Thursday, August 02, 2007


EclipseOwner387 said...

Based upon Eclipse's own schedule, we will not know until at least Q1 2008 if Eclipse is delivering a completed airplane. Until then, the position holders and owners will have to endure criticism of the program. Fortunately, the critics are having a smaller list of "issues" as Eclipse tidies up its IOU's.

The next big milestone is ramp up of production. It will take a few months to grade Eclipse on this and until then it will be fruitless to argue the critics claims on this. As the faithful, we need to also hold Eclipse accountable to meet the new forecasts OR keep us posted when they have snafus/delays.

What I am looking at:

FIKI - we should expect an answer Dec 07.

AVIO NG (partial) - we need to see it cut in by SN134 or sooner.

AVIO NG (Moving Map) - we need to see available Q1 2008.

These are the most important airplane IOU's that I need to see for a "complete" airplane. Unfortunately, we have to wait until Q1 to know. In the meantime, Eclipse NEEDS the position holders to have faith and make progress payments and take delivery of "almost complete" airplanes. Faith and trust will only be maintained if Eclipse makes milestones and/or significant provable progress. Thus far I am still convinced Eclipse will deliver. In return, Eclipse is offering the faithful a chance at a solid value for the mission profile of the EA500.

All other issues are still debatable BUT I think we have to all agree that Eclipse still owes a truly completed product and until then the critics have a solid argument here. Eclipse knows this so we don't need to defend them on this point.

Thank you EO for these candid remarks...EO currently owns serial 028 (N963JG pictured above) which is on lease back to Eclipse. A regular contributor to the blog, he keeps us informed as to his Eclipse trading activity, having bought and sold (at a profit we presume) delivery positions 387 and 024.

108 comments:

Stan Blankenship said...

For the record, Ken Meyer earlier provided the following:

"Peg Billson (COO), for whom Eclipse customers have great respect, projected at Oshkosh that production will reach one per calendar day in August, 1.5 per day in October, 2 per day in April and 3 per day in late 2008."

airtaximan said...

Eo,

This is why I love you. Very sober. Also, the FACT that you've played the game well and bought and sold a handful and made money all along makes me reverent.

The longer term issue might be described as:

The e-500 plan is base don higher rate, which is dependent on higher demand. So far, without the Dayjet "order", e-clips 500 does not fulfill this requirement.

How do you see the business BEYOND the infusion of IOU's which is pretty much at the determination of e-clips? Just apply more effort and money. The demand must be there, if not, are they sunk?

WhyTech said...

EO said:

"Thus far I am still convinced Eclipse will deliver."

Believe it or not, I am convinced that E-clips *can* deliver if they can keep the ship afloat financially long enough to get the work done. There is no rocket science in what remains to be done - been done by others already a number of times over.

If one looks at the divide between the faithful and the critics, the issues seem to fall into four broad categories: 1) business practices, 2) program delays, 3)market potential for a completed, fully functional EA 500, and 4) long-term viability of the company (closely related to #3). There is no question in my mind that progress is being made in the area of overcoming program delays. The other areas remain murky at best.

WT

hummer said...

whytec
In order to accomplish 1-4, it will require a tremendous amount of "focus" and "discipline", neither of which Vern has displayed. With what is left of the 210 million, let's hope that he puts the SE Concept on the back burner until he does an IPO.
He's been to the well probably for the last time. Can do it, certainly.
Will do it: look at the horses track record.

EclipseOwner387 said...

ATMAN,

I cannot comment with authority on the biz plan because I am not an insider. Personal speculation could bring forth many potential outcomes in my head. So instead, I will comment on the fact that Eclipse is still able to raise significant money means that some do believe the plan will work. My iclination is that too much has been accomplished for Eclipse to fail now. Someone would pick up the pieces if it did (corruption or fraud could change that.)

Prediction:

If the high rate biz plan fails and the company goes insolvent because of it, then the common stock investors will lose money but position holders will be "taken care" of by the new owners. Just a prediction, I could be wrong.

Ken Meyer said...

airsafetyman wrote,

"A buyer would be much better off getting a good used airplane with a clean maintenance history and no damage than sink money into this....thing."

That's widespread view around here, I think. But what jet??

It's an interesting question. If one wants to understand the success of Eclipse one has to answer that question. What jet do you guys think would actually make a decent substitute for the Eclipse?

Somebody pick the used jet of your choice (in the same price bracket) and tell us why you think it is better than a brand new Eclipse. We'll work through the numbers and see. It might be very enlightening.

Ken

Gunner said...

Interesting challenge, Ken. Unfortunately, we've seen a tendency to "change their numbers to better suit my view of things" in past. The result: Eclipse is always faster, cheaper, more luxurious, more dependable and safer by a wide margin....at least, on your particular calculator.

That's a problem when we compare actual performance to wish list....and we've seen that attempt repeatedly here.
Gunner

421Jockey said...

Ken,

That's a great idea. I would consider taking my position profit, investing in a conventional jet and using the profit to pay expenses for a time.

Too bad all the experts are not up to the challenge of proving what they have been saying on this Blog for so long.

Gunner said...

421-
OK, I'll bite on the comparison. Since actual availability is not a requirement to the comparison and paper performance remains the rule:

Let's honestly compare the Moller SkyCar to the EA-500.

Go for it.
Gunner

airtaximan said...

EO, I agree on the speculation. Suffice it to say my speculation on major issues of contention, most of which were categorically denied by Ken et als, have been correct. Track record.

I do not see how e-clips could make it, if volume production was not achieved. More than 500 planes per year. This pertain to cost and volume realities in e-clips plan.

If they reduce volume, cost rises. How can any new buyer tackle the realities of "sorry, the volume is not there, the lower cost is not there, we lose money on every plane...and we are out of business"???

The depositors can be taken care of? How?

Better pray hard dayjet is a BIG success, and they agree to some price increases, too...according to Alexa.

Otherwise...

mirage00 said...

Just a little teaser for the "bashers". Oh and yes, everyone is aware of the temporary Garmin 496 in use during this paper flight.

Eclipse Test Filght

EO387…Great post. I can't wait to see the focus of this blog once the IOU list is gone.

I remain amused

double 00

airtaximan said...

Mirage..

you have said "I can't wait until XY or Z is gone, what will this blog become? for a long time now...

I suggest you reflect on many issues, including all the missed goals, BS claims and on-going quality problems. The new issues that will arise will be in the same category as the old issues that are now IOU's...

fixes, NGs, training, performance, supplier replacements, BS orders, certifications, deliveries... etc...etc...

History...track record....management...culture...

This blog will have entertaining (amusing, if you will) material for a long time.

WhyTech said...

Moo said:

"Just a little teaser for the "bashers". "

This video is a perfect illustration of one of my big gripes with the E-clips - the seats are so close the pilots are rubbing shoulders - too small!
This is a tradeoff I am not willing to make to get the price down to mass market level.

And the 496 - I am very amused.

WT

flightguy said...

As for the longevity of the blog after the E500,

Then Eclipse rolls out, if not bellow up, a new program and we start all over again. History has a tendency to repeat itself.

cj3driver said...

421,

Re: competitive aircraft:

Just pick up this months issue (Aug) of BC&A. You can compare operating costs line by line. There isn’t really that much difference in operating costs between the light jets. Especially on trips less than 500NM.

If you have a questions regarding CJ, CJ1 or CJ3, I may be able to answer them. You can look back on my previous posts, I went back and forth with Ken (and Vern) numerous times on actual cost Eclipse comparisons between other jets and turboprops. I echo gunner & ATM’s thoughts in that regard. We need to see a completed E500 tested by a impartial 3rd party in real world conditions before drawing conclusions. The actual performance reports made by Mike Press and others at low altitude, are not that impressive - even given the size and weight of the airplane.

Also, the E500 hasn’t been around long enough to determine service, parts and maintenance costs yet. It could be very expensive if Eclipse doesn’t come thru on promises (volume and service centers).

