Friday, August 17, 2007

Taxi Anyone?

Karen Di Piazza reported "Today, North American Jet Charter Group, LLC, became the world's first on-demand air charter operator to fly two paying charter passengers on the Eclipse 500 very light jet.


On Aug. 14, North American Jet Charter became the world's first FAR Part 135 operator to receive Federal Aviation Administration approval to begin commercial service using the Eclipse VLJ."

The complete article can be read at
CharterX.

DayJet can't be far behind...and Vern has repeatedly linked the success of his program to the success of the Eclipse in the air taxi market.

354 comments:

1 – 200 of 354   Newer›   Newest»
baron95 said...

From the CharterX article...

[Eclipse, manufacturer of the EA-500 VLJ has been waiting for more than eight years to have its aircraft actually become approved to fly charter passengers, yet the company's website fails to mention North American Jet Charter as the first charter operator to receive FAA approval to use the EA-500 for on-demand charter services. This journalist sent Eclipse Aviation an email earlier in the day, asking for a response; Eclipse refused to comment.

Ken Ross, North American Jet Charter president, who was the pilot-in-command during the first Eclipse VLJ air charter flight today, confirmed to CharterX he hasn't heard a word from Vern Raburn, Eclipse CEO. This journalist, not Ross, questions the politics of Raburn: why has Eclipse ignored a historical-making first FAA-approved EA-500 charter company capable of providing business passengers with an effective-cost alternative for air-taxi services? Raburn has boasted that the EA-500 is the perfect air taxi twin-engine VLJ that will "revolutionize" travel for business executives. Business executives flew today for the first time--with North American Jet Charter.]

It is interesting how Eclipse is ignoring this development, apparently in preparation to tout the Day Jet operation (which has 11 Eclipses on hand and still is not generating revenues).

What gives. What is the Eclipse/DayJet deal?

cj3driver said...

Ken said;

“ … The PW615 generates 50% more thrust. The Mustang weighs about 50% more. Does it really make sense to you that the fuel burns will be about the same? … “

No, … but thrust isn’t linear either. I can tell you I burn less total fuel in my CJ3 on any mission over 300 NM than I used to in the CJ1. 10,700 lbs vs, 14,000 lbs. … 1,900 thrust vs. 2,850. and nearly double the range to boot.

I’m not saying (and never have) that the Eclipse burns equal or more fuel to the Mustang. I just maintain, that in the big picture, with a $350,000 (or more) annual budget for any VLJ, the difference in fuel burn, $17,000 a year is a miniscule number. … and this us using YOUR numbers for fuel burn (600nm @ 200 hrs per yr) not BC&A’s

cj3driver said...

EO387 wrote,

"North 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."

cj3driver said...

Baron95

At $1,300 per hour, the little jet is priced right in there with CJ's ($1,500 per hr) King airs ($900-1100) and more...

Hardly revolutionary.

Not real good news for the new investors.

Not real good news for the "air taxi" market.

Not a very good case for the volume market

Ken Meyer said...

CJ3 wrote,

"I just maintain, that in the big picture, with a $350,000 (or more) annual budget for any VLJ, the difference in fuel burn, $17,000 a year is a miniscule number."

Using $4.69/gal and 600 nm flights at FL 370, the Mustang costs $24,000 more each year in fuel.

The Mustang costs about $97K more each year in insurance and debt service.

Between the two, an owner/pilot would spend an extra $121,000 each and every year without gaining any additional speed or range. He'd gain maybe a hundred pounds in full-fuel payload.

There are other additional costs--higher engine reserves for instance, so the true additional cost exceeds $121,000 per year. It's up to the individual purchaser whether all that extra expense is worthwhile or not, but the guys who crunch these numbers for a living don't seem to think the extra expense is worth it--that's why we're reading about how North American Jet Charter, Dayjet, Linear Air and the others all selected the Eclipse over the Mustang.

I like both planes, but honestly I don't think the Mustang is $1.3 million better or worth 75% more upfront and $600 more every hour I fly it. Those who think it is, should buy it; I won't fault them for doing so, but my decision was to get the same performance while spending a lot less. YMMV.

Ken

cj3driver said...

The Charter X article goes on to say,

"…When the aircraft isn't being used under FAR Part 91, it will be on North American Jet Charter's FAR Part 135 certificate," he said….”

Another reason Vern probably wont make a big deal out of this 135 operation, is that the plane appears to be a typical aircraft owned by a private party (company) operated under part 91, and earns charter revenue in the spare time to offset costs or create a business purpose for favorable tax consequences under 135. There is a big difference between this type of operation and DayJet or any other Charter company that uses the aircraft as capital asset solely to produce a profit in and of itself and one that is used for part time revenue, just to offset some costs.

