended June 30.

In short, their business plan seems to work...assuming profit is a measure of success vs finger pointing at Wall Street.
Gunner

gadfly said...

BatPOO?

Pardon me for asking, but is the pseudonym meant to be in any way related to the substance found near Carlsbad Caverns? If it is, then your presence is most welcome . . . and a rare thing, indeed. Because the last we had heard is that “bat guano” was on the list of endangered feces.

gadfly

(Of course, in any case, we welcome you to the discussion. And forgive me for asking so bold a question.)

WhyTech said...

Gunner said:

"I'd guess the current costs of production are conservatively right around the current selling price..."

I would guess that the current *variable* costs are bit under the selling price, resulting in a modest positive contribution margin. However, when fixed costs and low volume ar taken into account, I wouldnt be surprised to see the full cost to be substantially in excess of the selling price.

WT

WhyTech said...

gunner said:

"their business plan seems to work."

Works very well. Post IPO market cap around $10 billion.

WT

Gunner said...

Whytech-
Of course, prices go down if you fire and/or sue your vendors, in lieu of paying them.

The Eclipse business Model as applied to the average household budget process:
"Honey, can't we just pay our MaterCard with our Visa?".

;-)
Gunner

hummer said...
This comment has been removed by the author.
airtaximan said...

Mirage:

"If investment capital is coming in at this time, the source must be seeing something of substance in the numbers that makes it appealing."

Under normal circumstances, maybe...taking the trackrecord into consideration, I doubt it. Vern has been "selling" this company for 10 years now. every fiancnial projection was WAY off. Guess what... THAT's what people bought.

I'm sure there's some story, BUT I doubt its realistic.

Riddle me this: Why would a new company entering into production, with huge backlog of orders, and paid in deposits/progress payments, go off and produce a new product prototype? They were WAY behind schedule... why the distraction/diversion?

Its another excuse to raise money... another story...more BS.

con-jet

IMHO... and you know, of course, I'm NEVER wrong! Just ask Redtail...

Seriously, Mirage, relying on the "investors see something" holds no water at this point. Not given the track record, all the investment money gone already, etc... "someone invested so it makes sense to invest" makes no sense to me.

You?

flightguy said...

If investment capital is coming in at this time, the source must be seeing something of substance in the numbers that makes it appealing.

Absolutely, they are potentially posturing for an acquisition. THEY WOULD OBVIOUSLY CLEAN HOUSE AND MANAGEMENT GIVEN THE CIRCUMSTANCES.

TO THE FAITHFUL-What say you?

ColdWetMackarelofReality said...

Who are the investors this time? Is it a (new) private equity firm? More unsecured investors (position holders)? Or is it more of the Board of Director's money, Al Mann and Kent Kresa come to mind?

That tidbit would clear the air completely on M00's mantra that 'people smarter than you' are pouring fresh money into Eclipse. Could be it's just a couple guys on the board throwing good money after bad to keep the dream alive just a little longer, until they can sell their can of beans.

WhyTech said...

CWMOR said:

"Could be it's just a couple guys on the board throwing good money after bad to keep the dream alive just a little longer, "

Been there, done that. For existing investors, there are two kinds of financings: wanna do and gotta do. In the gotta do type, you are buying time to find some 'people smarter than you' to pour fresh money into Eclipse.

WT

gadfly said...

Cold Fish

The problem with the can of beans is that it's been leaking out the seams for some time now. And there is no amount of money that can cover up the "fragrance". And if these so-called investors are as smart as they have been portrayed, they have got to have a "nose" for this sort of thing.

The "dream" is in a graveyard spiral . . . the "jig is up" (to quote a WWII military leader). The enemy is regularly flying over Berlin. And the future is not looking good.

gadfly

Ken Meyer said...

gadfly wrote,

"The "dream" is in a graveyard spiral . . . the "jig is up" (to quote a WWII military leader). The enemy is regularly flying over Berlin. And the future is not looking good."

Sorry, Gad (or is it Grand-Gad?), I'm not picking on you; just tagging onto your post.

I've been deriving a great deal of pleasure from watching the 6 or 8 diehard Eclipse haters pat themselves on the back time and time again, always with words something like Gadfly just used: "Hey folks, GREAT NEWS! The gig is up! Eclipse is in a tailspin. They're finished. Hurray!"

The only thing is, if you look back in the blog, these same 6 or 8 guys were proclaiming the demise of Eclipse before the plane was ever certified (telling us then it would never be certified). Then they proclaimed the plane would never be delivered (only it was, no doubt to their great consternation). Then they proclaimed they'd never crank up deliveries (they're on number 40-something now). They said they'd never certify the aero-mods (we all know they did). And so on.

Predicting the demise of Eclipse has become the blog's favorite pastime. These same guys never seem to get it: You can only be wrong in your dire predictions that the company is on its deathbed so many times before you start looking pretty silly."

I noticed that not a single one of you pointed out what is perhaps the most telling aspect of the story in Conde Nast Portfolio. Eclipse could have secured $200 million in financing simply by allowing the new investors to have 2 seats on the board. Some would argue it might actually be a good move to bring some new blood in, but either way, it obviously wasn't the move the current board and CEO wanted.

The point? Eclipse didn't have to kowtow to the wishes of a big new investor trying to twist their arm. They just moved on to another big, new investor. They said, "No; we won't give away seats on the board for money. We don't need your money that much." Then they turned around and found another investor.

Do any of you diehard naysayers, so busy predicting the demise of the company, honestly believe turning down the money was the act of a company on its deathbed? If you do, I submit you've lost all touch with reality.

But given the number of times these same 6 or 8 people have incorrectly predicted the failure of Eclipse, it doesn't surprise me.

And it is amusing to watch.

Ken

gadfly said...

Cold Fish

To push the “allusion” just a bit further, this is a case of “the pilot” releasing control, and allowing the plane to come back to a more stable condition. But the “pilot” thinks he has a sense of “attitude”, and is not willing to allow others to bring the plane down safely. In such a situation, there is nothing to do, but simply observe the predictable take place.

And so we watch, and wonder . . . how long until it all comes to an end.

gadfly

(Unfortunately, all the above remedy assumes that the plane has been properly “trimmed” before hand, that without its leader/pilot, it “can” assume a semblance of stability. For some who read this, I’m not referring to the “aircraft”.)

gadfly

Gunner said...

Ken-
I give you high marks. That was World Class Spin. And I honestly DO NOT mean that in the "derogatory" connotation of spin.

That was uncharacteristically, High Order spin, putting the best face on a bad situation (the company was on the brink of collapse two months ago, according to its Founder).

In fact, it was such Articulate Damage Control (again in the most flattering sense of the word), you get a complete pass from me on the meat of your post.

Fair enough?
Gunner

Ken Meyer said...

And, in other significant news today...

For a second time in less than a year, a serious glitch has struck the G1000 system used in the Citation Mustang. Most of you will recall that Mustang deliveries were halted early this year for a couple of months due to a problem in the FMS portion of the Mustang’s G1000 system. Today, Garmin announced that there is a problem with recently-completed GRS 77 AHRS units used with all G1000 systems--they are failing at a very high rate for unknown reasons. Garmin says they do not know what the problem is, but they are working diligently to fix it.

Meanwhile, the G1000 system is not being deliveried to aircraft companies. As a result, Columbia Aircraft announced it is laying off hundreds of workers because they cannot deliver any airplanes until they get more G1000’s. And it is unclear when they’ll get more G1000’s since Garmin doesn’t know what’s wrong, let alone how long it will take to fix it.

Cessna says it has halted all deliveries of piston planes until the problem is resolved. They say deliveries of the Mustang can continue for now because the production rate is low enough that older, non-affected G1000 systems already in stock can be used temporarily.

Nobody likes to see any company run into problems like this, but it does serve to illustrate that Avio is not the only high-tech avionics package suffering problems.

Ken

cj3driver said...

“…The assholes at Highland, they waited until the 23rd-and-a-half hour to make demands,” Raburn tells me. “It was clearly a premeditated attempt to put the company into bankruptcy…”


No doubt someone at Highland stumbled across the “Eclipse Aviation Critic” blog at the 23rd hour. Lets see … end of June … just in time for the Eclipsidrin post!

BTW - Ken, There is a reason Highland wanted the two seats. They obviously didn’t want to let go of the funds without them. It appears Highland didn’t want to budge on that point either. I wonder what it cost Vern for those two seats with the new round.

Ken, aren’t you wondering what happened to the hundreds of millions (pos.) of 60% deposits collected by Eclipse. Vern says they were pushed close to bankruptcy in June. Less than 20 planes were delivered at that point. Is the new round ($200 mil net) enough to build the planes that the 60% was collected on? What about future production, Aviong, service center infrastructure and retrofits?

cj3driver said...

Ken said:

“ … Cessna says it has halted all deliveries of piston planes until the problem is resolved. They say deliveries of the Mustang can continue for now because the production rate is low enough that older, non-affected G1000 systems already in stock can be used temporarily…. “

Ken,

I guess, … if they wanted to, Cessna and Columbia could continue delivering planes, restrict them to VFR and strap Garmin 496’s to the dash.

…I’ve heard of other companies doing that. … Even in their light jets!

Jim Howard said...

"BUT as everyone can see, people much smarter than you, have complete access to the financials and business models of this company, invested on the "24th hour" "

There are lots of reason why Eclipse will probably survive and prosper. But that's not one of them.

That's what we call an 'appeal to authority' argument, and it fails with me.

I retired from the Air Force in 1994, my first job after that was as a software engineer for a VC funded startup. After the first year I was really confused as to how capitalism could allow the company to survive with 100 well paid employees who were making a product that sold only in small numbers. And only about 10 of us really contributed to the product that was selling, most were doing all sorts of 'projects' that generated no revenue.

But the management was full of these really good looking MBA types. They all were slim, all very handsome/pretty, all wore very stylish clothes, drove nice cars, had good golf games, and they all knew secret fraternity handshakes. And every head of MBA hair was in the John Edwards class of beauty!

I figured they were a lot smarter than me, and that after 20 years in the government I just didn't understand the private sector yet.

One day the CEO was gone and a guy who looked like Tony Soprano was there as our new CEO. He told he was there to 'clean things up'.

A month latter the company had 4 employees, a few months after that another company bought the software. Today one of those last four work for the new company.

As I stood in the unemployment line I reflected that perhaps either I wasn't as dumb as I thought, or was there the slightest possiblity that those beautiful MBAs were not quite the living Gods that I had thought?

I didn't have much time to reflect because only a few weeks latter one of the MBAs called me and invited to come onboard a new company they were forming. They had partnered with a Real Live Medical Doctor. And not just any old Doctor, but a former Surgeon General of the United States! A famous TV network talking head was on the board! And they had VCs lined up ready to give them as much money as they could spend! And they had an even prettier collection of MBAs hanging around, with lower handicaps and better cars!

Ok, even if MBAs were not as smart as I thought, surely with a famous MD on board nothing could go wrong.

To make a long story short I spent a couple of years writing software for products that never made it to release,wondering why captalism was allowing me to draw a high salary without really making anything useful. But our MBAs and high power BoD were as proud as Lucifer, so I figured I just didn't understand capitalism.

We did have a web page, and on the strenght of that we went public. One of the directors dumped her stock a week later, incuring the wrath of the SEC. Those who dumped shares on the 61st day made some money. A year latter the stock was worthless and we were all on the street again.

I'm not particulary smart, and I'm ugly to boot, even by software engineer standards. But in both these cases I could see really serious problems with sustainablity that the MBAs would just waive away or laugh at when I asked questions.

So ya'll will forgive me if I don't buy the 'people much smarter than you' argument.

gadfly said...

Ken

The dinner “invite” is still on, make no mistake!