The other used alternatives, CJ, TBM, King Air’s, Pilatus ect. Have been around a long time and have a long history of operating expenses.

EclipseOwner387 said...

Mirage00,

That video is of my airplane N963JG is SN28.

Cool! Thanks for posting.

EO

EclipseOwner387 said...

Whytech,

The pilots shoulders are not rubbing. It is the angle of the camera that makes them look closer than in reality. The front seats are tight but not much different than a Malibu that I consider comfortable for the size and mission of the plane.

gadfly said...

Criticism is important. “Bashing”, as I understand it, it to destroy something for “whatever reason”. Whereas, criticism is to bring faults to the surface, so they may be addressed . . . and corrected where-ever possible.

Regardless on which side of the fence you reside, “Eclipse” is in desperate need of criticism . . . for untold reasons.

An “Eclipse” flew over the shop, today. My only desire for that particular plane is that it gets back safely . . . nothing less, nothing more. To speculate on “why” it flew overhead, doesn’t matter.

Eclipse, as I see it, is in much trouble for the reasons spelled out by many people . . . many, but not all, on this blog-site. Most of you address the financial issues . . . and, from my limited understanding, those alone will soon bring this enterprise to an end. But maybe not . . . who knows!

My own view is beyond that . . . or should I say, “in a different direction”. And it has to do with a basic overall premise . . . and degrades from there. It reminds me of a certain self proclaimed “leader”, who set out to essentially take over the world . . . and began (in his own way) with certain successes. Soon, he destroyed those that were his “friends”. Then, he undertook “two fronts”. He “almost” pulled it off. Thankfully, he was in “over his head” . . . and human history continues . . . whether for better or worse, the jury is out. And since history repeats itself, it often applies on the “macro” and “micro” level.

Eclipse, for instance, set out recently on “two fronts”, with the new “ConJet” . . . or should it be named the “Porpoise Jet” (further flight tests will decide).

You business guru’s carry on . . . my little business is quite small, so I do not qualify to give advice on such matters (although we have survived for over thirty one years, and contribute to aerospace manufacturing).

As I see it, there is nothing special about the Eclipse 500 . . . and even if it “flies” (which is does on a daily basis), there is nothing it does to qualify it as “special”. Cheap to own, you say? That is a long way off from being established! Fast? . . . private jets have been flying 100 knots faster and 10K higher . . . for forty years. More reliable? . . . That’s for history to determine.

You all know the arguments . . . ad nauseum.

The design itself violates much in basic aerodynamics combined with “inherent stability” (and Yes, some last minute “clean-up” has been a band-aid fix to bring the thing up to speed, as it were).

Why do you bother to argue over this thing? Do any of you truly think this is the greatest thing since sliced cheese?

Carry on!

What a tempest in a tea pot!

gadfly

(And no, I am not in the least, amused!)

mirage00 said...

EO387,

I was wondering if that was your baby, since you mentioned Eclipse was giving demo flights that week in WI.

I'm sure it was comforting to see both landings were greasers. :)

I remain amused

double 00

gadfly said...

Double Nothing

Since I have even helped to "grease in" a couple thousand tons of submarine, many times, does that amuse you?

gadfly

('Like putting a baby in its crib!)

Ken Meyer said...

421jockey wrote,

"That's a great idea. I would consider taking my position profit, investing in a conventional jet and using the profit to pay expenses for a time."

I think many of us are in the position of profiting on our positions if we were to sell. But what plane would we get instead? Is there anything that actually compares?

I'll get the ball rolling. Let's say you wanted a CitationJet. Here is a 14-year-old one for $2.275 million. I know I said "same price bracket" but I couldn't find a CJ for $1.6 million. So, we'll have to figure in an extra $50,625 in fixed annual expenses for the CJ (cost of $675,000 capital at 6% plus cost of extra hull insurance at 1.5%).

So, how does it work out?

According to Conklin & de Decker, the Direct Operating Costs for this aircraft, minus crew expenses and catering come out 1113.99 per hour or about $3.36 per mile. Add in the extra cost of capital and insurance and you get $4.12 per mile (assuming an annual usage of 200 hours).

How does that compare to the Eclipse? Well, as AT points out, nobody knows exactly what the maintenance costs are for the plane. But we do know that if you buy JetComplete plus engine coverage, the manufacturer is assuming the risk of a bad cost estimate instead of us. So, for this comparison, let's use JetComplete numbers. JetComplete includes things like chart service, recurrent training, maintenance tracking, and XM weather that we're not charging to the CitationJet in any way, so the comparison is a little unfair, and you might mentally add all that stuff to the hourly cost of the CitationJet.

If you work it out, you get $623.68 per hour (including all that extra JetComplete stuff). That's $2.05 per nautical mile for the Eclipse vs $4.12 per nautical mile for the CitationJet.

So an old CitationJet is an interesting choice, but it winds up costing more than twice as much every single mile you fly it. And you'd have a 14 year-old airplane with old avionics, interior, paint job, etc. It wouldn't have the workload-reducing and safety features of Avio NG. And of course old airplanes tend to have a lot more down time. This particular one already has 2650 hours on the engines; it has ProParts but no overhaul coverage, so there is probably a big expense down the road a few years for the engines.

But it's a workable choice for some. I don't see it as a good alternative; would you?

Any other aircraft candidates to look at?

Ken

Stan Blankenship said...

Check the Oshkosh Report written by Fred George. At long last, the aviation press is beginning to provide some honest assessment.

WhyTech said...

EO siad:

"The front seats are tight but not much different than a Malibu that I consider comfortable for the size and mission of the plane. "

OK - I have some Malibu time and agree that the room in the Malibu front seats is adequate (just).

WT

mouse said...

EO,

The problem is there is not much of any vale to sell. All of the parts come from vendors who have been treated like red-headed step children at best. If someone were to take over the company they would have to renegotiate everything, and the terms would be terrible at best. The numbers the vendors were sold on do not pan out, and never will. The facilities Eclipse is in are all leased, so nothing up that sleeve either. The labor pool in ABQ sucks! Warranty issues with no hold-back for them would cripple a 3rd world nations economy... The people of Eclipse who have carried the company on their shoulders are tired.

There is no payback or ROI in any scenario, so what would you be buying?

mouse said...

Ken, the replacement to the Eclipse isn't a jet. It's a turboprop market, price, mission, speed, cost, size, range airplane.

Sure there are some very neat advantages and dreams to owning a small little jet, but you need to get over the powerplant selection issue... Piston, Turboprop, fan jet, wahtever, it's just another source of power...

The fact is if you want a jet airplane it cost X and thats that. You can't cheat the physics. Fuel + heat = thermal output and molten metal at some point. The physics are different in the smaller engines when comapred to the larger engines, but when they shake themselves out and enough data is collected to establish the new baseline for this power range, it'll all be a wash...Forget the engine and look at the mission (range and payload) to determine what you need.

Ken Meyer said...

EO387 wrote,

"The front seats are tight but not much different than a Malibu that I consider comfortable for the size and mission of the plane."

You might find this cabin dimension diagram interesting. It was put together by Adam to show how much larger their cabin is than that of their competitors' aircraft, but what it also shows is that the cabin width of the Eclipse is not bad--it is actually a bit wider than the Meridian and 10" wider than the Cessna 340 I'm flying right now!

Ken

mouse said...

Mirage, when the IOU list is gone so will the blog. That's the whole point... If Eclipse would just build the airplane they promised and shut up about all the BS they keep claiming, and prove it.

I cannot imagine aviator on this blog does not want to see the EA-500 succeed, it's Vern and his imature, moronic statements that caused this blog to form.

We as a group have survived and prospered by using sound principals and thoughts, and proccesses. Nothing wrong with new ideas, hell we're all employed in aviation because of new ideas, advancemnts, technology and the shear fun, nut when someone comes in and spews out his mouth what should have been blowing out the other end comes along, we call him on it.

Too bad so many others drank the KoolAid and are running around with their pants around their ankles quoting the promises like scriptures passed down from some mountain top... Look in the mirror and tell me how amused you are...