The 135 approval is still good news for Eclipse … just not the right spin for Vern. … I guess. …. Nothing revolutionary there.

Who knows … maybe they will pop the cork tomorrow.

Six Romeo said...

Gunner,

Thanks for the comment on the XD.

I realize this is complete hearsay, but about a year ago I was discussing eclipse/dayjet with someone I would consider in the know in ABQ. I really don't want to get into a lot of details, but after he described their relationship, I asked the following question. So, it sounds like Dayjet is a pseudo subsidiary of eclipse? He smiled, as if to say you're right, and changed the subject. Granted this is not too substantial, but since then I certainly believe eclipse=dayjet.

Six Romeo said...

From dayjet's website. Sorry if someone else has pointed this out, but "To be a DayJet Pilot means you’ll have a predictable work schedule..." And this meets "per-seat, on-demand" how? Of course, astro. Maybe the Russians should have been writing aviong code...

Here's another correlation between eclipse and dayjet. Predictable=if you're awake, you'll be working.

cj3driver said...

Ken said;

“…The Mustang costs about $97K more each year in insurance and debt service….”

Ken,

A new Lexus also costs a lot more in “insurance and debt service” than a Camry.

You keep wanting to add capital cost (and incremental insurance) in your comparison and not depreciation. You must think that the new Lexus you bought three years ago is worth the same as when you drove it off.

There are a certain number of people who will buy a new toy just to be the first kid on the block with one. I confess, I am guilty of that with cars. With planes, I’m a little more conservative. I think many people are.

Fuel cost, burn, insurance … all these items are known (or will be known) and be relatively undisputable in the next few months. Yes, the Mustang is bigger and burns more fuel. Yes, the Mustang costs more, so the capital/insurance cost is more. How much more remains to be seen.

However, for me, when comparing aircraft (not just Eclipse) resale value is a very important part of the financial aspect of total cost. Expected depreciation is a major factor in my decision making process. What if I am not happy with the plane in a few years?, What if I want to move up (or down)?. What if I lose my medical? What if I have to sell for financial reasons?

I would think you (or any one else considering an Eclipse in this forum) would be much more interested in other people’s opinions of something that may have a HUGE and much more significant effect on your choice in the long run. This one issue (depreciation) can potentially cost you hundreds of thousands, if not a million or more dollars, in the next few years.

Safety, Reliability, Training, Service, Stablility/longevity of the Company, market share and fate of DayJet, all tie back to the future value of the fleet and the actual cost of ownership.

Six Romeo said...

cj3driver,

You and WT proffer tremendous (apparently unbiased) insight, from a proven plane owners' perspective, into the babyjet story. On behalf of the observers (pardon me if I am being presumptuous ) of this blog, Thank you!

When you address Ken, do you ever want to say, "Hello Wall."

WhyTech said...

6R said:

"You and WT proffer tremendous (apparently unbiased) insight,"

Thanks, 6R. Just to be clear, I have no dog in this fight. I dont own a Cessna or an Eclipse, or any other "jet." No human is without some biases. I confess that ethically challenged behavior by companies or individuals makes me wild.

WT

WhyTech said...

6R said:

"When you address Ken, do you ever want to say, "Hello Wall."

Ken has destoyed his credibility with me by his relentless flogging of just a few of the tradeoffs to be considered in acft ownership. If his logic prevailed, there would be no market for any jet except the E-clips. I try to be patient with Ken. Unlike many on ths blog, he is more about talk than action.

WT

a37pilot said...

CJ3 your right on target

The vast majority of all the turbine powered aircraft charter is being done by privately owned aircraft that are being leased to some 135 operation to either offset cost or create a business use for the aircraft. With the charter rates today it would be difficult if not impossible to purchase an aircraft just for the charter revenue you might earn. BCA had a great article about this a couple months ago. If an Eclipse can be operated cheaply enough to make a viable stand alone charter aircraft, that will be revolutionary. The problem is there is a significant difference in operating cost when you start operating part 135. The wear and tear aspect of part 135 operations is going to be significant.

airtaximan said...

"we know there are a large number of DayJet planes that are being used by their owner precisely according to the owner's wishes...we know there are a pretty good number of owners who have taken their airplanes home...There are a small number of leasebacks"

If you read the dayjet presentation, you would see that this statement is incorrect, really.

ALl things considered, I'd say the companies are "sister" companies, to be polite.