Let’s get some things clear . . . at least, for me. I like to see new enterprises succeed, but not at the expense of other legitimate enterprises. It would be of great benefit for Eclipse to set the business world of Albuquerque on fire (in the good sense of the term). Maybe it would even benefit our own business, and maybe not . . . but throughout our own history, I have supported my competition where-ever possible, understanding the difficult path from “start-up” to “success” . . . and the continuing effort required to maintain a successful business, and “squeaky clean” integrity. I like seeing other succeed. And I would have liked to see Eclipse succeed.

But from the beginning, something didn’t pass the “smell test”. Frankly, it still doesn’t. For whatever reason, Albuquerque seems to be a “magnet” for new schemes . . . and I think it has more to do with the local politics than the people who wish to promote new ideas. (There just isn’t time to pursue that subject on this blogsite.)

We’ve lived here since 1970 . . . and been in business since 1976, and have seen a few things come and go. Bill Gates actually attempted to begin here . . . but gave up and went back home. But all that is another story.

Maybe it’s that the local politicians have no clue about high technology (in spite of the national labs) . . . they find it to their advantage to use out-of-state businesses to bolster their own political base. I think that’s much of it . . . but will leave that for others to decide.

But this I do know, when asked about the design of the little jet, and the so-called “testing” (wind tunnel, for example, and the limitations of the one they used in Washington) and “design” (by someone whom I greatly respect, and have worked with on aerodynamic problems for a couple decades), I began to more closely examine the basics of Eclipse, and their business practices. Unfortunately, for Eclipse, Albuquerque is a “small town”, where word gets around quicker than the internet. And I did not like what I was learning.

It is to my advantage, being in the manufacturing and design of tooling for “aerospace”, for Eclipse to not only succeed, but to prosper. However, I still must look at myself in the mirror, and maintain an integrity in our own company.

The little jet has some nice features . . . and some “not so nice” features. Those are customer choices.

But many promises were made as to time and capabilities . . . and from my own point of view, they are not meeting those promises. And when “push comes to shove”, they blame others for their problems. I, as a business owner, do not have that privilege. When things go wrong in our business, I am to blame . . . no one else. And when a string of profanity leaves the lips of someone, I stop doing business with that person. They have revealed something about themselves that cancels all future relationships.

It’s that simple, with me. My life, and the remaining time I may have left, is worth more than “hoping against hope” that someone else will clean up their act, and suddenly be straight and honest. Eclipse Aviation has all the earmarks of a company that is soon to fail, from all that I have observed in my life. I simply hate to see others become a part of that impending failure. But it will fail, and many will be hurt.

gadfly

Gunner said...

Jim-
Great, great, great post.

I once was one of those handsome, young MBA's. Well, I'm still handsome and an MBA. ;-)

Difference between me an much of the Class of '84: They went to Wall Street; I went to work for myself. They invested other peoples' money; I invested my own, borrowed capital. I retired 10 years later. And BELIEVE ME, it wasn't because I was smarter than any of those people.

But it's funny how quickly you come up a learning curve when you're dealing with your own money, as I was, or coming with a decade of prior experience as you had.
Gunner

hummer said...

Ken. . .
I ask a question a little while ago about why it takes 1,400 employees to make about 2 planes a month. Could you be so kind as to address it. I seriously don't understand; I do really understand a variable work force. Thank you

ColdWetMackarelofReality said...

There is a single word that explains why 'Eclipse' (read that Vern) turned down the Highland money - EGO.

How does coming to the table with a quarter of a Billion Dollars and demanding 2 seats on the BoD and preferred creditor status equal an attempt to cause bankruptcy?

Retribution? Hear that Wall Street, don't you come begging to give Vern your money, if he doesn't like your terms he doesn't just get mad, he'll get even. Puhlease.

Vern needed $400M, but his EGO would not allow him to accept new oversight on the house of cards.

IPO - no chance in the world of passing Sarbanes-Oxley at this juncture IMO - this company simply cannot stand that kind of review.

All those loyal employees who have stuck it out for years, enduring the dressing downs, the blood lettings, putting their butts on the line, all on the promise of stock option payouts probably don't even know yet what the dilution will be this time (3rd or 4th time by my count).

How long will talented men and women stick it out for worthless options when the industry is going great guns and there is more work than talented people to fill the billets?

I know Vern and he will cut off his nose to spite his face. Turning down good money because of a request for some oversight into how that money would be spent (after a Billion $$ already gone), to the logical mind a fair trade, to Vern, an insult - of course he walked.

Word on the street is that the BoD bailed them out - again. I figure Mann and Kresa probably have close to $400M in, just between the two of them, maybe more.

Vern will waste millions in vain and self-serving parties at OSH and SNF and AOPA, trying to look the part of the big successful OEM CEO, but the suit just doesn't fit - think Arnold Schwarzenegger's suit on Danny DeVito in Twins.

airtaximan said...

watching Ken is like winessing a Rorschach inkblot test.

For those who are unfamiliar, here's one definition:

"The Rorschach inkblot test is a method of psychological evaluation. Psychologists use this test to try to examine the personality characteristics and emotional functioning of their patients. The Rorschach is currently the second most commonly used test in forensic assessment, after the MMPI, and is the second most widely used test by members of the Society for Personality Assessment. It has been employed in diagnosing underlying thought disorder and differentiating psychotic from nonpsychotic thinking in cases where the patient is reluctant to openly admit to psychotic thinking."

Put any BS from e-clips in front of him, and listen to his interpretation. Its so transparent, its amazing.

I used to think it was a crafty way he was going about trying to influence public opinion, by enthusiastically parroting Vern and e-clips, but I know now I was wrong. Its his personal, uncontrolable perspective on things. Truly it is...

No one could ever read the CN article and make up the conclusion Ken came to.

I sincerely doubt Vern's rendition of the financing fiasco he desribes is true. Its analogous to all the suppliers, systems, and employees thrown under the bus. See Aspen for a nice reference.

There will be no court case - he can never undergo examination, and open disclosure will sink them.

PS. I've never predicted demise of e-clips, not even once - I've always assumed he could continue to bilk investors and depositors for a long, long time.

A viable business plan? I have not seen one yet, BUT the con-jet might create a cheap enough jet for many more millions in deposit money and another billion in equity - even the promise of an IPO.... if they ever had a shot, its the con-jet.

At least we'll have a lot more amusement for M00 and the rest for a while longer. Ken, may never see his plane, though. It might take years and years and years...

XXCCVVVLLL
OOOOkkkkNNNNYYYHH
OOOSSSDDTTEMMSSHHW

tell us, Ken, what do you see?

airtaximan said...

Ken, aren’t you wondering what happened to the hundreds of millions (pos.) of 60% deposits collected by Eclipse. Vern says they were pushed close to bankruptcy in June. Less than 20 planes were delivered at that point. Is the new round ($200 mil net) enough to build the planes that the 60% was collected on? What about future production, Aviong, service center infrastructure and retrofits?


...new CON-cept prototypes?

airtaximan said...

Hummer:

"I ask a question a little while ago about why it takes 1,400 employees to make about 2 planes a month. Could you be so kind as to address it."

I've asked, and Mouse provided that at the time, there were around 600 DIRECT employees working non-manufacturing as Vern puts it.

Still begs, what are the rest of them doing? Developing new Con-cepts?

Hummer, what happend with your analysis of Dayjet?

WhyTech said...

Ken said:


"it obviously wasn't the move the current board and CEO wanted. "

Of course not , Ken. New driectors who represent $200 million in new equity have a nasty habit of yanking back the rug to see what kind of crap is hiding there. They are often disruptive, especially when they smell trouble, and they want to have some say in how management puts their money to work. With E-clips pattern of blown milestones, financial crises, etc, what prudent new investor wouldnt demand board seats? Cant help but wonder just how smart the new guys are that ponyed up $200 million without insisting that they name all the board members. Ever been a board member of a troubled startup company, Ken?

WT

airtaximan said...

whytech,

that's just the way YOU see it!


thanks!

gadfly said...

Hey, folks!

'Ease up on the controls a bit. Don't let your rage cloud your reason. Sure, you may have many good points, but people listen better to a "whisper" than a "shout".

gadfly

WhyTech said...

Jim Howard's post is superb. It reflects the kind of street savvy I have often suggested is not to be found in Vern and the Faithful.

WT

airtaximan said...

but people listen better to a "whisper" than a "shout"

maybe you are right? I believe Vern's been whispering sweet nothings in the ears of some....

He has a real soft touch.

Ringtail said...

Why did we move off of the topic of somebody coming up with a new aircraft that compares to the Eclipse when it comes to overall cost/value? In my opinion the EA50 is going to be around for a long time regardless of who owns/manages the company...and to be candid I tend to be with Ken on this...I don't see another plane that can match the performance/mission capability for the same price and nobody has been able to come up with anything realistic that can be purchased and flown within a year other than a homebuilt. One could probably buy an EA50 via the auction process for a buck eighty in the near future.

Lets open that discussion back up. It has more genuine value than people trying to predict when/if the company will fail.

hummer said...

ATM
Still working on Part 135 certification analysis on North American Air & Lineair. These are both Part 135 operations that have everything and are simply adding a new aircraft. No problem, right?
Well they do have a problem and it is not with their ongoing successful Part 135 operation. . .it's the EA500. Suprise. . .It's the airplane.
Looking at DayJet gives me a headache and is a whole different business plan.
People on this blog. . .look at the market. They look at the number of potential buyers of jet aircraft and do themselves a diservice . . .the market is not in jet aircraft. . .the market is the flying public. Now who steps up and serves this market is where the future is in the VLJs.
BTW. . with your inkblot anology. . isn't the definition of insanity . .continuing doing the same thing and expecting different results?

hummer said...

Employees 1,400
Less:
Non Manufacturing (600)

Manufacturing 800

Times 160 hrs/mth. = 128,000 man/hrs

Divided by 2 aircraft = 64,000
man hours per aircraft.

Am I missing something?

gadfly said...

If you were reading carefully, Jim Howard’s story could be told a thousand times . . . and then some. Even in the brief time (37 years) that we have been in Albuquerque, his story has been repeated so many times, it has become extremely monotonous . . . no reflection on Jim.

And in most cases, it wasn’t for lack of enthusiasm, or a “good product”, or even “honesty”. These “new” companies, had it all . . . financing, talent, . . . you name it, they had it.

One company stands out: They had a new method of making variable refractive index glass lenses . . . something the old companies said, “couldn’t be done”. Good product, no question! But they became convinced that the “old school” had nothing to contribute, so they hired only “new” talent . . . “graduates” fresh out of college . . . and spent all their money going forward . . . and failed to recognize the need for the technology that preceded them, won at a hard cost. I think they still exist . . . but barely . . . and, as I understand it, most of their original crew is gone.

Another local company was going to set the world on fire with a new technology in “pumps” . . . and we even made some precision components for them. One day, I asked them if they wished to see a published illustration of their “patented” invention. They said, “that’s impossible!” . . . but I showed them the reprint from Franz Realeau’s 1870's book on “Kinematics of Machinery”. Yes, they had a “patent”, but had they some old “codger” on board, they might have avoided spending a fortune gaining “old” knowledge and wisdom. And that company no longer exists.

And so goes the local history. The dinosaurs continue, while other “startups” come and go. The new ones have some good ideas . . . no question, but as Job told his three “friends”in jest, “Surely, ye are the people and wisdom will die with you!” In other words, “they” had all the answers, and no-one could tell them a thing.

And so we watch history repeat itself with the “little jet”, and the people who have solved the problems of flight for the masses.

gadfly

airtaximan said...

BTW. . with your inkblot anology. . isn't the definition of insanity . .continuing doing the same thing and expecting different results?


you mean me, dealing with Ken?

Good point!