Ken Meyer said...

mouse wrote,

"Ken, the replacement to the Eclipse isn't a jet. It's a turboprop market, price, mission, speed, cost, size, range airplane."

Really?

OK. Find me a new twin-engine turboprop that goes 370 KTAS, climbs to FL410, costs under $2 million, has modern avionics, and can be operated for under $2 per nautical mile, and I'll be very, very interested.

Seriously--what can you find that offers the benefits of the Eclipse at anywhere near its acquisition and operating costs?? Find me the right replacement, and I'd sell my Eclipse positions tomorrow.

But I think you can't. Go ahead and prove me wrong. I'm all ears.

Ken

mouse said...

Ken, don't be deceived too much more by the size comparison. The EA-500 is wider at a point where nobody sits, at the door and emergency egress window. From that point forward and aft it rapidly necks down to the size of most small twins and larger singles... Nice try though!

mouse said...

Ken, When the EA-500 can do any of the things you claim it can, I'll jump into the pool with you. Right now is all you and they have are charts, promises, and dreams...

airtaximan said...

Ken:

Do you do this on purpose, or do you actually believe this stuff?

"Well, as AT points out, nobody knows exactly what the maintenance costs are for the plane. But we do know that if you buy JetComplete plus engine coverage, the manufacturer is assuming the risk of a bad cost estimate instead of us."

Regardng the risk:
-risk of Jet complete already inflated 30% from the first stated "no risk" price
-risk of your deposit?
-risk of your progress payment?
-airplane cost risk - except for intial buyers, the price went up, right?
-risk of receiving incomplete planes- everyone so far?
-risk tthe company will obsolete systems before 40 planes are delivered - NG?
-risk of cracking screens and windows? Short inspection periods and replacement times?
-risk of not being able to be trained in a timely manner?
-risk associated with poorly designed systems - pitot
-risk associated with not doing fatigue testing...
-risk associated with an exaggerated order book?
-risk associated with a poorly developed maintenance network
-risk associated with over production
-risk associated with CG issues
-risk associated with revised performance numbers
-risk associated with boots supplier changed
-risk associated with downtime for mods
-risk associated with production/delivery shortfalls

... there are many... and who has taken on this RISK, Ken? Not e-clips. So your claim they have offered to absorb some risk in Jet Complete is Completely false.

- this is one aviation company that has decided to place all the risk on outsiders, including customers. If you believe jet InCOmplete is risk free...well... you must believe a lot of other risk is "free".

Ken Meyer said...

mouse wrote,

"Ken, When the EA-500 can do any of the things you claim it can, I'll jump into the pool with you. Right now is all you and they have are charts, promises, and dreams..."

I take it from that missive that you do not have a suitable alternative to the Eclipse as you claimed.

I'm still all ears--if you genuinely believe there is an alternative aircraft that offers the advantages of the Eclipse, let's hear all about it. Otherwise, I recommend you quit telling us there is such an aircraft if there is not.

Ken

Metal Guy said...

I’ll echo mouse’s comment that if and when the EA-499.5 can live up to it’s over-hyped expectations, the critics will have to take a chill-pill. It’s really too bad that Eclipse management has bungled the entire image of the company and aircraft by its continued over promises and adolescent behavior. It’s a nice $2M airplane that will be ready around mid 2008. One won’t know the actual value proposition for several years however.

On the “amusing” front, those Part 135 guys are going to have a hell of a time keeping it on the center line with the backup attitude indictor blocking the left side of the windshield and the Garmin hand-held blocking the right. It was billed as the world most sophisticated Part 23 aircraft if I remember right…Pretty funny.

airsafetyman said...

Ken,


Come on the airplane is a nightmare: the avionics are screwed up beyond belief, the weather radar is a slapdash affair that is not even certified yet, the pitot system wasn't even designed to 1930's standards, the best you can say about the standby flight instruments is that they are in a very strange format, the windshields crack and threated to pop out, and the company can't even paint their show aircraft in an acceptable manner. You are like some guy in a Yugo showing up at a Formula I race. Give it a rest. People with decades of aviation experience and who are open to new ways of doing things have looked at this what-ever-it-is concept and concluded it's a disaster. You for some reason think we are all morons gleefully awaiting a spate of Eclipse crashes. I assure you that is the last thing I want to see, which is why I would be relieved if the whole enterprise went belly-up tomorrow.

Ken Meyer said...

airsafetyman wrote,

"You for some reason think we are all morons gleefully awaiting a spate of Eclipse crashes."

No, but I suspect many of you are dinosaurs who cannot fathom the idea that Eclipse is doing exactly what you said they never could.

Oddly enough, each and every time I attempt to engage this audience in a legitimate discussion, the haters sidetrack it.

Take the latest discussion seeking to see if there may be, in fact, a suitable alternative to the Eclipse. Mouse summed up the hater's approach brilliantly:

First he claimed, "the replacement to the Eclipse isn't a jet. It's a turboprop." But asked to name a twin-engine turboprop that can replace the Eclipse, he ran out of steam, gave up and joined with me--"When the EA-500 can do any of the things you claim it can, I'll jump into the pool with you."

But he's living in yesteryear. The performance of the Eclipse is no longer in doubt; the aircraft being delivered now have the outstanding performance and fuel economy those who ordered the 2700 aircraft seek. 370 KTAS highspeed cruise when you want to go fast. One nautical mile per pound of fuel when you want to be efficient. Name a jet or turboprop that can do both of those!

Ken

Metal Guy said...

Ken Said:
No, but I suspect many of you are dinosaurs who cannot fathom the idea that Eclipse is doing exactly what you said they never could.

What was than Ken?

ECLIPSE AVIATION has raised $65 million in a second round of private equity investment, which the company says validates the progress it is making in development of the Eclipse 500, six-seat personal jet.

Most of the individuals who provided the initial $60 million in private financing, plus several new investors, participated in the second round, says Eclipse chief executive Vern Raburn. "This shows the investor base is happy with our progress."

Certification is expected to cost more than $300 million. The $125 million raised so far "puts some real distance between us and the competition", Raburn says, referring to other companies' efforts to raise funding to develop similar aircraft.

Raburn says powerplant development of the $837,500 Eclipse, being performed under contract by engine maker Williams International, is "on schedule, under budget, and right on the button when it comes to earned value".

First flight is set for the third quarter of 2002, with US certification and first deliveries in 2003.


Gosh, I guess all of the dinosaurs were wrong after all.

Get real Ken.

bill e. goat said...

(I see Metal Guy read my thoughts while I was preparing this post)
-----------------------------

I am perplexed and exasperated with the premise this particular thread. Time for bold predictions to counter the bold B.S.

For starters, I think the E-500 will be a very nice airplane in 12 months (and isn't bad now), but the WORST thing Eclipse could do is ramp up production before it is complete. The ABSOLUTE worst thing.

Eclipse has been focused on production FOR 18 MONTHS- get it? E-I-G-H-T-E-E-N months!!! If the management had a clue, they would have been finishing the E-500!! They have NO clue- get it- N-O , none, and don't even KNOW what a clue is. It's insanity to be "delivering" airplanes now, talk about reworking 50, 100, 150 ?? It's absurd beyond belief!

"Thus far I am still convinced Eclipse will deliver".

I give up! Deliver what? When?? For what price???

This is lunacy. It' just a freaking metal airplane, with jet engines, and avionics. Eclipse has bumbled and stumbled for 5 years, and WILL BE bumbling and stumbling for ANOTHER YEAR because of gross mismanagement- get a clue!

It's sad- just sad. A flabergastingly poor execution of what could have been an above-average product, delivered in a timely manner.

"Peg Billson (COO), for whom Eclipse customers have great respect, projected at Oshkosh that production will reach one per calendar day in August, 1.5 per day in October, 2 per day in April and 3 per day in late 2008."

Peg must be a favorite, because she is passing out koolaid- and crack cocaine. ANYONE who believes the production rate will exceed 350 a year is ON DOPE.