One reason is, no matter what real problems exist, Dayjet and E-clips cover them up together. Example, Dayjet's orderbook described as 229+70 options for years, finally revealed as 1430 total orders and options for delivery way into the future. This characterization of the orders, for years, by both companies, to deceive the public into thinking there were less Dayjet orders, and more (arm's length, real orders) "orders" is indicative.

Linearair's website looks like they are doing conventional charter based on leasebacks from individual buyers, as well...

The marketplace for charter is laced with this arrangement, and frankly, the savvy management companies take advantage of the owners, and promise to cover "some" portion of expenses (instead of make money) with the part135 revenue. THIS makes the price for charter "artificaially" low.

The NA Jets and Linear's of the world may have a leg up on the Dayjets' regarding business model, except for the price of the jet - a sweet deal at $1.1 million for Dayjet.

If Dayjet is "using the plane exactly as they expected" there's a reason it had to be $500 off the sticker price... 1/3 off? or more considering the Part135 package?

The plane is so good and so cheap...why take another 30%-40% off the price to make air taxi work?

Interesting "facts" in evidence on this already... something tells me there will be more soon... it's too juicy for the media to pass up.

Imagine if E-clips really was its own best customer, accounting for over half its orderbook? At 30-40% off the price everyone else is paying? Plus, was there really any progress payments made by Dayjet? Or did the other few hundred "Ken Meyers" pay for E-clips-Dayjet planes for a year while they were being non-manufactured?

Fun to watch.

Ken: where's your list of risks? You were so made at me for saying your never acknowledge them... its been a long time...can you even stomach to think about them realistically?

ahhhhahah!

airsafetyman said...

Is the Eclipse/DayJet part 135 delay an FAA payback for the Eclipse certification farce? "We haf ways, Vern, you vill not find zem pleasant!"

airtaximan said...

ASM,

I suspect the WAY Dajet is planning to use the planes has more to do with it... and its not necessarily only a part 135 issue or an FAA issue. But I really do not know...

Gunner said...

FWIW, a few of us have been questioning the ownership/control of DayJet for months now. If it's a viable business, in a competitive industry, there is absolutely no reason for the continued launch delays when other equipment might have been leased to get them "off the ground" while the EA-50X was still earthbound. The Eclipse might enter (or take over) their fleet at any time after launch.

One possibility might be that the initial fleet was offered super cheap with an exclusivity clause. But I suspect the relationship between Eclipse and DayJet will be proven to be far closer than that.

Conspiracy Theory, you say? Nope. Simply "rendering an opinion on future events". Ken has ruled such posts 100% acceptable.
Gunner

AlexA said...

CJ3DRIVER said “..that the plane appears to be a typical aircraft owned by a private party (company) operated under part 91, and earns charter revenue in the spare time.”

AVWEB reported “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.”

No one is going to take the trouble or expense to add an aircraft to a part 135 ticket if it wasn’t going to be used at least 200-400 hours a year for charter revenue.

airtaximan said...

"No one is going to take the trouble or expense to add an aircraft to a part 135 ticket if it wasn’t going to be used at least 200-400 hours a year for charter revenue."

this is simply not true... I know of many planes on certificates that end up having less than 400 hour per year. A lot less.

Remember, these planes are under management. they are owned by someone else. Unless they're "absentee owners" with no intention to use the planes themselves, its reasnable to think 150-200 hours per year is acceptable to them...like I said, many many planes are under this sort of arrangement.

airtaximan said...

some accounting...

How many planes are going to "wners" then mananged by Linear, NA Jet etc?

Why?

'cause someone's double counted them in the order book anaysis.

XZY to individuals
ABC to Linear + other air taxi

... when in fact there might be around 100 planes (who knows, really) that will go to individuals, then under management to these guys. The fleet orders are mischaracterized, I'd say. Linear NA Jet, and how many others were really "airplanes under management" for individuals.

airtaximan said...

Gunner:

"there is absolutely no reason for the continued launch delays when other equipment might have been leased to get them "off the ground" while the EA-50X was still earthbound."

One would think so... even just prove the model using airplanes (real airplanes) under management for a negotiated hourly rate. It could be low.

But how many planes cost so little to own and or lease and operate?

- actually many, many planes under management, whenreby the owner is actually subsidizing the cost, by looking for only incremental revenue.
- one could argue that even at a loss, dayjet could have been operational at least a year ago as planned, and on some routes, proven load factors in excess of 1 or 2...

But, fuel costs would have eaten into the success of their entire program with conventional planes.

NO WAY.
Props are an issue? NO WAY... Linear, Cirrus, etc...in fact there are 10,000 prop planes in charter today... people do not seem to really care.

Why? Like you say, it probably goes more to what is really "owed" to investors at Dayjet.

Black Tulip said...