Ken Meyer said...

hummer wrote,

"Manufacturing 800

Times 160 hrs/mth. = 128,000 man/hrs

Divided by 2 aircraft = 64,000
man hours per aircraft.

Am I missing something?"


No, your math is fine.

So is your logic.

Therefore it must be that each airplane takes 64,000 man-hours to build. It's a perfect illustration of the logic the naysayers seem to enjoy.

The only problem is--those who start with lousy premises usually end up with lousy conclusions. The company didn't build only 2 airplanes in the last 30 days.

Ken

gadfly said...

Hey . . . leave Ken alone. The man is fighting for something in which he believes . . . and taking on the world in the process. Soon enough, it will all become clear. In the mean time, he’ll fight you . . . ‘can’t rightly blame a man for that!

Go easy, just now. It makes it that much easier in the future . . . after the dust settles, and we mop up the blood.

gadfly

(Ken . . . work with what you know, and carry on. You'll do just fine!)

Ken Meyer said...

ringtail wrote,

"Why did we move off of the topic of somebody coming up with a new aircraft that compares to the Eclipse when it comes to overall cost/value? In my opinion the EA50 is going to be around for a long time regardless of who owns/manages the company...and to be candid I tend to be with Ken on this...I don't see another plane that can match the performance/mission capability for the same price and nobody has been able to come up with anything realistic that can be purchased and flown within a year other than a homebuilt."

Well, that's exactly right, Ringtail.

The issue is "What can you get that does as much as the Eclipse as cost-effectively as the Eclipse for anywhere near the same price?"

The answer is: nothing.

I've asked that question a dozen times here because that's the key question. You zoomed right into the central question in the debate, and that's remarkable because there are a dozen regulars on the blog who have written thousands upon thousands of words, mostly emotional, hateful gibberish, without understanding the central question.

I've said it before, and I'll say it again--I could sell my Eclipse positions today and make a profit on the whole venture. But I don't. Just where would I go to accomplish the goal of getting a cost-effective certified jet? Nowhere; there is no place to go.

And that is why the blog is consumed with all the talk about how awful Vern is and how awful the company is, and how they've already gone bankrupt (a dozen times if you believe what is written here!). But never does it come back to what a guy like you can buy in order to fly a jet cost-effectively.

That's the central question. And they don't want to address it because the answer to the central question always leads us back to Eclipse.

In the end, it doesn't actually matter what happens to Vern (oh, it matters to the haters, but not to you and me). And it doesn't actually matter what happens to the investors, either. In the end, the only thing that matters is what the airplane can do. It's certified and it's being produced in large numbers. Those twin facts ensure its survival, just as you observed.

So, really, all we need to do is examine the capabilities of the airplane. And when you do, you wind up concluding that there is no other viable alternative today.

Ken

Six Romeo said...

Ken, Eclipse seems to be a certainty in your future. I may be wrong, but you don't seem to have any desire to hear what is being said here. I am genuinely interested in why you spend so much energy on this site.

Ken Meyer said...

Grand-Gad wrote,

"Ken . . . work with what you know, and carry on. You'll do just fine!"

Not to worry, but thanks for the encouragement anyway. I will carry on :)

But I'll also be completely honest with you--I think the company has done a great many things that I would not have done. They've managed to piss off all kinds of people--vendors and customers alike. From the standpoint of the customer, personally I don't like their customer contracting policies at all--I'd be one of the first to say that the Eclipse Purchase Agreement is written to protect the company at the expense of the buyer. I don't think it should be.

But none of that matters. The only thing that matters is what the airplane can do. What it can do is more than any other airplane in its price bracket--by far.

That's why, in the end, the plane will succeed despite the best efforts of a lot of people on this blog and elsewhere who want to derail it.

It's a really good plane. In the end, that's all that matters.

Ken

WhyTech said...

Ken said:

"I've said it before, and I'll say it again--I could sell my Eclipse positions today and make a profit on the whole venture. But I don't. Just where would I go to accomplish the goal of getting a cost-effective certified jet? Nowhere; there is no place to go."

So Ken, why not trade one of your positions for for a real airplane and fly it instead of speculating about what it might be able to do someday when it is finished? You remind me of the IBM salesman (no offense, IBM salemen!) who spent the whole night sitting on the edge of the bed with a beautiful blonde telling her how wonderful it was GOING TO BE. For God's sake, Ken, get on with it!

WT

cj3driver said...

Ringtail said;

“…I don't see another plane that can match the performance/mission capability for the same price and nobody has been able to come up with anything realistic that can be purchased and flown within a year other than a homebuilt. One could probably buy an EA50 via the auction process for a buck eighty in the near future…”

Ringtail,

This is precisely why the used Eclipse market will be soft for a long time. A “buck eighty” or less for at least 40 more auction units. In addition, there are plenty of positions for substantially less than that, a couple hundred serial numbers out (1yr ?), plus there are at least 3 planes for sale on the used market right now.

I have counted six of delivered, non DayJet planes, out of less than fifteen back on the market or resold after completion. Just imagine how many will be on the market after a hundred or so are delivered. Add that to the number of planes available if DayJet fails. Staggaring.

This is why the price for a used E500, with a few hundred hours on it, … two or three years from now, will probably be worth substantially less than the cost of new, today or in the future. Why would anyone buy a used 400 hour Eclipse two years from now, when a new one costs LESS? Eclipse has already guaranteed the price (at much lower than auction) to several hundred buyers.

Because of this, If you figure 5% depreciation ($90,000) into the equation, this puts the annual Eclipse budget at $360,000, (250 hrs per yr).

There are many realistic options with greater “performance/mission capability” for that budget. Because of favorable ownership economics, a Mustang, used CJ, and a large number of turboprops can be purchased and operated (including higher fuel and maintenance costs) for equal or less than a new Eclipse when considering resale value.

The added benefit to the dinosaur option is;

Greater range (most options)
Larger cabin
Similar speed
Similar TO/landing distances
Higher fuel burn less than 10% of total budget
Known maintenance history
Reliable service
Financial stability
Known safety record (legacy aircraft)
Proven avionics
Warranty backed by larger company
No IOU’s at delivery
Ramp appeal
Potty, refreshment center and six seats (or more)
Strong resale value
Private Jet image vs. “taxi” image
External baggage areas
Capable of Six persons plus golf/ski

mouse said...

The two board seats was a huge issue because it would have given a majority to the "new"er members and they would have done some major house cleaning...

Vern has given a lot of board seats away, to his "friends", but to lose control of the board would have cost him and many of the early team their jobs.

airtaximan said...

Ken:

regarding the logic...

"The company didn't build only 2 airplanes in the last 30 days."

They built NONE in the last 30 days, Ken... if they delivered any, these were started months, and months, and months and months and months and months and months ago.

It would be fun to know how many planes are in work and since when, but I suspect this is a well guarded secret. Imagine there are only 50 or so planes in the works now... where did all the deposit money/progress payment money go?

There were 57 planes in the works at the beginning of this year, and some started back in March (or was it May?) of 2006, Ken.

Hummer's logic is probably better than yours on this...

Anyone know how many planes in the works in total, today??

Anyhow, any way you cut it, its taken 500 man years or so in direct labor to finish (sorta) 30 planes... That's around $1 million/plane - forget the other 500-700 folks on the payroll.

The numbers are staggering.

Ringtail said...

CJ3

If I follow what you are saying correctly it nets out in your opinion that the risk is in the unknown resale value of the Eclipse. Adding the depreciation element in (if it is indeed correct)would cause an overall higher TCO on the Eclipse than a higher priced Mustang/Citation?

mirage00 said...

Seriously, Mirage, relying on the "investors see something" holds no water at this point. Not given the track record, all the investment money gone already, etc... "someone invested so it makes sense to invest" makes no sense to me.

So then why would they invest? To just throw away $200 million? They looked at the business model, they looked at the production costs, they looked at all of the finances and made a decision to invest. They know more than we do.

I remain amused

double 00

mouse said...

How many man/hours (or person/hours)? Don't forget that Eclipse only puts the pieces together. There is so many more hours at the vendors, at the FSW gantry (Fuji), Etc...

Warranty start dates? Most vendor parts, especially electronics have a finite shelf life before they start running on warranty time. Avidyne gives the OEM 6 months on the shelf, and 12 months to the owner, or in other words, 18 months after receipt at Eclipse the warranty clock is off and running.

Trim actuators, electronic circuit breakers, switches, servos, tick, tick, tick...

Software loads and generations/versions are all outdating themselves on the shelf. Recertification of anything electronic better be watched closely too, most have anywhere from 6 months to 24 months before recertification is required...

Cables (wiring), electronic and stainless steel flight control cables all have to be opened and unsealed during installation, and they don't like just sitting around corroding on their contacts or in between their braids waiting to be put into service.

Luckily the air is pretty dry (to say the least) in ABQ, however the contacts are getting pitted and warranty is running out like the grains of sand through the hour-glass...

The tires have a shefl life too, and they don't like sitting around being compressed by gravity instead of nitrogen. EVer look at the racking to see if they are all standing on their treads or lying on their sidewalls? Tires dryrot a lot faster in the desert air, and when they are not pressurized on a rim they have a lot more surface area exposed to the damaging atmosphere...

So many little detials add up to downstream issues, and problems for the owner when he or she gets his/her plane...

Buyer beware...

cj3driver said...

Ringtail said;

“… If I follow what you are saying correctly it nets out in your opinion that the risk is in the unknown resale value of the Eclipse. Adding the depreciation element in (if it is indeed correct) would cause an overall higher TCO (Total Cost of Ownership) on the Eclipse than a higher priced Mustang/Citation?...”



Yes,

For this segment of the population (owner flown - light jet market), depreciation (or anticipated) is a major part of an investment decision. This is a big part of the marketing with fractionals. I also believe the average jet buyer is not very impulsive. I have sold several planes in the past and have found most buyers to be methodical and conservative. This is evident with the auction results of # 38. There were limited (small) number of bidders and relatively long periods between bids. The sales price did not exceed planes/positions on the secondary market, and even less considering “Eclipse dollars”. Bidding activity was low and slow, given the large proclaimed order book.

In addition, the marketing time for Eclipse aircraft (delivered and positions) appears to be long. Also a huge selection to choose from. Just take a look at spjets.com or controller and this becomes very evident. Some of the ads are over six months old.

I think it is also true that most people will spend 10% or less of their net worth on toys. That being said, the market for the owner flown Eclipse will mostly be targeted to individuals with a net worth of $15 to $25 million or so. This is one of the reasons I believe the owner flown market is relatively small. Since less than 1/4% of the American households fall into this category, and less than 1% are pilots, this puts the market at less than 2,500 people.

I also estimate this group would feel comfortable spending 20 -30% of their net (spendable) annual income on a Jet. This puts the market at individuals with $500 – $1 million net income per year ... and, with a passion for aviation.

You might say … maybe there is a greater market is for non-pilot owners who will hire pilots to fly for them. Yes, there is a market there, but when you add the cost of pilot and related expenses, the annual expense increases to 450K or more. In that price range, there are many other options for travel, including traditional charter, Jet cards and fractionals. Much larger and more prestigious aircraft that you can take family, friends, baggage and clubs/skis with you.


In order for Eclipse to keep its pricing below 2 million, most industry experts, and even Vern himself, seems to agree that they need volume of at least 500 planes per year. That means over 2 sales per day, every business day per year. This is clearly NOT going to happen in the owner flown market.

IMO, depreciation / risk, is an essential part of the cost equation when considering a new or used aircraft. This is not to say the Eclipse is not a good value. I believe it is, assuming the IOU’s are filled and the performance is met. I just don’t think there will be a “darkening of the sky” in the owner flown segment… or airtaxi segment for that matter. Its just a small jet, worth about $2 million … a choice, … in a very crowded, and small market.

mouse said...