Clue department:
Ken is right- there is nothing that can touch the E-500 for it's value (okay, give it 12 more months to have “jet complete”, or completed jet, or whatever Vern is calling the "final" version). Especially for the money-losing price of $1.5M Pump that price up to $2.1M, and it's still a good buy (esp. after it's finished).

And 350 jet airplanes a year from a new (well, sort of new- it was new 7 or 8 years ago) is FANTASTIC.

But 3 airplanes per day is FANTASY. ANYONE who believes THAT is a cracked-up IDIOT.

mouse said...

Ken, right now any thing that flys according to it's Type Certificate Data Sheet beats the Eclipse.

You want to compare an airplane against a pipe dream. There is no convining you of anything because you lack any sense of reality.

The EA-500 does nothing that it claims, yet. So you cannot use one shred of proof provided by Eclipse, Vern, or the manuals because none of it is proven.

I'll leave you with a bag of nails.. go nail some jell-o to the wall and call me when you're done.

Gunner said...

Ken said:
"Take the latest discussion seeking to see if there may be, in fact, a suitable alternative to the Eclipse.

Why is it Ken keeps raising this red herring challenge and I keep responding with "Moller Sky Car", only to have Ken ask the question again?

The Moller promises EVERYTHING the EA-500 promises, and much more. A 30 year old Cessna 340 DOES everything the available EA-500 does, and more.

Where's the beef?
Gunner

Metal Guy said...

See, wouldn’t it be great if Ken would fess up and state "Hey Metal Guy, thanks for pointing that out. I guess Eclipse is not doing exactly what they said they could do after all. I was wrong.”

How bout it Ken?

bill e. goat said...

I'm not bashing Ken or any of the enthusiastic owners-in-waiting. I think they're all being good sports, and although a bit optimistic and trusting by my standards, they are smart guys, and are pretty objective (NOT objectionable :).

I and many others very much appreciate their input and observations.

And I note, they do indeed share bad news with us, and frequently are the first ones to relay it.

Niner Zulu said...
This comment has been removed by the author.
cj3driver said...

Introduced in the summer of 1986 at a price of less than $4000, the Yugo was by far the lowest-priced new car available in the USA at the time, and it sold very well at first. It was sold in the US until 1992, with the most American units sold in a year peaking at 45,000. No American car came close to the price of a Yugo. Great gas mileage, four seats … four tires plus a spare. What a deal.

In 1986 if your budget was $4,000.00 for a new car, Yugo was your only choice. Direct operating cost came out to about $.15 cents per mile.

Or, in 1986, you could purchase a nice used 16 year old 1970 Plymouth Barracuda Hemi for about $6,000.00. If you add in the cost of extra insurance and capital carry, … some extra fuel and maintenance on the older car, you could figure on about $.25 per mile.

Boy, … There was just nothing that could compete with that Yugo. Especially not the dinosaurs.

But…Go figure, … not everybody bought Yugo’s in those years. Some people didn’t like the styling, some preferred to stick with existing manufacturers despite the low price and economy. Some people needed a larger car and opted for the County Squire or a Coupe D Ville. Can you imagine … some people even paid $40,000 and bought a gas guzzling Mercedes Benz! Why … they spent over 10 times the price of the Yugo. What could they possibly be thinking?

Well Ken, with sales as high as 45,000 units per year, Yugo may have been a success in some peoples eyes, but Honda and Toyota “Eclipsed” that notion, … and Yugo? … Well I do not recall seeing a Yugo Dealer and Service center operating in my town, but, they are still being produced for markets in Serbia, Lebanon, Syria and Egypt..

I think I can speak for every one here on this issue. … “There is no other certified tiny twin-jet weighing 6,000 lbs, on the market today, that can do what Eclipse claims the E500 will do … none.”

But, Just as with Yugo, there are many alternatives that just may be a better choice.

WhyTech said...

9Z said:

"When the plane does everything it's supposed to do, and the factory proves they can do everything they are supposed to do, heck I'll buy one"

Ken has been so persuasive that I will add "me too" to 9Z's comment. However, I will also require a minimum of 5 years of fleet operational experience, at least 100 flying (should not be an issue if E-clips survives) and the customer treatment that a $2mm purchase deserves.

We'll see.

In the mean time, I was highly amused by Moo's video. All those "acres" of beautiful high resolution displays and the airplane was being operated on the basis of a 2in x 4in portable GPS on the glare shield. What an embarassment!

WT

EclipseOwner387 said...

CJ3,

Yugo - Eclipse

The difference is my pilot friends get excited about the Eclipse. No one I knew ever got excited about a Yugo. A Jet is still for better or worse a Jet in the eyes of most. So essentially it is not a good comparison. Using your analysis I should be embarrassed to own a cheap turboprop or Cessna 172. I think it would be more fitting to compare the Yugo to a bicycle. If you could only afford a bicycle the Yugo would look grand. Most citizens/pilots can't even afford a 172. Now to someone lofty enough to command a CJ3, you may have a distorted view of what most believe. Come down here with the common folk and maybe you would see it differently!

:-)

airtaximan said...

for a bunch of buyer looking to travel fast and save time, and whose time is so important to them... time seems to be irrelevant in any discussion about e-clips delivering on promises.

I can see it now... September 2008 KEN MEYER SAID...
"see, I told you...I told you...."

Ken Meyer said...

niner zulu wrote,

" let me know when those windows are fixed so I don't have to worry about my kids being sucked out a 12" hole in an explosive decompression"

That's very dramatic. I hadn't heard that one before. Perhaps you should become a screenwriter, sell your story to Hollywood and make a fortune.

But for those who lack your creative bent, the windows never posed any hazard of explosive decompression, and it wouldn't have been the windows in the cabin where your kids sit anyway--it was always the cockpit windows. The company described, for all to see, what the extent and nature of the problem was:

"Eclipse 500 flight test aircraft have exhibited 7 incidents of cockpit windshield cracking and 7 separate incidents of cockpit side window cracking. This cracking is due to a combination of thermal and pressurization loads causing a fatigue failure of the outside layer of acrylic. The “fail safe” interior layer of acrylic was undamaged in all cases.

"As a result, an inspection and replacement interval was added for the transparencies ONLY to the Aircraft Maintenance Manual to prevent cracking in service. Eclipse is working diligently to remove any unique transparency inspection intervals as quickly as possible."

The windows and windshields were redesigned; the new design enters the line at S/N 74. Existing aircraft receive the new design in the course of life cycle replacement under the AMM. The new design has dramatically higher inspection and replacement cycles. The company reports that they will lengthen the intervals as field experience warrants.

The "honey, the kids got sucked out of the plane" scenario is pure aviation melodrama. Perhaps at some point we can resume a legitimate discussion of the aircraft's pros and cons instead of poking fun with fictional stories.

Or perhaps your interest is not in a legitimate discussion of the plane's pros and cons?

Ken

mirage00 said...

"When the plane does everything it's supposed to do, and the factory proves they can do everything they are supposed to do, heck I'll buy one"

Ken has been so persuasive that I will add "me too" to 9Z's comment. However, I will also require a minimum of 5 years of fleet operational experience, at least 100 flying (should not be an issue if E-clips survives) and the customer treatment that a $2mm purchase deserves.


What we are seeing Ken, is the "bashers" realizing the potential of this little bird, its value and the eventual elimination of the IOU list. As EO387 time will tell. My blog prediction stands.

And yes, the Mirage is a comfortable bird to fly.

I remain amused

double 00

WhyTech said...

mg said:

"It’s really too bad that Eclipse management has bungled the entire image of the company and aircraft by its continued over promises and adolescent behavior. It’s a nice $2M airplane that will be ready around mid 2008. One won’t know the actual value proposition for several years however."

A perfect summary!

WT

WhyTech said...

Moo said:

"the "bashers" realizing the potential of this little bird, its value and the eventual elimination of the IOU list."