CJ3,

I agree 101% with everything you wrote, however I have a comment to add. While your results and numbers I expect will be the same, you might consider the following:

You refer to pilots or aviation enthusiasts as the buyers. The market attraction at the income level should be for non-pilots and non-aviation enthusiasts. Everyone in that target audience needs a personal transportation solution.

The problem, and why your numbers are 101% correct IMHO is that Eclipse failed miserably in making the plane attractive to that community by over-promising, under-delivering, missing target by years, slide-of-hand antics like changing major vendors at the last minute (Hmm, just like Highland did to Eclipse per Vern???), claiming deliveries when much of their panel is "INOP" (in fact their inop placards are built in as good as the actual legends which leads one to believe that they are A) there for a while, and B) meant to deceive you).

If you want to attract a new crowd, and this is the only growth arena left in aviation right now, you don't do it the way Eclipse has done it. You might get away with it with people already in the game (think of the deposit holders on this site), but not with the timid non-airplane flyers and owners.

You have to put the bowl of cream out and wait for the cat to come to you... try and grab the cat before it's ready and you chased it away forever.

As a mouse I understand the cat logic.. being in the bush beats being caught with two hands...

Another real diservice to anyone looking at or considering the Eclipse falls on to the "supporters" on this site. By rolling over and accepting, and even spinning everything in such a wonderful light, they have pushed Vern and his management into thinking that everyone will accept, and in fact wants the plane, just as it is, and why fix it so soon, or before it's ready?

Ken, by not bitching about how screwed up the program is, by way of negative reinforcement you have helped Vern pump out an inferior product that cannot compete with or supply the current market...

Aircraft value = very little, long term prospects = not too much unless leadership changes, and not changes its way, but changes. The cat has seen the hands, and it's not coming near the bowl of cream, or in this case the bowl of rancid skim milk.

Niner Zulu said...

Jetprop jockey asked "Where is the market?".

I will answer that. It doesn't exist. It never has. It is wishful thinking.

The VLJ spin machine is out of control, and Eclipse is leading the pack. Sorry Ken, I don't think current jet operators are going to scale back into Eclipses as fuel prices increase - instead I believe that these older jets purchased over the past few years by over-optimistic baby boomers are going to be DUMPED on the market, further depressing prices of all jets including VLJ's.

We may be in a global boom, but the US is in a global bust and we are the largest GA market. With the US housing market unwinding and only in it's first year of a multi-year contraction, people are really going to be feeling the pinch just about the time the VLJ revolution hits. Add the falling dollar, peak oil, and the VLJ boom is likely to be a VLJ bust.

Let's be serious. Eclipse is really going to build 2,700 jets on the market in the next 3-4 years, AND they are going to go up in price? And Cessna, Piper, Diamond, et al are going to add a few hundred more to the mix? Who is going to be buying them? No clue. I know a LOT of pilots and not many of them can afford $150,000 - $350,000 per year to own a jet.

airsafetyman said...

The folks on this blog seem to fall into two categories: those who have spent their careers in aviation and are, by definition, poverty-stricken, and those who by talent and hard work have become fairly wealthy and can afford to buy a private aircraft. If I, as a member of the beggar-bowl set, could suggest anything it would be for you guys to combine your resources and get a real airplane like a late model Dassault Falcon or Beech 125 and share it. Form an organization, hire some pilots and mechanics, and by all means fly as copilot until you get a type rating. This whole VLJ concept, in one guise as an air taxi with a single pilot under heavy pressure to flog a crumbling Eclipse around the circuit on peril of losing his job if he refuses, and on the other side a single part-time owner/pilot flying this thing by himself is just a train wreck coming down the road.

AeroObserver said...

North American Jet first to add Eclipse 500 to Part 135 certificate

http://www.avweb.com/avwebbiz/news/Chicago_Firm_First_With_Part_135_Eclipse_VLJ_195918-1.html

Ken Meyer said...

DayJet nears Launch

Will have 11 planes next week.

Ken

Ken Meyer said...

CJ3 wrote,

"In order for Eclipse to keep its pricing below 2 million, most industry experts, and even Vern himself, seems to agree that they need volume of at least 500 planes per year."

Whoa; hold the phone.

Vern never said that. Show me where he did.

And I don't think any industry "experts" (except maybe mouse who, after all, was separated from the company 5 years ago) have worked out what production volume is necessary to sustain a price under $2 million.


Do you have an actual data source for those "facts?"

Why can't we just stick to real facts around here? (that's rhetorical; I know the answer--it's because if we stuck to real facts around here, we couldn't knock the plane very much, could we?)

Ken

airtaximan said...

http://www.charterx.com/resources
/article.aspx?id=2904

Dayjet scheduled to launch in a few weeks

flightguy said...

"Eclipse will break even at 500 deliveries a year and will be “comfortable” at 750, he says. That boils down to as few as two aircraft a day, although Raburn’s target is four. He expects Eclipse Aviation to be profitable by 2007."

This from Eclipse's own website:
http://www.eclipseaviation.com/index.php?option=com_newsroom&task=viewarticle&id=1010&Itemid=51

Metal Guy said...

“The assholes at Highland, they waited until the 23rd-and-a-half hour to make demands,” Raburn tells me. “It was clearly a premeditated attempt to put the company into bankruptcy. []”

Sounds like Vern got a taste of his own medicine. This is the way he treats everyone else and then giggles to himself that he’s a real ass-hole. Real winner on our hands.

Hey Vern, I hope they really pissed you off.

Ken Meyer said...

Flightguy, that that's at current pricing. The hypothesis CJ is putting forth was "below $2 million"--that's a different pricepoint and therefore an entirely different volume/profitability curve.

To my knowledge, no one here knows what volume is needed at that higher pricepoint.

Ken

JetProp Jockey said...

Unless there is a letter sent out to every position holder that they need to pay an extra couple hundred thousand for their aircraft, the next 3 years of production will be at the current pricepoint and volume needed according to the company is 500 to 750.

hummer said...

ATM
AvwebBiz 5.31
Chicago Firm First with Part 135
Eclipse VLJ

airtaximan said...

Ken:

all we have are facts and histroy, right?

So, what do you think about these numbers?

...its taken 500 man years or so in direct labor to finish (sorta) 30 planes... That's around $1 million/plane - forget the other 500-700 folks on the payroll.

?

airtaximan said...

Hummer,

was there a doubt as to whether the plane COULD be part 135?

I'm a little lost on what you are thinking

hummer said...

Ken
Now is Eclipse would get their head out of (the sand), they would put on auction a duplicate of this Part 135 equipped (and certified) with all the mods to date. . AND BRAG ABOUT IT.
Let's see what the real market value is?

hummer said...

Ken
And how about some real updated operating figures for this aircraft?

hummer said...

ATM
Sure it "COULD"
That's a no brainer
but "WOULD" considering the hostilities brought about by
certification was the point.
HURRAH
Stick it to them Vern.
Don't stop now!

cj3driver said...

Ken said;

“…The hypothesis CJ is putting forth was "below $2 million"--that's a different price point and therefore an entirely different volume/profitability curve….”

Yes,

I believe the ultimate volume for the Eclipse should have been at the higher price point/lower volume. And therefore my point. Much smaller market. The problem is that Eclipse has pre-sold hundreds of units at the wrong price point. Most likely to individuals who cant really afford it, or dont really want a $1.85 million dollar jet. They are just speculators, many with multiple postitions, that were promised sub million dollar jets. They hang on because of equity. Ultimately, there are not 2,700 buyers for this product … even at 1.5 million.

The dinosaurs all know this.

At current value ($1.85 mil), the market for the Eclipse is 100 -150 planes per year at best. This is evident by the number of resale’s taking placed. For example s/n 29 NBX has been on the market for over two months. This is a flying aircraft sitting in a hangar in Texas at $1.8 million.

Eclipse has already pre-sold over 10 year’s market share. They will eventually will be, … and already are, competing for that market share with their most serious competitor, … Their own customers. This will eventually cause a soft resale market. Oversupply of new product.

Just read Mike Press’s past newsletters and you can see the trends for position pricing. There are so many positions out there, they fluctuate like commodities markets.

This is why you should factor in depreciation / risk factor into the equation.

As for the volume / pricepoint needed for Eclipse to survive, … that’s years and years away. I would be more worried about the next 36 months.

ExEclipser said...

I'd like to know from someone still on the inside -

Have the aero mods been certified? If not, then I don't suppose we'll see a marked improvement in deliveries. When the fixes are made, that's when ramp up will take place.

I think, if I were a customer, I would prefer to wait a few more months for an aircraft that was built with the fixes rather than retrofitted at a later date.

I would, however, like to be typerated while in waiting...

EclipseOwner387 said...

CJ3,

SN29 is not selling because it is worth about 50-75K less and the seller is firm on his price. He is asking too much compared to better equipped airplanes that are for sale. Numerous aircraft ready to go with similar options are selling actively for about 50K less. If that supply dries up he may get his number but that is the issue.

Also, a number of the aircraft lsted on Controller are already sold but haven't been taken off.

ExEclipser said...

N15ND (LinearAir) is flying again, today. Perhaps flying proving runs to prepare to get them on their Part 135 ticket.

N875NA is presumably the aircraft that is being used by the charter company in Chicago. Wonder what makes them think they don't need the same proving runs that LinearAir and DayJet need. Wonder what makes them think they'll be 'first'?

Talked to a DayJet rep the other day and asked if they were going to beat LinearAir to revenue service. They didn't seem to care.

EclipseOwner387 said...

EXECLIPSER,

The aeromods have been certified. SN40 was delivered yesterday and it is an aeromod airplane. Eclipse announced certification of the mods at Oshkosh. I have posted the news a few times now.

ExEclipser said...

I think that the value of the Eclipse 500 was set in the first auction. Even if the buyer had $80,000 in BidderBucks, it still sold for at least $30K more than current retail.

ExEclipser said...

EO: Thanks. For some reason, I thought so, but I knew that it would be quicker to post here than to actually search for myself. :)

ExEclipser said...

Are deliveries not necessarily made in the same order they come off the line? DayJet was boasting number 8, but number 12 is SN..37. If 40 came off the line, DJ should have 12 by now.

Are there a few finishing touches that need more time for DJ?

All that being said, DayJet has to wait 17 airplane deliveries between their 12th and 13th plane (their first aeromod ac).

Gunner said...

Execlipser said:
I think that the value of the Eclipse 500 was set in the first auction.

I wouldn't go that far. But it's a strong data point. And not a very encouraging one for those hoping this company will stay in business for a while. While we have no "facts" that this is below cost, neither are there "facts" that would indicate a profit built in at this price.

And so it's reasonable to analyze based on what we DO know: Given the rate of production, outsourcing of manufacture, market size and competitors' prices, it's a pretty good bet that direct and indirect costs exceed this amount.
Gunner

ExEclipser said...

Sure the costs exceed the price at this stage of the game.

But I doubt anyone would pay one birrion dorrars for the first plane, or even 25 Mil each for the first 40.

I don't disagree with you - they've GOTTA ramp up production rates. Maybe now that 40 has come off the chute, they can get crankin'.

I wish I could just sit outside of the plant and count them as they come off the line. My contacts are not real eager to help me keep count.

ExEclipser said...

I guess according to AVWeb, North American Jet Charter Group actually "received FAA approval as the first U.S. Part 135 very light jet (VLJ) operator using an Eclipse 500."

With only two flights in FlightAware, the most recent being last Friday as it made its way from ABQ to Chicago Executive, I don't understand how they got their ticket.

LinearAir has been doing Part 135 ops for a while and DayJet has had the planes for several months. What makes NAJCG so capable of getting the EA50 on their ticket so quickly?

cj3driver said...

EO said,

“…SN29 is not selling because it is worth about 50-75K less and the seller is firm on his price. He is asking too much compared to better equipped airplanes that are for sale. Numerous aircraft ready to go with similar options are selling actively for about 50K less. If that supply dries up he may get his number but that is the issue…”

EO.
With all due respect, you have made my point. Move that thought 12 months from now, when there is (may be) 300 planes on the ground. Even at 180 new planes per year, there needs to be 15 NEW buyers each month. That’s a sale every other day.

As you said, this seller will have to LOWER the price in order to make a sale. SN 29 has been for sale for several months now. There obviously has not been 50 new buyers for “on the ground” Eclipses at $1.8 in the last few months. And there are less than 25 flying Eclipses in the hands of owners… and hundreds more to enter the market.

I seriously doubt the supply will dry up in the next few years, unless Eclipse goes TU, and, as evident by S/N 29, the used market is already getting soft.

cj3driver said...

EX said;

"...I think that the value of the Eclipse 500 was set in the first auction. Even if the buyer had $80,000 in BidderBucks, it still sold for at least $30K more than current retail...."




.... But SN 29 at $50K over market just sits ....

redtail said...

S/N 29 just doesn't have the optional equipment that people are wanting in this aircraft. The only avionics option installed (or to be installed) is SkyWatch. No 135 option, no copilot option, no TAWS, no StormScope. Other aircraft for sale are simply better equipped (on Tuesday).

Again, your inadequate research supports an incorrect conclusion.

ExEclipser said...
This comment has been removed by the author.
ExEclipser said...

CJ3: Frankly, I think SN29 is doing a poor job advertising.

For $1.8 Mil, I'd have every spec listed out (what's on there and what's paid for vs what is in IOU status like the lavatory), thousands of photos, and prominently displaying that it's available NOW.

He's also presumably used up the training portion of the purchase, so that would be an added cost to the buyer.

Maybe he should take BidderBucks.

cj3driver said...

"...Again, your inadequate research supports an incorrect conclusion..."

OK, but I was using EO's conclustion at $50K over market. What do you think 100K? 150K? Either way... pretty tiny market, dont you think?

EclipseOwner387 said...

CJ3,

What you are not taking into account is that as the market has more time to digest the success of Eclipse the market will actually increase in price. Many of the sellers of these airplanes were not speculators. They are buyers that got worried about Eclipse. If Eclipse demonstartes it is here to stay the value of the Eclipse will balance out the supply and the supply could stay short as concerned buyers jump back in. Everyone on this blog has pretty much agreed that the Eclipse should be a 2+ million dollar airplane. As long as that is the case I think your theory will fizzle. Keep in mind these prices are being paid for an INCOMPLETE airplane. What will the market be with a IOU-free aircraft?

However, if it becomes obvious that Eclipse will fail or is in trouble then all bets are off.

EclipseBlogger said...

I think most buyers are still in the "wait and see" category. Until the problems are ironed out, there is no point in buying a new position from Eclipse in the near term. If Eclipse survives, the delivery date of a new position won't change that much if you wait a while. If you want a plane sooner off the secondary market, I think there will always be a selection to choose from. So again, why rush in at this time. Wait until the future can be forecast with a little more certainty, and fewer IOUs.

Donald said...

I am wondering why so many people are so negative about Eclipse Aviation. There are so many very smart people writimg so many negative thoughts.

Please take some tie to reflect on the condition of the United States manufacturing outsourcing in general. Those of you that are so brilliant why not put your brains together and write about posible solutions in helping Eclipse manufacture safe reliable jets in larger numbers. You could be helping hundreds of men and woman feed their families.
How can anyone bad mouth Vern and Company? Unless you have invested your personal capital in Eclipse you should have no complaints.

donald

The Eclipse jet(s) are a true inovation. Nothing is perfect. Eclipse is succeding. It may take quite some time, but they will make more and more jets.

Gunner said...

EO said:
"Everyone on this blog has pretty much agreed that the Eclipse should be a 2+ million dollar airplane."

Everyone but Ken, who's still waiting for that to be proven as "fact", but let's disregard for a moment. I'd not only agree that it's a $2MM+ PROMISED jet (and have said so for months), but would go as far as to say it HAS to price in the $2.2MM range to be profitable. (Look to Cessna, Adam and Elite as examples of how the competitive market is pricing these birds.)

At that price, Eclipse enters it's own limited order spiral. The Cheap Seats market dries up and it gets hit in the price guts by promising competitors. Other than some minimal fuel savings and several hundred grand, there'll be absolutely nothing that recommends this aircraft over the Mustang; and much that mitigates against. D-Jet then starts looking good to the $1.5mm budget guys; Epic has two entries sitting right at the Eclipse price range.

If the early design errors and misses on this aircraft (which were HUGE) are any indication of expected reliability; if the early fit and finish issues are any indication of workmanship. Well, let's just say it doesn't take much to tank the rep of a new design. See Mirage and MU2.

Gunner

cj3driver said...

“…Everyone on this blog has pretty much agreed that the Eclipse should be a 2+ million dollar airplane. As long as that is the case I think your theory will fizzle…”

EO,

Again, the point is … I do not believe there are hundreds of ADDITIONAL NEW buyers ANNUALLY for this product, IOU free or not. The Eclipse buyers are mostly there now, hundreds of them (if not thousands). Eclipse, in the long run, is competing for these buyers with existing customers. This will have a negative effect on sales in the future, especially at $2 million or more, since majority of existing customers are under contract for less than that price.

If there are hundreds MORE buyers at $2 million or more, on top of the hundreds (thousands) already under contract with Eclipse, than you are right, my theory will fizzle. I just don’t think there are … for the stated reasons.

Gunner said...

Donald-
It's not that we "hate" Eclipse. We object to the way the company has lowered the standards for aircraft design, certification and, especially, marketing. We don't like the fact that Vern has actually encouraged User Fees with his pompous pronouncements and doctored Order Book.

I can pretty much guarantee you that, if the Board replaced him with a an Aviation Professional or even a Business Professional; someone who worked over the next 24 months to build a rep for integrity, there's many of us that would re-enter the market at that time and take a serious look at this jet.

Witness the support Diamond, Cirrus, Epic and Honda have received here. If Eclipse is alone in having vocal public critics, there's probably a reason.
Gunner

ExEclipser said...

Donald,

I understand your frustration. Even though I am no longer an employee of Eclipse, I remain faithful. As an investor, I remain judgemental.

Your points are well taken. There is a lot of improvment that Eclipse could gain from listening to the aviation world. Many many many of these criticisms have been around a long time and Eclipse management simply refuses to listen.

One of the biggest problems with any startup company is that you have to populate your positions with employees. Obviously you can't bring everyone in from the same company with the same experience.

Eclipse's problems have stemmed from the fact that they hired arguably some of the best engineers and assembly-folk from top aviation companies - especially Cessna, Raytheon, and Boeing.

This is something like wanting to build the best computer system in the world and bringing in IBM, Commodore, Apple, and TRS80 parts and then trying to get them all to talk to each other.

Even when I was there in 2004, there were very little processes in place. The folks on the line from Cessna couldn't understand the drawings cranked out by ex-Raytheoners. 14 VPs vs 400 rank and file workers created ego-wars that continue to plague the company to this day.

Everyone has experience, but think their way is best. Common sense engineering was ursurped by Vern himself. Chaos in process and change management was epidemic.

Some of the best personell equipped to deal with changing environments were contractors, but they were always the first to get let go.

There are growing pains in every company. There's probably a SinoSwearingCritic blog out there for the very same reasons as this one exists - everyone wants to be a critic and it's real easy when you smell the blood of broken promises and setbacks.

I know that Eclipse is going to make it. The speed at which they are getting there is frustrating. I've sacrificed quite a bit to be a part of this company and was rewarded by getting let go.

But I gotta hand it to Vern. Asshole that he may be, he has introduced a concept in aviation that no less than a dozen companies are trying to or looking into cashing in on now.

mirage00 said...

We object to the way the company has lowered the standards for aircraft design, certification and, especially, marketing. We don't like the fact that Vern has actually encouraged User Fees with his pompous pronouncements and doctored Order Book.


Oh please... that's rediculous. Please explain what you mean by "standards".

Also when you get a chance, quantify this statement as well.
"Vern has actually encouraged User Fees with his pompous pronouncements and doctored Order Book."


I remain amused.

double 00

cj3driver said...

Donald said;

“…How can anyone bad mouth Vern and Company? Unless you have invested your personal capital in Eclipse you should have no complaints …”

Donald,

Are giving permission to the faithful?



Is questioning the economic viability of a company “bad mouthing”? I don’t think comments on markets and forecasts are necessarily “bad mouthing” Eclipse either. Many comments revolve around the faithful argument that there are no other options available. I think people are seriously interested in this, especially if they are considering writing a big check for a plane promised in the future.

BTW – a large number of parts for the Eclipse are outsourced outside the USA.
Wings, engines, nosecone, tail, radar come to mind.

Gunner said...

"Please explain what you mean by "standards".

Just off the top of my head?
- Certifying a partially complete design

- Demanding Progress Payments when you know you have no avionics

- Trashing respected Vendors to cover your own incompetence

- Trashing your own workforce to cover your own design shortfalls

- Trashing respected aircraft manufacturers to cover your own inadequacy

- Claiming that other manufacturers have been "screwing us" for years, while admitting you've blown hundreds of millions in payments received to complete orders

- Claiming that a well respected Wall Street firm premeditated the attempted bankruptcy of your company

You, know, little drops in standards like that.


"Also when you get a chance, quantify this statement as well.
"Vern has actually encouraged User Fees with his pompous pronouncements and doctored Order Book.""


Marion Blakey already has; publicly. Not worthy of further comment.

Gunner

ExEclipser said...
This comment has been removed by the author.
cj3driver said...

Gunner

Well said. ... Moo?

ExEclipser said...

I can't elaborate, but I must take exception to the comment "- Trashing respected Vendors to cover your own incompetence."

Trust me - more than most of the blame is very much deservedly belonging to the suppliers.

Gunner - if you're implying that Vern's purported inflated order book is cause for user fees, keep in mind that independent FAA research has determined that there would be 5000 VLJs in the next 5 years. Even if Eclipse disappeared tomorrow, that number could only be halved.

Vern has quite publically criticized user fees - outside the company and inside the company (as if there was anything we could do about it).

cj3driver said...

“… independent FAA research has determined that there would be 5000 VLJs in the next 5 years …”

I don’t agree with that either, … not without air taxis. And, my guess, we will know the answer to the air taxi question in the next 12 months.

cj3driver said...

EX,

Do you consider the Mustang and Phenom 100 a VLJ? ... Cessna and Embraer dont.

mirage00 said...

Certifying a partially complete design
Who certified the airplane? Who accepted the airplane with IOU's?

Demanding Progress Payments when you know you have no avionics
How is the plane certified and flying without avionics?

Trashing respected Vendors to cover your own incompetence
Avidyne has more than its share of issues and has been losing its advantage to Garmin. What is incorrect here?

Trashing your own workforce to cover your own design shortfalls
Trashing? I'm sorry, I missed those statements. Could you provide links?


Claiming that other manufacturers have been "screwing us" for yearsWell for years it’s basically been a (as mom used to say) "you get what you get and you don't get upset" mentality in the industry.

Claiming that a well respected Wall Street firm premeditated the attempted bankruptcy of your company
How dare he.

Marion Blakey already has; publicly. Not worthy of further comment.
Wow. You really believe Vern has that much power. How do you sleep at night?


I remain amused!

double 00

Gunner said...

Exe-
Mouse and HotDog would disagree with you as to the cause of the Vendor problems.