Moo, you are getting way ahead of yourself, and demonstrating the usual inability of the faithful to distinguish between what is and what might be. By the time my criteria are met, it will be 2013, some 15 years after Elcipse began, and 10 years Vern promised first deliveries.

WT

mirage00 said...

Moo, you are getting way ahead of yourself, and demonstrating the usual inability of the faithful to distinguish between what is and what might be. By the time my criteria are met, it will be 2013, some 15 years after Elcipse began, and 10 years Vern promised first deliveries.

Why...

Aero mods are in production. NG soon to be in production. Awaiting FIKI status. Time will tell but the trend is telling.

I remain amused

double 00

Gunner said...

The SkyCar is also right on track for certification in '08; according to the Moller releases, at least.
Gunner

Niner Zulu said...

Oh come on Ken, lighten up a bit ;-).

The point is, I wouldn't buy ANY airplane with a window cracking problem, and in my opinion neither should anyone else. Fix it, then I'll buy it. Who needs problems? Life is way too short.

I want to own a jet with window problems about as much as I want to own an Alpaca farm and a bee hive collection.

mirage00 said...

The SkyCar is also right on track for certification in '08; according to the Moller releases, at least.
Gunner


And they claim I lack substance? Yikes

I remain amused

double 00

Gunner said...

mirage said:
"And they claim I lack substance?"

Glad to see you're starting to get the point.
Gunner

airtaximan said...

Ken:

"The “fail safe” interior layer of acrylic was undamaged in all cases."

Seems like someone is going to a lot of trouble redesiging a system that was "fail safe" to begin with...

keep chomping on this stuff Ken... its becoming wonderful to watch

airtaximan said...

You die-hards seem to be OK with waiting and waitng and waiting... all the while defending such a piss-poor track-record.

You have so much patience...

I'm surprsed you don't fly commercial - and LOVE it!

JetA1 said...

Was anyone else surprised at the video of the demo flight in EO's plane, when the right-seater reached up on takeoff roll and grabbed the 496 and pulled it down?

I'm having a hard time believing:
1. They didn't provide any type of mounting to keep it from flying around the cockpit in turbulence.
2. There isn't a way to wire/plug it into the ships power system, so you don't have to carry around spare batteries?

Perhaps EO can provide some insight?

Thanks,
JetA1

Metal Guy said...

To appease the believers, I re-wrote the press release above to show how Eclipse management could have saved face years ago. If they had taken this approach, or even something similar, they would have nowhere near the critics that they do have today.

A long long time ago, in a parallel universe where this blog does not exist :


December 2000

ECLIPSE AVIATION has raised $65 million in a second round of private equity investment, which the company says validates the progress it is making in development of the Eclipse 500, four-seat personal jet.

Most of the individuals who provided the initial $60 million in private financing, plus several new investors, participated in the second round, says Eclipse chief executive Vern Raburn. "This shows the investor base is happy with our progress."

Certification is expected to cost more than $1.5 Billion. The $125 million raised so far "puts some real distance between us and the competition", Raburn says, referring to other companies' efforts to raise funding to develop similar aircraft.

Raburn says powerplant development of the $2,000,000 Eclipse, being performed under contract by engine maker Williams International, is “on schedule, under budget, and right on the button when it comes to earned value". However, he did state that “given the risks associated with the advanced powerplant, there is a significant chance that we will eventually replace the Williams EJ22 with another engine. We will do the best we can, but there are no guarantees here.”

“Also, given our aggressive positioning on vendor pricing and pushing the technology envelope, we expect major churn with key suppliers and are braced to scrap the entire systems several times over” stated Raburn. “This is not going to be easy and will take lots of time and money”.

First flight is set for the third quarter of 2007, with US certification and first deliveries in 2008 for the completed aircraft.



And the aviation dinosaurs (instead of laughing at him) would have said that it sounds perfectly reasonable and wished him good luck…

airtaximan said...

metalguy,

What was the date on the original release?

Gunner said...

Metal Guy-
One correction:
The aviation "dinosaurs" actually DID wish him a heartfelt "Good Luck". It's Vern that's been sniping them every time he fails; not the other way around.
Gunner

cj3driver said...

EO said:

“ … Now to someone lofty enough to command a CJ3, you may have a distorted view of what most believe. Come down here with the common folk and maybe you would see it differently!...”

EO,

I hardly think I have a distorted view of the predicament of the $2 million dollar jet buyer. And, … I probably would have advised my mom NOT to purchase an ’86 Yugo... even with $4,000 price tag and the new car smell.

Cessna is backlogged two years on CJ3s at 7.7 million a copy. Why don’t those buyers just purchase a nice used Challenger 300, or Gulfstream? Same price, bigger cabin, more fuel and maintenance. Same reason the Faithful wait for their E500's. Same reason hundreds of thousands of people bought brand new Yugo's in the '80s, instead of used TownCar’s. The point of the post was the alternatives.

A new 86 Yugo compares to a used TownCar the same way a New Eclipse compares to a used CJ. A new CJ3 compares to a used Gulfstream the same way a new skateboard compares to a used 10 speed. Price/value.

Early buyers of Eclipses (such as you) are getting a great value for the money. Who wouldn’t agree that $995K for a brand new twin-jet isn’t a fantastic value … (assuming the IOU’s get accomplished) Now, at a price of $2 million … the jury is out.

I assure you those buyers of new Yugo’s were excited by their new purchases. An Eclipse buyer would be just as excited with a used alternative, and will be ecstatic (with a used dinosaur) if Eclipse goes TU any time soon.

As I have posted before, I also considered purchasing an E500 a few years ago. I spent a lot of time comparing cost / value / risk. I chose an alternative.

BTW – I have lots of time in piston singles and I still own one.

Green-or-Red said...

Ken
Please verfiy with your sources that the fatigue test started around the 4th of July.

AT
All windshields and cockpit windows have a fail-safe laminate in the multi-ply layup.

NZ
What are the cockpit window inspection intervals on the Mustang or the SJ-30?

EclipseOwner387 said...

jeta1,

That is not my 496 they are using. I don't know if it is plugged in or running on batteries from the video. I do have a 496 in my JetProp and currently I use it exactly as you saw there. Co-Pilot side on the windscreen. Garmin provides a heavy sand bag mount that has kept mine stable through any turbulence I have had. The demo flight appears to use the same mount. When I have the waas upgrades to my 530/430 I am going to yoke mount it. However, the placement of the 496 on the windscreen has never bothered me but I want to have automatic crossfilling and it will be cleaner to have it mounted on the yoke. (I did this on my Malibu before I sold it.)

But as you can see, it is easy to pull out of the window if you want more visibility. Typically mine stays up there for the duration of the flight. The passegers love it up high because they can see the ETE displayed and don't need to keep asking me how much longer. Are we there yet?

mirage00 said...

E0387 -

How did you like your Malibu? Any engine problems?

I remain amused

double 00

airtaximan said...

G or R,

"Please verfiy with your sources that the fatigue test started around the 4th of July."

European certification IS a wonderful thing... I guess e-clips couldn;t skirt the fatigue test THERE!

fun stuff! unless your family is onboard

JetProp Jockey said...

M00 - I know your question was directed to EO and I am sure he will respond. We both have the JetProp conversions of a Mirage. Before I purchased and converted the 89 airframe I am now flying (deilvered in 2001 and now have about 1200 hours on the conversion) I flew an 85 Malibu with a Cont. 310 HP piston.

With the Cont. engines, there were not alot of in flight failures, but very few made TBO. The fuel economy was great using the POH perscribed Lean of Peak operation - 18gph in cruise. The problems with the Lycoming replacement are will know.

The PT6 conversion is wonderful and the service provided by JetProp is second to none. They underpromise and overdeliver.

My maintenance cost for the engine is basically $0 and the cost to maintain the airframe is lowered, I assume due to the lack of vibration of a piston.

mirage00 said...

JetProp Jockey

Thanks for the info. I looked into the Mirage a few years back since I was flying the Malibu already. I didn't like the Lycoming engine in flight issues. Not sure if they have been resolved in the newer model.