To User Fees, what's it matter what Vern says in opposition; he's provided the FAA ammunition for 1,000 VLJ's per year from his company alone.
Gunner

ExEclipser said...

CJ3 - Of course Cessna and Embraer don't consider their little planes VLJs because Vern coined the term. But when considered that a VLJ is generally accepted to be an aircraft that is less than 10000 lbs and carry fewer than 8 on board, then yes, both are VLJs. Besides, both Cessna AND Embraer have called their little jets VLJs.

FYI, a Google search for vlj site:cessna.com points to the Mustang website, even though the word doesn't appear on that page.

Embraer press release introducing Satoshi Yokota: "In April 2005, Satoshi Yokota was appointed to the current position as Executive Vice President, Engineering and Development, where he is supporting the entry of Embraer in the very light business jet (VLJ) market with the Phenom 100 and Phenom 300 jets."

Gunner, as Hotdog and Mouse are probably still at Eclipse and I am not, I can assure you that while I was there, I was acutely aware of vendor problems well before they were ever publically acknowledged.

As much as you may care to disagree, the FAA doesn't use a 4-plane-a-day word by the CEO of a startup to predict the number of VLJs to be delivered.

redtail said...

Gunner said... To User Fees, what's it matter what Vern says in opposition; he's provided the FAA ammunition for 1,000 VLJ's per year from his company alone.

How stupid can the FAA be. Do you really think they expect Eclipses to start crawling out the factory like a swarm of ants. Don't you think they see the SLOW ramp-up.

Gunner said... Claiming that a well respected Wall Street firm premeditated the attempted bankruptcy of your company

Well respected? Do some due diligence. Highland is well known for changing terms at the last minute when a company can least afford to negotiate. They get very expensive terms, and later take over the company. Vern did the right thing.

Gunner said...

"Highland is well known for changing terms at the last minute when a company can least afford to negotiate."

Well then, shame on Vern for not doing HIS Due Diligence; sham on Vern for doing business with a Bottom Feeder. But, just maybe, that's all that he has left outside of Board money?

Regardless, I never said he should have done the deal. Just that his comments about a premeditated conspiracy to bankrupt him are pretty childish and unprofessional; almost as unprofessional as attempting to borrow money from a company that you claim has a rep for sleaze. (That could be confusing to some: am I referring to Highland or Eclipse? Except for careful read, one might never know.)
Gunner

redtail said...

I think the point here is that YOU make statements based on emotion and too few facts. Respected Wall Street Firm? How do you know? What do you know?

Yes, Vern should not have been caught with his pants down, but that's the way hardball is played.

Gunner said...

redtail-
Methinks you protest too much. Go to the Highland web site; seems they've done business with a large number of respected firms. Eclipse was the only one they attempted to "bankrupt".

So, stop with the "What do you know?", BS. That dog just won't hunt.

Vern tried to borrow money. He and the firm he approached couldn't come to terms. Leave it at that...that Ludlum Wall Street Intrigue Story just ain't playing out.
Gunner

ExEclipser said...

Hmmm... I don't think that the Highlands website is going to tout their aggressive strategies on their website.

A separate article I came upon from the Dallas Morning News does mention that they are extremely agressive and don't have any heartache suing the crap out of companies they finance and trying to take them over by appointing directors.

Perhaps Vern was aware of this and thought that they weren't going to do this, but it was pretty crappy of Highland to come up with extravagant demands at the last minute.

Were they trying to intentionally put Eclipse into bankruptcy? Doubt it, but they wanted to make it absolutely clear that they were in charge of the deal. Had the financing gone through before the final demands, everything would be pretty moot. Had it gone through WITH those demands in place, Eclipse would have been enslaved to them.

Vern made the right choice - and could have ended up locking its doors. I doubt Highland could have run the company better than Vern. None of their guys are aviators.

Gunner said...

And I'm being called "emotional"?

Exe-
It's a Capital Investment firm. The company was, by Vern's own admission, broke. They wanted two board seats and security. And you call that "crappy" of them?

Professional companies have a Business Plan and a Cash Flow Plane, Exe. They hit the street for money well in advance of running out; they don't find themselves in a situation where the failure of a financing deal to go thru threatens their existence so badly that they have to run back to insiders to bail them out.

This was a $200 MILLION dollar financing of company with no assets, a questionable business plan and over a BILLION in prior investments. Highland isn't the Small Business Administration, Exe. They're a Money Lender.

Let's all grow up a bit and understand the way funding for overfunded companies with no earnings actually works in a Free Market.
Gunner

ExEclipser said...

Again, I don't disagree with you. But its their tactics that I'm referring to.

There are plenty of other heavy investors in Eclipse and they're not all demanding two board seats the day before they fork over the money they promised.

And, obviously, this botched round of funding DIDN'T kill Eclipse because they DID have a backup. Obviously they're not happy, but they're not dead in the water.

WhyTech said...

Gunner said:

"Let's all grow up a bit and understand the way funding for overfunded companies with no earnings actually works in a Free Market."

Right on, Gunner. How may of those criticizing Highland have raised $200 million in private equity or debt? The reality is that the negotiation ends only at the momement the closing documents are signed. The company (E-clips) is free to approach any financing source they wish, and most usually keep several irons in the fire until the closing. Highland has been around a long time and their reputation and style are very well known to those providing and accepting financing. Given Vern's prior experience in this process, he had to be completely aware of what the was getting into. He was free to walk at any time.

WT

mirage00 said...

Given Vern's prior experience in this process, he had to be completely aware of what the was getting into. He was free to walk at any time.

And he did in the 23rd and 3/4 hour. So I would assume he did his job.

I remain amused.

double 00

redtail said...

Yes, he was. Yes, he did

Gunner said...

Yep, and then he whined like a little girl that he barely avoided bankruptcy with all those Bad, Bad People trying to hurt him. But, no worries, "There WILL be retribution".


Really makes me want to invest in this company. Stable management; level headed; well in touch with reality.

Anybody need a bridge loan for your next Progress Payment? I'm offering great rates due to the obviously stellar leadership of this company.

;-)
Gunner

mirage00 said...

Really makes me want to invest in this company. Stable management; level headed; well in touch with reality.

$200,000,000 says someone seems to think so.

I remain amused.

double 00

Gunner said...

Mirage-
Yep, those with money already in the game have hard choices when the kids come home and cry that they blew the Nest Egg. Evidently Wall Street wasn't quite as sympathetic, nor nearly as frightened by your boy's threats and tantrums.

That's called a Data Point.

Now, I'm amused, too.
Gunner

mirage00 said...

Yep, those with money already in the game have hard choices when the kids come home and cry that they blew the Nest Egg.

You have no idea where that money came from nor what the terms were.
Time to revisit prior discussions... RVSM, Aero Mods, Pitot Tube... Conspiracy... etc...

I remain amused

double 00

WhyTech said...

M00 said:

"So I would assume he did his job."

Certainly not his pattern up to this point. You must know the terms of the various financing alternatives to make such a call.

WT

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

Exe-
Back to your point on Highland's demand for Board Representation. It's a natural and quite common request from ANY arm's length, third party investor at this stage in the Eclipse well-runs.

I'm really a bit amazed at the lack of understanding by some here of the way the Capital Markets work. It sounds from the comments that some believe each new round of fund-raising should be easier than the last and the terms more lenient.

But it's quite the opposite. Every time you admit to blowing your wad and return to the markets, the terms get stiffer because the pay-day is smaller and less likely. It's just that simple.

Two Board Seats? Exe, Eclipse is so far upside down in their funding; they have burned thru so much money compared to their competition that the "We'd like your lungs" deals are the only ones on the table until they can get this mess turned around. The Lenders look at them and their previous (wrong) projections and conclude (appropriately) that management and Board is not doing their job properly. I can't think of ANY large investor that wouldn't demand Board Representation (if not Control) at this point.

Two Board Seats was not at all unreasonable; nor was preferred or convertible debt. They wound up on Highland's doorstep, rather than Goldman's for a reason. Not saying that Vern should have taken the deal; just that he shouldn't be crying about it, threatening "retribution" over it, or regaling us with "conspiracy to bankrupt" stories around it.

Remember, this entire Highland issue was only brought up as one entry in a list of ways this Company cheapens the industry image; that list wasn't volunteered. It was demanded by The Faithful.
Gunner

paul said...

Bunch of Nothing said:

Oh please... that's rediculous. Please explain what you mean by "standards".
How about short ED, pre-loaded parts, poorly pulled blind fasteners, mis-drilled and oversize holes. The fact that they use numerous (thousands) of blind Huck rivets where a hard rivet could easily be installed concerns me.

Gunner said...

If that's the Original Paul, Welcome Back, guy!!!!

You're info a year ago was too spot on. I figured they'd run you off for good as they apparently did to HotDog (for about the same reasons).
Gunner

WhyTech said...

Gunner said:

"the "We'd like your lungs" deals are the only ones on the table until they can get this mess turned around."

If E-clips had delivered on their promises (or anywhere close) the financial types would be standing in line to throw money at them, and on just about any terms E-clips wanted.

WT

airtaximan said...

"but it was pretty crappy of Highland to come up with extravagant demands at the last minute."

remember, this is Vern's stated rendition of what happend...

one might do well to consider the source, and remember, Aspen, Avidyne, United, Williams, etc... and re-think what he is saying, why and what it means.

I would venture to say, what he writes is likely the opposite of what really happend.

Perhaps he USED them, and found a sucker to compete for the deal. Once he backed out at the last minute to take the other deal, they threatend to sue...so he's now posturing.

Just a possibility... in any case, I doubt whether VErn is being accurate or even remotely honest.

gadfly said...

Paul

“Huck”, “Cherry”, Pop, . . . even “explosive” and other types of blind rivets are great in non-structural repairs for “patches”. But I was not aware that these rivets are approved for structural assembly.

"Way back when", the “upset end” of the rivet was to be at least 150 to 165% of shank diameter, and 50 to 65% thickness of shank diameter. How is that achieved with a “blind rivet”?

Back in the “big war”, major aircraft companies hired the “little people”, to crawl back in wings, and “hard-to-get-to” places to “buck” rivets. Back then, the “dinosaurs” understood the serious drawbacks of using “blind rivets”.

Riveting properly is an “art”, and nothing to be taken lightly.

You have taken the gadfly by surprise.

gadfly

(I'll hunt up my old "CAM 18" manual, and see what it has to say. Of course, those old "stick and wire" aircraf weren't subjected to the high stresses of today's jets . . . makes one wonder!)

airtaximan said...

anyone take exception with around $1 million per plane so far in direct labor...

if so, how does the road to break even look?

*** there was a reason Vern sold cert then immediate ramp to hundreds of planes a year. Why? Avoid the risks associated with the financial disaster e-clips is now in.

Just like the technological revolution based on Avidyne, EJ22 and FSW...the new one being "sold" as "high performance manufacturing" is BS.

No one would rate 500 folks to produce 30 or so planes in a year (or 15 months) anything special.

So, how does $1 million per plane in direct labor sound? so far...
.. and imagine the actual costs all in including overhead, and its probably close to $3 million a plane.

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

AT-
Dunno that I'd be willing to stick my neck out that far on pinning down the numbers. I'd rather stick with orders of magnitude precision, based on what we know.

From what I know of empty coffers in June '07, hundred of planes to be produced without benefit of the Progress Payments (they're gone), Training & Flight Sim expenses, Retrofits and service center costs.... based on that, the recent influx of funds won't last much past the New Year (if that far). That is, IF this company starts delivering planes according to (any one of) their announced schedule(s).

Of course, the timing for cash needs should be perfect. Sometime in fall, problems with the EA-50X will be announced as solved ("just working out the operational details; we're REALLY gearing up for production this time!"). The LessJet will then move front and center "by overwhelming demand". That will be the excuse for the next round of frantic 4AM phone calls with the next set of "assholes".

Personally, I don't think that people are as gullible as Vern hopes. Then again, I sometimes look around him and wonder.
Gunner

redtail said...

Airtaximan said... No one would rate 500 folks to produce 30 or so planes in a year (or 15 months) anything special.

Your guess is probably about as good as your knowledge (or lack thereof) of the program. Aircraft #40 was delivered yesterday. So I guess your estimate is off by at least 25% before we even look at it. Good try.

airtaximan said...

redtail,

you are a funny man.

There have been reports of 600 or more workers since last March on the first 57 planes...

Keep measuring with a micrometer and cutting with a chainsaw, buddy. This will get you far.

Even if I'm OFF by 25% as you like to think... its still $750,000 per plane in direct labor, plus the material cost, plus the other 600-800 employees and overhead.

You ARE kidding with us, right?

Provide what you think the real numbers are.. go for it. I promise, its laughable to think this will ramp to anything reasonable in any sort of timeframe that could result in positive cash flow, no matter how much you want to fudge the numbers.

E-clips promised a plane a day in August... and they are still eating into production started months and months and months and months ago... at best 6-8 months ago.

Start thinking a plane produced in x man-hours instead of years... and try not to be fooled by 20 deliveries in a month... planes that have been produced with 500 employees for 6-8 months... that's a big problem.

Look here...while we pick your pocket over there...sorry redtail -it makes no sense.

airtaximan said...

redtail, since I am so wrong, instead of just shooting at my assertion, PROVIDE SOME DETAILS AS TO THE RIGHT NUMBERS.

Go on, the math can be really simple. Surprise us with some accurate insightful data or opinion, instead of just shooting out meaningless numbers which we all know.

How many manhours would you say have gone into the first 30 or 40 planes? How do you arrive at these numbers?

What do you THINK the B/E is as for rate? Man hours in direct labor? Material cost? Overhead? Repayment of development cost? Warrantee reserve? Etc...etc...

You can do it... use 40 instead of about 30 planes, use 6 months instead of 9 or a year or more... its so out of whack.... try it.

cj3driver said...

Redtail said;

“… Aircraft #40 was delivered yesterday. So I guess your estimate is off by at least 25% before we even look at it…. “

On July 6th Vern said:

“…I'd like to provide a quick snapshot of our delivery progress. … our total for the first half of the year to 30 aircraft, and our overall total to 31. … In fact, we expect to deliver over 20 aircraft during July...”


Redtail,

That would bring the total to 50 planes at the end of July, and what…. 65 by now?

You say # 40 was just delivered? … It appears Verns estimate is a little off also, … No?

airtaximan said...

SWEET!
Florida grants special Dayjet tax exemption! I guess they planned to begin over a year ago... but this is a very strange execmption. Nice work Dayjet... I gues Gadfly would probably like to enjoin Florida residents in his sentiments about ABQ aiding and abetting E-clips!

Sorry about the spacing.

http://edr.state.fl.us/conferences/

revenueimpact/2006/pdf/page%20304-

305.pdf

cj3driver said...

“… Aircraft #40 was delivered yesterday. …. “

On July 6th Vern said:

“…I'd like to provide a quick snapshot of our delivery progress. … our total for the first half of the year to 30 aircraft, and our overall total to 31.

… It seems Eclipse has delivered 9 aircraft in the last 45 days. One plane every 5 days.

At this rate it will put Eclipse at 68 for the year.

redtail said...

airtaximan said... redtail, since I am so wrong, instead of just shooting at my assertion, PROVIDE SOME DETAILS AS TO THE RIGHT NUMBERS.

My guess would be no better or worse than yours. It's a senseless exercises.

airtaximan said...

Really?

Sensless exercise?

You do not have enough data points to have an opinion?

So why jab at me?

I think this is very importnat, and I believe that using some good old fashioned common sense together with simply paying some attention, is very revealing.

They are way off the mark. Again.

Period.

airtaximan said...

More help from Vern... a lot of interesting production numbers, too.

http://finance.senate.gov/hearings/

testimony/2007test/071907testvr.pdf

airtaximan said...

snce no one really KNOWs anything abou this program, anymore...

I thought it would be fun to post a little look into the past, circa Q-1 2006, around 16 months ago...

http://www.fhi.co.jp/english/news/
press/2006/06_03_06e.pdf

Some interesting pictures at the bottom, too!

I guess this "part" was ordered a few days before production began? When was the first production aircraft really started?

I'd think hard about mouse's last post regarding stuff sitting around... or perhaps, how much fun the suppliers are having now, thinking... how long did it take them to non-manufacture 40 or so planes? They are asking for how any new parts shipped? When are they going to finish the new planes? When AM I going to get paid?

But like Retail says, anyone's guess is as good as his...

Anyone here a supplier? Any thoughts?

mouse said...

Ken,

Guess Vern doesn't tell you everything... Back in the fall or 2001 the break-even production rate was 500 per year, and in the summer of 2002 it was 550...

Who knows where it is now? A lot of variables to consider, and I doubt Eclipse is any closer to knowing. The factors of current design changes, current prices due to their slow/delayed start and ramping. All of the vendor prices were tied to time and rate...

How many licks to get to the center of a tootsie pop??? The world may never know... Sure hope thats a glob of tootsie roll in the middle of all that hard candy coating, don't you?

PS. If the candy coating starts to crack, and it doesn't smell good.. Stop eating it!

Donald said...

Thanks to all that answered my questions today and responded to my comments. Take care.

donald

redtail said...

airtaximan said... Really? Sensless exercise? You do not have enough data points to have an opinion? So why jab at me? I think this is very importnat, and I believe that using some good old fashioned common sense together with simply paying some attention, is very revealing. They are way off the mark. Again. Period.

Right, not enough data points to form a conclusion of hard numbers. Yes, it's important. But, any number you come up with has no basis in fact. And common sense only takes you so far. I'd say you are about as far off the mark as you claim Eclipse is. And what's sad is you think you're having a eureka moment.

mouse said...

One of many reasons why production isn't is related to the time to build due to no rate tooling or rate systems.

The aero mods, and in fact all of the current (pre-aero mod) fairings are installed by hand, hand laid-out, hand drilled, hand fitted, hand sanded, contoured, Etc. This step alone makes this portion of the build go over on planned labor by a factor of 180.

Yep, a :20 minute job now taking 36 hours... And they are scrapping fairings when the holes don't line up, or get mis-drilled. Even the best sheet metal people have difficulty with a hole, and when there are so many, it is a big issue.

This time loss is just one detail of the entire build...

cj3driver said...

Another DayJet article from Forbes;

http://www.dayjet.com/News/
recentArticles/
Forbes_08132007.pdf

“But will their math work? DayJet expects revenue of $111 million after its first full year and an operating loss of $15 million, it says in a June 2006 prospectus. The average fare would be $859 for a 291-mile trip. Iacobucci says DayJet needs 1.3 passengers generating revenues of $2 per mile flown to break even.
But consultants who have seen Eclipse's business plan say DayJet's costs will likely be three times as high--more like $2,400 per flight, given labor and pilot costs. "People say a lot of stuff--I don't know where they get their data," Iacobucci counters. DayJet also must minimize empty return trips (deadheading). Most small operators fly up to half of their trips without revenue to position aircraft; DayJet aims for 10% to 20%.

The bigger question is whether the air taxi market is big enough. "Once we launch we will know if the dogs are going to eat the dog food. I am just as skeptical as anyone else," he says. "Just about everyone is watching us and wondering if we are going to make it."

cj3driver said...

Ed doesn’t sound real confident.

paul said...

I thought everyone knew. The empenage is fastened to the aft pressure bulkhead with 12 internal clips each using 4 rivets each. If I remember correctly the clips are .050" The circumfrence of the empenage has one row of huck pull fasteners (crappy version of a cherry) at a .750 pitch that attaches to the skin of the fuselage. The tail assy that is built by Hanson is almost completely constructed with huck pulls. I never understood the rational for using blind fasteners when you can see the blind side of it. An experienced mechanic could probably install AD rivets faster than the blind ones considering the hucks have a high failure rate in regards to the stems breaking off flush. Cherry Max's would have been a better choice in my opinion due to their higher quality.
I was told the reason for using blind fasteners was to speed production with unskilled workers.
Allthough it is much easier to remove a bad solid rivet than a blind one.

Gunner said...

CJ-
Neither does Redtail. But, like Ken, he takes solace in the fact that nothing is "proven" yet. As though this gives Vern credibility.
Gunner

redtail said...

Gunner said... CJ-Neither does Redtail. But, like Ken, he takes solace in the fact that nothing is "proven" yet. As though this gives Vern credibility. Gunner

It doesn't give Vern any credibility. It shows that you and ATM have none.

airtaximan said...

Redtail,

"Yes, it's important. But, any number you come up with has no basis in fact. And common sense only takes you so far. I'd say you are about as far off the mark as you claim Eclipse is. And what's sad is you think you're having a eureka moment."

nope, just asking questions... showing waht I think, based on what's been printed.

simple math:
- how many employees in direct labor: 400, 500, 600? - you pick, we've seen numbers for the whole company in the 1200-1400 range so far.
- what do you think they get paid... even if you are off by 30% it won't matter, really... $40k-$60k... you pick.
- how many planes have been produced? 30, 40? you pick...

The first plane was initiated in Q1 2006. Call it a year ago? 14 months? you pick...

do the math, son.... add the rest of the employees, parts cost, warantee reserves, overhead...etc... when I say add, I just mean, imagine - it does not matter.

It's staggering.
This is the montain that will be climbed, getting the rate up, the cost down, and paying the net LOSS per plane all along the way...

At this point, its not hard to imagine them losing $1 million per plane. Is it?

airtaximan said...

redtail, careful now...

one of your buddies accused me of having a MOLE INSDE E-CLIPS becasue my info was sooooo good!

Just 'cause you do not see things for what they are, does not mean I have no credibility. It just means you cannot see.

Wasn't it YOU who said I have a mole inside e-clip?

gadfly said...

paul

Let's hope they get some good dynamic tests going, soon, to gain empirical data, and pull those "blind rivets" to failure. And by an independent lab. The whole nine yards: stress, heat/cold, vibration . . . life cycle. It’s this sort of thing (the riveting method) that messes up the computer stress analysis algorithm.

gadfly

mouse said...

Ken Ross has a tight operation, and a good repport with his FSDO. Proving flights might not have been done in that tail number...

When you plan in advance, and are upfront with those you work with (the FAA) you get treated like a human, just as the way you treat them.

mouse said...

Donald,

If you think Vern will listen to anyone, about anything, anytime, let someone know.

There have been 100's of the best and brightest trying to save Vern from himself... He'd rather play solitaire on his laptop, and bully his team in meetings than actually listen or allow innovation to happen, unless its his disruptive innovation. Except of course for his conversations with Ken...

mouse said...

Guys,

Before you go overboard slapping Vern on the back for his great ideas, look back in history and see who thought of what, and when.

The first VLJ was designed and flown by Rockwell (Gulfstream later) back in the late 70's...

The Peregrine was a single engine jet powered by the JT15 and flew in '83.

http://www.machdiamonds.com/peregrine.html

Vern was introduced to Dr. Williams V-Jet by Burt Rutan, and Burt gave Vern the idea of mass transit.

Vern has never been original, and he trusts nobody because he cannot be trusted. His world is viewed from what he knows.. Take the credit, bad mouth the dinosaurs and move on...

Think Vern learned to get a finished product to market from the computer industry? How many versions does it take to get to the final product? How many unsupported versions get dumped on the path to what was promised?

Vern is an amazing carnival hawker and fundraiser, period.