What's your fuel burn rate and range with the conversion?

I remain amused

double 00

Niner Zulu said...
This comment has been removed by the author.
airtaximan said...

"All windshields and cockpit windows have a fail-safe laminate in the multi-ply layup."

I imagine this coment that keeps comng up is an attempt to defuse any safety or quality issues with the defective transparencies.

- why the short inspection, redesign and replacement intervals?

... Please stop the insanity. Accept the defect, admit it was a problem, involved redesign and move along. You sound like you are in denial, and/or do not care about safety or quality one bit.

JetProp Jockey said...

M00

I true out at about 250 knots at FL260 or 270 and get a burn rate of 30 gph (210#).

Assuming VFR reserves I consider my range to be about 950 NM. If the airport I am going to is IFR or Marginal, I wouldn't try for more than about an 800 NM trip. Like any other kersone burner, the fuel burn a low altitudes is bad and I don't want to mess around with low fuel and do a missed approach.

I, and every other JetProp pilot I've talked with, don't use the long range cruise. It might increase the range by 75 miles, but drop the speed so much, it just isn't worth it.

Niner Zulu said...
This comment has been removed by the author.
WhyTech said...

9Z said:

"calls this blog my "soap opera"

And like a soap opera, if you dont tune in for three montsh, you dont miss a thing. (An observation, not a criticism - this is pure entertainment!)

And:

" had a couple of thoughts about the “value” of the Eclipse which I will try to express"

Pretty much sums up my point of view as well. I would also give the Mustang some points under the category "not having to explain away (to my self and others) the stigma that will be attached to the E-clips for years if not forever."

WT

EclipseOwner387 said...

Mirage00,

I had a 1985 Malibu with the 550 conversion. I ran LOP (fine tuned by kevin mead's shop) and I would get 190 +/- KTAS on 17GPH at Fl190. I put over four hundered hours on the engine after a fresh top when I bought it and Kevin Mead said it was still going strong. Said what ever we were doing was working. I sold the plane but before I did I put a fresh top on it and Kevin Mead said it didn't need it but I thought it would help it sell. The engine has about 1400 hours on it now and it was bought by a friend so I will try to keep tabs on how long it lasts. Good LOP techniques does seem to work and saves money as well. The owner before me flew ROP. If you want more info let me know.

airtaximan said...

n-z,

checks out EOs last post... notice he said "I sold the plane..."

Calculate the residual value of the e-clips, given the projected volume production, and see what the plane could be worth, should anyone try to sell one in a few years. Also, add the risk of the company not really being in a condition to provide on-going support, etc regarding the potential re-sale. Think AMC Pacer...

Add this in to your equation regarding "value".

=anyone think peace of mind is an issue with airplanes and their manufacturers? I do. Add up the problems thus far at e-clips, and POM is a REAL risk factor, too.

hummer said...

Ok Try This:
5 owners
Aircaft cost: $1,800,000.
Pick up EA500 NOW (at serial 139)
Tax write off: $720,000
Owners use of aircaft at $800/hr.
Typerating if desired.
Part 135
600 hours annually @ $400/hr net
$240,000 x 3 = $720,000
Residiual value: $750,000.
Owners pickup Mustangs after three year wait.
What's wrong with this scenario?

Niner Zulu said...

whytech & AT you are right on. It's not just the money - it's the hassle factor of getting service, the stress of not knowing whether the company will stay in business, having to explain why you bought the Yugo of jets.

Why buy a jet to go fast and save time, only to have it negated by a trip to ABQ and two one-way tickets back home? There normally isn't a line item for these things in the jet comparison but they need to be factored into the comparison equation because EVERYTHING comes at a price.

Hummer, can't quite figure out what's going on. Are you figuring leasing out the airplane for charter (or air taxi) and netting 600 hrs/yr x $400/hr to offset the cost of ownership? I don't know about leasing out planes - personally I wouldn't lease out my plane and I also wouldn't share it with 4 other people, so those figures wouldn't apply to me. But if you're willing to lease it out AND willing share what few hours you can get the plane with 4 other owners AND willing to gamble on the Eclipse company AND you can actually derive $240,000 per year in income from the plane even though there are supposedly going to be hundreds of other Eclipses doing the same thing....then what you're saying makes perfect sense.

hummer said...

niner zulu
Fast, Cheap and Now
Fractional Ownership with 5 owners
Small Businesses Men & Professional
Practices that have a stomach full of
the airlines but indivially can
not justify a big dollar jet.
They use aircraft at $800/hr.
Part 135 at $1,200/hr
Net $400/hr
Can't get a Mustang for three years. So if the above like the
process, put down a deposit.
If Eclipse makes it, buy one of
theirs.

cj3driver said...

Hummer,

How about this:

Early 80’s late 70’s Citation 501SP, plenty to choose from at around $850K.
Proven record, big cabin (compared to E500), private potty, Garmin 530 in the panel, nice ramp appeal. Most have recent paint and interior … A Citation in your hangar.

You can buy a lot of fuel and maintenance for a million bucks difference! Heck, (borrowing Ken's analysis) you can pay for the difference in operating cost with just the capital and insurance savings! Put the $1,000,000 in a savings account for maintenance. Sell the plane in 3 years when your Eclipse is ready. Your insurance will be cheaper (plenty of jet time under your belt) and … have a blast in the interim.

Price / value.

hummer said...

cj3drive
Your deal sounds better than mine with a whole lot less risk! Thanks
for the advise. It may be a lot smarter way to go, and when the dust
settles. . .. who knows?

Ken Meyer said...

CJ3 wrote,

"Early 80’s late 70’s Citation 501SP, plenty to choose from at around $850K."

Got any idea what the fuel burn of a Citation ISP is? Conklin and deDecker say that its block fuel burn is 160 gallons per hour. Fuel cost alone for this bird is more than the total DOC for the Eclipse because it burns, on average, 2.4 times as much fuel per hour as the Eclipse. That's one reason why these old Citations are so cheap to acquire--they're very inefficient planes!

BTW, there are a couple of aspects of Citation ISP ownership I don't know about but have concerns--RVSM (how much does it cost to certify the plane to fly over FL280?) and noise (are there airports it is excluded from because it is noisy?). Thoughts?

Ken

hummer said...

Ken
Thanks for the claification.
Look at my numbers above.
Anything appear to be in error?

cj3driver said...

Ken, in answer to your question BC&A shows fuel cost per hour for the Eclipse at $344.77 and $699.88 for the Citation I. If you fly 200 hrs per year, the difference in cost is $70,000 per year. A million dollars in the bank will earn you $50,000.00, maybe more, so the fuel cost is mostly saved by the interest. (this is from your analysis – Eclipse vs. Mustang) Maintenance is another issue, could be $10K or could be 100K per year. … But, in any case, it wont be over 300K, since you could just go out and buy another one. Even a run-out 501SP is worth over 500K.

I’m not saying this would be the best route to go. Its just an option. I actually considered it a few years ago. I stuck with the JetProp instead, and then moved to CJ’s. I have no regrets.

The point of the Eclipse – Citation I, comparison is merely a response to Hummer, 421 and you, “seeking to see if there may be, in fact, a suitable alternative to the Eclipse.”

Apparently to the faithful, there is not and I took you (all) seriously. That’s your perogitive. Take it or leave it.

As I have said before, The Eclipse obviously has a market. IMO it’s just a small one. Its really a neat little plane, … but, only if all the bugs are worked out, the performance meets promises, and the company shows signs of profitability (longevity).

So far I don’t see this happening. Too many other alternatives. A used Citation is just one of them.

cj3driver said...

In case you are really interested Ken, a quick look thru the Citaion I ads on controller showed may to be RVSM equipped. I’m not sure about noise abatement, but I have never heard of a problem, and there are a couple of 500, 501 operators at my FBO. I could find out if you want.

planet-ex said...


cj3driver said...
In case you are really interested Ken, a quick look thru the Citaion I ads on controller showed may to be RVSM equipped. I’m not sure about noise abatement, but I have never heard of a problem, and there are a couple of 500, 501 operators at my FBO. I could find out if you want.


According to the FAA database, the Cessna 500/501 are Stage III aircraft. In fact, every Cessna Citation meets Stage III.

The 500/501 is 78, 86.2, and 87.9 for takeoff, sideline, and approach respectively.

Ken Meyer said...

The trouble with the Citation ISP, like so many old planes, is the cost of operating it. Well, that plus the hassle of owning something old that will tend to break more often and also lacks modern safety features & amenities.

Take a peek at the Citation ISP Direct Operating Expense numbers from Conklin & de Decker, recalculated to 200 hours annual flight time:

$1581.47 per hour (excluding crew and catering)--that figure is driven high by very high hourly maintenance expenses and engine reserves

$4.95 per nautical mile

The Eclipse expenses, calculated using the same methodology, come out $589.85 per hour and $1.95 per nautical mile).

The Citation ISP costs $3.00 more every mile you fly. Almost $200K every year. The $600K savings in upfront expense will offset some of that in reduced cost of capital and insurance--about $45,000--so the actual additional cost of the Citation ISP per year is "only" about $135,000 or $2.11 per mile.

And don't forget that when you buy a 30-year-old airplane, there are a number of intangibles--downtime, higher refurbishing costs, and the constant annoyance of flying something very old.

I certainly wouldn't fault anybody for buying an old Citation ISP, but if you buy one, you ought to look carefully at how quickly the higher operating expenses will offset the lower acquisition cost.

A Citation ISP may be a useful approach for certain pilots, but it doesn't work for me.

Ken

WhyTech said...

Ken said:

"The Citation ISP costs $3.00 more every mile you fly. Almost $200K every year"

Ken,

You surprise me. You far understate the advantage for the Eclipse. Even you should know that an airplane you cant actually buy and fly (Eclipse) cost virtually nothing to operate!

WT

airtaximan said...

Ken:

"BTW, there are a couple of aspects of Citation ISP ownership I don't know about..."

Really, unknowns regarding a well established older aircraft bother you, but regarding a new one with a lot of known problems, and potentially (probably? indications so far are that there will be?)many, many, many unknown problems doesn't concern you.

At least with the Citation you can look it up.

All you have with e-clips is a piss-poor record, no fatigue test, trackrecord of missing goals, IOUS etc...etc...

HOW did you decide to buy one with all these "unknowns"?
I like this line of thinking... explains a lot.

airtaximan said...

for gunner,

http://news.aol.com/story/
_a/company-now-sells-real
-flying saucers/
20070803170609990001?ncid=NWS00010000000001

Ken Meyer said...

Whytech says,

"You far understate the advantage for the Eclipse."

You're right; I did. My apologies.

Conklin and de Decker say that the FIXED expenses for the Citation ISP are higher than the Eclipse 500 despite the lower acquisition cost of an old Citation. It is, according to C & D, not just the direct operating expenses where the Eclipse has the advantage.

Ken

hummer said...

Ken
Could you address the potential
residual value of the EA500?
Given the purchase price of plus
or minus $1.8 mil, and assuming
growth and production as per Peg
Billson latest figures, any
speculation on three to five years
out.
I am certain you have considered this aspect of your purchase.
Enlighten us on the best and worse case scenario.

airtaximan said...

TOO GOOD FOR VERN TO PASS UP, I'm sure...

Since June 28, Dougherty says Cirrus has received an additional 100 orders for its jet, which is yet to have an official name. "We have 250 position holders today and the deposit amount is $100,000," she said. Although there's not a set price for the jet, company cofounder and CEO Alan Klapmeier says the jet's target price is amid in the neighborhood of $1 million. Certification is thought to be around 2010.

Imagine how many he'll sell at the low low intoriductory GUARANTEED price of $650,000 (even $779,000, like the e-500 initial price!)

I imagine Vern will be on this very soon. I expect a few thousand "firm orders and options" all "backed with non-refundable $75,000 deposits" - except for the $5,000 auction place-holders with e-clip'd'ya dollars) for delivery on 2010 (Q-1 of course!).

Later...

Gunner said...

AT-
Thanks for the latest Moller story link. Here's an easier link to follow: http://tinyurl.com/28qdab

Those guys really are cutting edge, huh? Read what people in the know are saying about it:

"Hello,
I think you people are missing the point, it was intended only to fly 10 feet for the license and the fact of safety. Secondly this craft is a begining, not an end. Its like the model t ford, when that first came out do you think that was effecient? So give this another decade and many new tries it will come and benfit us all. Can you imagine getting to work directly you could save an hour off your commute! Keep up the good work. 90,000 sounds like a lot, but think some of these cars cost that much now. So this could be brought down to 50,000. An escalade cost this!"


Couldn't have been written better by The Faithful themselves. That's the beauty of the design. What's not to like?

Gunner

Ken Meyer said...

hummer asked,

"Could you address the potential
residual value of the EA500?
Given the purchase price of plus
or minus $1.8 mil, and assuming
growth and production as per Peg
Billson latest figures, any
speculation on three to five years
out."


I think it's impossible to say. There are too many unknowns and too little firm data to formulate a projection. It's all a guess, but here are some factors to think about:

In favor of the Eclipse holding value nicely:

1. Current Eclipse pricing is well below competitor pricing (e.g. even single engine turboprops cost more)

2. There is an announced price increase

3. Further price increases seem likely

4. Positions for aircraft to be delivered soon and already-delivered aircraft are selling at a premium (I know of one for later this year that just sold for $1,775,000).

5. Deliveries have not cranked up as fast as originally forecast--therefore demand is currently unsatisfed.

6. There is the likelihood of increasing demand going forward--as the aircraft appear at airports all around the country (and the world), pilots will see that the plane actually flies well, and fence-sitters in large numbers may step up to the plate. Also, if DayJet, LinearAir, Pogo, MyPlane or any of the others succeed in a big way, demand (and pricing) will go up.

7. Many early speculators are selling their positions and making a tidy profit despite undercutting current company pricing. The values are holding up pretty well despite this obvious downward force. Early speculators' positions will be exhausted shortly.

But arguing against the aircraft holding its value are:

1. Scheduled production numbers will exhaust current orders some time in 2010.

2. By 2010, aircraft production could be 1000 per year if the company continues to boost production, creating a possible oversupply (but bear in mind the company won't do this unless the market can support that production volume--it would work against them as much as it works against existing owners)

3. DayJet may fail; their used aircraft could hit the market and dilute pricing.

4. The aircraft may have a bad accident record or may have many maintenance issues that lower its value to buyers.

5. Positions for delivery in 2008 and beyond are currently selling at a discount to factory pricing, which suggests that, at present, supply in the 2008 and beyond timeframe exceeds demand.

There are really too many unknowns to know what will happen moving forward. But what I keep coming back to whenever I think about this issue is value. The plain fact is that you cannot get a twin-engine turbofan aircraft for anywhere near the current Eclipse price, and you cannot find a twinjet anywhere that is as inexpensive to operate. As long as there remains a market for a cost-effective twinjet, I think the value will hold up well.

For me, it doesn't matter much how well the value holds up over time. I've been flying my current plane for 17 years. I figure I'll fly the new plane about that many years and then see what to get. Whatever the pricing of the Eclipse does over 17 years will be a mere blip compared to the overall cost saving of operating such a fuel-efficient jet for that many years.

Ken

cj3driver said...

Heres the reality of someone purchasing an E500, and using it for typical DayJet “airtiaxi” routes:

Average trip length 250 NM
Block speed 230
Block fuel 450/ hr
Fuel cost $4.50/gal
JetCompete $250

Insurance $35,000 per year
Hangar $15,000 per year
Capital cost $120,000 per year
Property tax $20,000 per year
Depreciation $200,000 first year

Total annual cost $500,000

Translates to $10.00 per mile this mission.