He's also a pretty good pilot from a seat-of-the-pants point of view. Think he was worried about building in value at any of the software companies he was invloved in?

He was so smart he missed the boat on that stock program...

mouse said...

The FAA indeed used every statement from Vern to fuel and support their numbers. The FAA needs these numbers to support the funding they want.

The airlines love Vern's mouth, because it fuels their story to reduce costs (which they don't even pay) so they can get more for nothing. The airlines are scared to death of anyone who might encroach on their business.

So many of their routes are so financially stupid that if they lose just 2 first class paying customers the leg loses money.

TheFAA lives for the next syllable out of any oriface from Vern...

A single person has a huge effect in our system.

mouse said...

Paul and Gad,

Blind fasteners are legal, go look at the Aerostar, the entire wing is pulled... and for one reason.. No skill is needed to pull the fastener hypothetically.. a "robot" can do it. The problem is, "Not Exactly". However you can more accuratley try and manage time with a pulled fastener... The real issue is the fincial hit you take using a $0.23 to $7.15 fasteners instead of a $5 per pound rivet.

Reminds me of a funny story from the "good old days" of 2001 in ABQ.

I was asked to help audit the inventory when it jumped several $100K's overnight, and nobody could figure out what happened..

The decison to pre-kit every step of the build meant handing out individual rivets. Funny thig about solid rivets, they are bought by the pound. When purcahsing broke them out from "Lbs" to "each" they kept the same cost value from the Lb to the each... voila, $3.53 rivets instead of approx $0.02 rivets...

It was pretty funny at the time...

mouse said...

AT,

leave Redtail alone... he can't cypher to good I guess... He must be one of those double knot spies...

Go fetch him some vettles and don't spect any too much numbering from him..

mouse said...

Paul,

not quite... A pulled fastener already has a centered hole to drill. Knock out the stem with a punch and it drills out so easy an unskilled person could be taught in an hour with very good success.

A solid rivet is a nightmare to drill out without destrying the base material hole except for the skilled sheetmetal mechanic.

Niner Zulu said...

ECLIPSE REALITY CHECK

Lest anyone forget, the following statements were made by Vern on June 18, 2007:

"we have solidified a leadership team that is well prepared to build the Eclipse 500 at an unprecedented high volume."

"With our new, data-driven production schedule and this demonstrable learning curve, our entire team is focused with a plan in hand, on delivering the following milestones:
1. one aircraft per day by August 2007".

I guess the team needs more "solidifying", because this "milestone" was missed by - you guessed it - a mile.

;-)

airsafetyman said...

God forbid you should use skilled sheet-metal mechanics to assemble the airframe. They might even point out design flaws before things get really ugly down the road.

fred said...
This comment has been removed by the author.
fred said...

mouse wrote :

"He was so smart he missed the boat on that stock program..."

not exactly ...

if you know the Faber's théorics about "making an economic bubble"

you may understand (on a théoric point of view...) why it is of a such a great importance the E500 has to be regarded as something "brand new , never seen before" ...ooouuppps , sorry , ken ;-)) =

"a disruptive technology breakthrought of value proposition leading to a new way of defining the ratio paid$/getting back wathever....!!! "
(ok , i exagerate just a little bit , even in vern's talmud such incomprehensible sentences do not exist .... ;-)) )

for some not aware of this theoric , Faber explained what are the conditions to sparke a bubble :
it always refer to some kind of NEW stuff ( just before 1929 , most peoples thought radio was the "starting point" of the boom leading to the black friday fiasco , in the 80's the japaneeses started to believe the "japaneese way of managment" was the NEW starting point of the boom which led them into a 15 years of recession , not long ago , exactly the same motto did happen for the internet and the dot.com ...)

then you need a low inflation (at the time EA started) and a monetary mass in expansion (thru excess of credits and deliberate scam from the FED.RES. ) and a willingness for speculation ...

if thoses conditions are met together (exactly the case of USA)
as Minsky has described : the boom almost allways make excess financials ressources are sent towards "specifics sectors" where they boost their devellopment and finally make the common peoples (as "joe doe in the stocks-markets" in opposition to the few keeping their blood cold and knowing what they do !)

then it always happen in the same way : irrational behaviors and irrationals expectations leads to such non-sens and over-value untill the 'thing" starts to be so irrational , even "Joe Doe" understands something is smelly ...

in the light of the events , i would say vern hasn't been bad on this topic ....

he tried creating the "bubble" ( the skies will be darkened by our revolutionary jet )

all others conditions were present ..

only times was too short !!
(you can translate into : not enough results in too much a long time )

now the cash is going to vanish , the markets will suffer corrections , the central bank is trying to release some liquidities to the market , but i doubt it will be of a good effect ... (have you ever heard of a fire being being extinguished by throwing more gas into the fire ??? this is what the Fed. is trying to do .... )

so soon it's going to be "vade , missa est " not too many are going to wash their cash in underfunded project to build an unprofitable plane for a firm without cash-flow ....

a little advice for the ones not too deeply involved get your cah before it's too late and buy some "sustainable value" (as gold , silver ,...) i wouldn't bet "paper value" are going to remain of any value for very long ....

Black Tulip said...

Does the one aircraft per day in August include model aircraft from the Eclipse company store? Supposedly Harley Davidson makes about as much money selling apparel as they do bikes. Eclipse could launch a new line…. miniature figures of depositors, investors, air taxi customers to complement the little plane.

Black Tulip

airsafetyman said...

Think about it. One of the advantages of the Eclipse is that it is put together with unskilled sheet metal laborers? In the flight department I used to work for as director of maintenance we would use Piedmont Airlines for major repair work. They were not workers, they were not "laborers", they were artists; when they finished the repair was better than the original structure in every way. The repair was done ONCE and it was done RIGHT, and the quality of the repair was NEVER a cause of concern. I would say for Eclipse to take notice, but the rivets are not the only thing that is "blind" there, or on this blog.

WhyTech said...

BT said:

"miniature figures of depositors, investors, air taxi customers to complement the little plane."

Fabulous idea! I was just given a Hillary Nutcracker - an figure of Hillary C. with legs which pivot to accept a nut - hyped as having stainless steel thighs. Even came with a package of Hillary Nuts. Now an action figure of Vern along this line might produce more revenue than the plane!

WT

Ken Meyer said...

Chicago Firm First With Part 135 Eclipse VLJ

North American Jet Charter Group at Chicago Executive Airport in Wheeling, Ill., on Tuesday received FAA approval as the first U.S. Part 135 very light jet (VLJ) operator using an Eclipse 500. Operations are expected to begin Wednesday under the company moniker “Q,” for Quintessential Traveler service that offers an air limo at half the traditional charter rate, according to North American Jet. "Today begins a new chapter in aviation history," said North American Jet Charter Group President Ken Ross. "With the operating efficiency of a VLJ like the Eclipse, the flexibility and productivity benefits previously available only to company presidents and CEOs are now available to virtually any business traveler." Pricing has initially been based on one-way fares with no daily minimums for aircraft usage or overnight charges. North American Jet claims that up to three travelers will enjoy all the benefits of first-class travel on their Eclipse 500s for about the same rate as a one-way first-class airline ticket. Q service will eventually be expanded to offer a wide range of travel services from ground travel to lodging and entertainment venues. North American Jet expects its Eclipse 500 fleet to expand to more than six of the VLJs by year-end, with projected growth to more than 20 aircraft by the end of next year.

--------------------

So, there you have it, from the stakeholders themselves instead of the naysayers--the Eclipse 500's operating efficiency (read: value proposition) is the key attribute that opens jet travel to the broader public. It's opening up jet travel to hundreds of individual owners, and it is opening it up to thousands of passengers.

DayJet, Linear, North American, OurPlane, Pogo and all the others see something the naysayers are blind to. Interesting, eh?

Ken

WhyTech said...

Ken said:

"all the others see something the naysayers are blind to. Interesting, eh?"

No, Ken, not interesting, and not right. All the naysayers know that if you make it tiny and light, then some efficiency measures will be better than larger and heavier. Just look to the LSA category for confirmation. If you read the posts more carefully, you will see that efficiency is far down the list of issues for the naysayers. Go find a new dead horse to whip.

WT

Gunner said...

Ken said:
DayJet, Linear, North American, OurPlane, Pogo and all the others see something the naysayers are blind to.

They sure do:

They see First Class travel; we see cramped charter with strangers, "for about the same rate as a one-way first-class airline ticket"

That's a "value proposition"?
Whatever happened to a buck a mile?
Gunner

airtaximan said...

blind to this issue? I'd say not... just thinking more about the risks and realities of operating the plane, providing air service with the plane, and delaing with the company.

Did you ever address the risks Ken?

ExEclipser said...

Mouse, I didn't ever claim that the VLJ was Vern's idea. But he DID bring it (the VLJ, not necessarily the EA500) to production and practical application.

I've even compared Vern Rayburn to Tony Fox - Marketing gurus with no clue how to actually bring an airplane to market. Vern just had a little more tenacity and a heckuva lot more money than Tony.

So, now that we're watching the stock market pummell, what is going to happen in the corporate jet world?

People going to abandon their mini jets, or flock to them because they need the service but at a much lower cost?

airtaximan said...

I like your description of Vern compared with Tony Fox.

Good question regardng the market and the prospects for the VLJ.

Why "buy" when you can access the planes on-demand at a few bucks a mile?

paul said...

Mouse said:
"not quite... A pulled fastener already has a centered hole to drill. Knock out the stem with a punch and it drills out so easy an unskilled person could be taught in an hour with very good success."

Not quite. Before you can knock out the stem you must remove the locking collar, which is steel as well as the stem. It is good practice to have someone back you up before pounding on the rivet to prevent deformation of the surrounding skin. The big problem with blind fasteners is differential metal corrosion. The body being aluminum, the collar and the stem being steel.
Any mechanic worth his salt can remove solid rivets without causing damage much more quickly than a blind one.
I worked DHC-6's in tha caribbean that had cherry's installed. They were easy to remove because the collars disappeared from exposure to the salty conditions.

EclipseOwner387 said...

Northa American's rate quoted to us a few moments ago was $1300/hr for the EA500. I can get a pilatus for $1000-$1100 per hour. A little slower but a lot more seats.

Gunner said...

EO-
On the plus side, I could picture this making sense for a single company, where two execs need to travel about 500 miles for a meeting. Cost would be about $5K round trip, according to your numbers.

I just don't see it making sense for "virtually any business traveler".
Gunner

Ken Meyer said...

EO387 wrote,

"Northa American's rate quoted to us a few moments ago was $1300/hr for the EA500. I can get a pilatus for $1000-$1100 per hour. A little slower but a lot more seats."

Bear in mind that the Pilatus top speed is 270 KTAS, so the per mile price of the Eclipse comes out less most of the time. You get faster speed and twin-jet safety (i.e. many people simply don't feel comfortable flying anything with propellers, let alone a plane with just one engine).

If you want to haul a lot, the Pilatus is a much better choice. But how many times have you seen a King Air 200 pull up and drop off one or two businessmen each carrying a briefcase? I see it a lot.

I don't think North American or anybody else is saying the Eclipse replaces all other planes. Far from it. Linear Air is not retiring their Caravans; they recognize that they serve a different market segment (and they're upfront that they think the Eclipse market segment is dramatically larger).

These companies recognize that the Eclipse offers cost-effective jet transport, and that's what people want (so the studies say, anyway).

Ken

airtaximan said...

Ken says:

"so the studies say, anyway"

Which studies, I like to read these studies... thanks

airtaximan said...

Gunner...

they said "virtually"

pls pay better attention!

;0

gadfly said...

paul

‘Not to worry about corrosion of the “pull rivets” and the “stir-fried welds”. Folks like DayJet will not be flying the plane anywhere near an ocean!

gadfly

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