Gunner said...

On another note, ISSC stock closed at $15.5 down 14 points from the high it achieved on the Eclipse announcement and a full 20% off from where they were, prior Eclipse. Looks like Osh and the LessJet hasn't pulled their bacon out of the fire.

Anybody who shorted that stock at $29 should be smiling right about now. Who says you can't make money with Eclipse! ;-)
Gunner

Niner Zulu said...

My thinking is that the residual value of the Eclipse is going to be a LOT less than what most people might envision. This is not to pick on Eclipse - I think the entire piston/jet/turboprop market will be going a lot lower and Eclipse will be no different. Reasons: I could go into detail but I'd put everyone to sleep. In brief, the reality is that not many people in this country know what is going on with the US dollar & the economy, they don't care or understand how the lack of refinery capacity in the US and elsewhere is going to affect fuel prices nor do they realize that most of the major oil fields in the world are in decline. We've also got 77 million baby boomers hitting retirement with little or no savings and their aint' no social security trust fund. That means, even more taxes on the young to support the most entitled generation ever and an even bigger drag on the economy.

What are the first things to drop in price when people are insecure about the future? Vacation homes, boats, AIRPLANES. I think we're headed for a fire sale in prices.

airtaximan said...

Ken,

... I guess you forgot the cheaper single engines coming up, including the con-jet with pretty much the same perfomance but lower operating costs and the 7 place The-Jet. Epic with their new deep pockets becomes a viable contender as well...

This should do wonders for your planes residual value.

Also, I doubt there are any smaller engine development programs around the world... but IF there were, and these smaller, more fuel efficienct and less expensive powerplants came to market on twin 4 place planes with better performance and fuel economy and pricing than the 500...

perhaps you are not looking at the realities of the situation? Just making a case for your own decision taken a long time ago, when there were still alot of unknowns that seemed to have gone the wrong way? really...

airtaximan said...

N-Z...

yup, and on the other side of the argument is...

the world has generated a lot more wealt faster in the last few years due to advancing markets around the world.

the demand for planes could be pretty robust elsewhere... if not in the US.

BUT, I would not bet much against your scenario.

Personally, I think the e-clips has the worst chance of keeping residual value - Ken's logic sounds good, except if they raise prices, folks will buy something better... the cheapness will not be there any longer and there's nothng else except a lot of risk.

Especially considering the singles.

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

Stan. . .
You got any ideas concerning
residual value? You been around
a long time, seen lots of ups &
downs and I respect your opinion.

PS: Editing of posts would be
a great addition to this
site.

Black Tulip said...

NEW POLITICAL PARTY MAY BE IN THE WORKS

WASHINGTON POST EXCLUSIVE

Washington, DC, August 4, 2007 – An unidentified political operative told the Washington Post that a new political party may field a candidate in the 2008 Presidential Election. “Voters are tired of the Republicans and Democrats,” he said. “They crave a fresh face and a new approach. I’ve been researching an obscure aircraft internet site for months now, and I find the kind of unbridled optimism this country hasn’t seen for decades.”

“The political group call themselves The Faithful and they have been testing their new ideas against a panel of all political stripes for over a year now,” the operative continued. “The internet panel’s inability to rebut The Faithful’s arguments has strengthened their political resolve.”

“Their platform is fresh and optimistic; they see the world as it should be, not at it is. The group brings a new set of economics that will put Keynes and Friedman in the dustbin of history. They have found the secret of relieving suppliers of the shackles of shareholder return, fiduciary responsibility, product performance, aftermarket support and critical media review. ”

“The Faithful bring a populist message that gives them a real shot in 2008,” he continued. “They want a chicken in every pot and a plane in every garage. If current U.S. industry can’t do this, then these dinosaurs will be left behind, as new companies and new rules are rolled out. This is populism at its best… these aren’t coupon-clipping trust-funders, these are blue collar guys with dirty fingernails.”

“We are about to enter the enlightened age of economics,” he concluded. “The Faithful realize that capitalists have been cheating the common man with high prices and artificial scarcity. The establishment had better watch out because The Faithful are about to storm the castle with pitchforks and torches.”

Black Tulip

Gunner said...

That's a keeper, BT.
Classic.
Gunner

Niner Zulu said...

AT, agree with your point about a lot of wealth being generated around the world, especially outside of the US. But there hasn't been much of a demand for GA aircraft elsewhere for a lot of reasons which don't have a lot to do with cost i.e. geopolitcal issues, government restrictions, maintenance support, fuel, etc. Most of the essays I've read by people that have flown around the world say that there is NO place like the US, Canada and maybe Great Britain for GA aircraft. So this is THE market that will have the greatest effect on pricing.

Look at Europe for example - I just spent a 10 days in France and I think I saw 2 GA aircraft fly over the entire time I was there. I believe they were both TBM's. The French aren't exactly poor. Where are the 172's? The Cherokee's? Since 2001 the dollar has tanked 50% against the Euro - talk about a fire sale - planes have never been less expensive for Europeans. Where is the huge demand?

Niner Zulu said...

Here's another one of my favorite blogs. I live in the land of people who are delusional about the value of their homes - among other things ;-)

http://www.irvinehousingblog.com/

I especially liked the chart on the home page, showing the phases of a "bubble" whether it be homes, internet stocks, or "VLJ market optimism". I don't think VLJ's are in a bubble, but I certainly think the manufacturers are approaching the "delusional" phase in a manufacturing bubble as they race to produce VLJ's. Eclipse leads the pack by about 10 laps, but none of the manufacturers seem to be immune to VLJ mania.

Gunner said...

NinerZ-
Agreed as to the overemphasis on VLJ's. I think the housing analogy is spot on and there's a whole lot of companies that are rushing in to a VLJ market that can only support a very few.

With gas prices set to soar, there will certainly be increased demand for more fuel efficient aircraft; but, in reality, we've not seen much of that technology come to reality; most of the fuel efficiency is realized by smaller aircraft and smaller payload; not by any quantum leap in jet engine efficiency. Very few of the new Jet designs will prosper. My money's on Diamond and Cirrus in the SE category, because they have other products to support these; Cessna, Embraer, Epic and HondaJet in the twin category. I rule Eclipse out because I think they're producing an inferior aircraft that's probably worth about what they're charging and they can't make money at that price.

If your economic predictions come to pass, The Faithful Argue, Eclipse will take off as owners look to "downgrade". It's like arguing that the Tract Home market should be soaring today. Just doesn't work that way...as buyer dollars are forced out of a market, ALL market segments suffer and only those able to hold their own during a production downturn can survive.

We see this in the housing industry, in the automotive industry and in the aircraft industry.

Using The Faithful's very logic, there's simply no doubt that the low end winner will have to be (you guessed it) Moller. They don't like to talk about Moller, however. The company over-promises and continues to claim a flying, certified, revolutionary product on "Tuesday". That about says it all.
Gunner

JetA1 said...

NZ said:
"But there hasn't been much of a demand for GA aircraft elsewhere for a lot of reasons which don't have a lot to do with cost i.e. geopolitcal issues, government restrictions, maintenance support, fuel, etc."

I think your perception may be off a bit, did you miss these?

July 25, 2007
Hawker Beechcraft Corp. expanded its operation by opening an international sales headquarters in Broughton, United Kingdom.
International markets make up 50 percent of the company's new aircraft sales, and are considered a high-growth region by all general aviation manufacturers.


May 10, 07 quote:
"It is important for us to continue to gather information from our international customers as the business jet market outside the U.S. continues to grow," Chairman, President and Chief Executive Officer Jack Pelton said. "In 2006, business jet orders outside the U.S. accounted for 48 percent of our total orders, which is a significant increase compared to the past few years."

Good luck to EA with EASA Cert...those guys are sticklers!

mirage00 said...

Then you DO charge that Cessna limits its production, just to make more money. That's a bomb-shell for certain.

No not at all. I'm just pointing out that their capacity to build the Mustang is maxed out at their current production rate.

I remain amused

double 00