In comparing a Mustang owner to an Eclipse owner, Ken said, "He'd gain maybe a hundred pounds in full-fuel payload."

I believe the Mustang is a far more capable aircraft than the Eclipse might turn out to be, in terms of payload/range/speed. You need only compare gross weight and thrust of the two machines.

Black Tulip

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

3 each at $1,8. mill

1 each at 975,000

1 each auction t $1,975.

Do the math for above weekly
activities. All they got to
do if 5/week.

hummer said...

And of course, variable labor
force. Get those 600 doing
nothing out the door.
Of the 800 on the line, determine
what is essential and let the rest
walk.

hummer said...

Easy decision but looks like no one
has the balls to make it.

hummer said...

Focus, discipline and a variable work force. Five units per week and as justifiable production increases, increase the work force. The nonsense of having tens of thousands of man hours to produce a really small number of aircraft is insanity.
The only problem Eclipse has now is
production. . .then quality production. The Sales are there, the equipment and suppliers are there, the capital is there. . . Production is the only uncertainty.
Get a tough manufacturing person with responsiblity and AUTHORITY and Eclipse is well on the way to solving the problems.

WhyTech said...

9Z said:

"I wonder how long they can continue to pull rabbits out of the same hat. "

Excellent analysis! I wouldnt have thought that they could get even the most recent round done, but then maybe the rabbits multiply even faster than I thought!

WT

hummer said...

9Z & WhyTech
That is absolutely wrong.
The only way for Eclipse to survive
is to start making money on every
thing going out the door PERIOD.

Stan Blankenship said...

According to the information in the public sector, the company received $225m after Oshkosh 2006.

By June 2007, Vern claims the company was nearly out of money.

After Oshkosh 2007, the company received another $210m.

The burn rate today is higher than what it was this time last year.

Given the slow production rate, and delivering airplanes under priced to begin with, plus only collecting 40% on delivery, will mean the more airplanes the company delivers, the more money they will lose.

My guess, the company will need another cash infusion by the end of the year.

hummer,

In answer to your earlier question, we were on Table Rock. Norfork however is our all time favorite and one of the best kept secrets in the Ozarks.

WhyTech said...

hummer said:

"9Z & WhyTech
That is absolutely wrong."

I dont think that we are in basic disagreement. Making money on everyting going out the door would be hugely beneficial. But, as others have posted here, that doesnt seem likely in the near-term, which means raising more money will be essential, at least for the next 1-2 years. If they can find a way to make money on everything going out the door, I'd definitely recommend that they do that, and soon!

WT

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

Stan Blankenship said “Given the slow production rate, and delivering airplanes under priced to begin with, plus only collecting 40% on delivery, will mean the more airplanes the company delivers, the more money they will lose… My guess, the company will need another cash infusion by the end of the year.”

Stan there is always a possibility the company will need a cash infusion but you fail to take into account a number of factors.

1. Progress Payments - With the announced production rate Eclipse will be collecting approximately 30 deposits or $18 million per month through October (6 months before schedule delivery) and 60 deposits per months after October ($36 million per month). It is still to be seen if Eclipse can deliver at these rates but it does not affect the call date for the Progress Payments.
2. Delivered Aircraft Payments- Whatever the magic number tends to be Eclipse will receive 40% upon delivery of aircrafts. Twenty a month is approximately $8 million and so on. The public will not have knowledge of the actual number until reported to GAMA.
3. Open slots- Eclipse has always stated that they have left open slots early in the delivery line for premium customers. A good example is the aircraft that was recently auctioned off. If you assume the first 150 or 200 aircrafts going out the door are loss leaders you are mistaken. I know of at least another position going out the door for premium. Some of the late entrants into the VLJ charter business have no problems paying premium.
4. Vendor Stake- While I have no independent confirmation one vendor representative informed me that a one time substantial discount was negotiated for the first 155 aircrafts in order to get the business. Maybe mouse can add more info. You know what happens when you ASSume

The bottom line is you, I and the fellow bloggers can speculate anyway you want to spin the issue. My guess is there are only a handful of employees that really know what the cost is on each and every serial number going out the door.

While Ken was ridiculed about his statements in reference to equity investors my experience has been that these folks conduct serious due diligence before investing their money.

airsafetyman said...

Is this just a scam? Vern the airplane maker sells airplanes to Vern the DayJet guru at a loss. He further puts Eclipse in a hole by providing maintenance and parts at a loss through JetComplete. Vern the airplane maker is guaranteed to lose money, and Vern the 135 operator is guaranteed to make money. But to what end?

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

"my experience has been that these folks conduct serious due diligence before investing their money."

and this id offered as, what? FOlks, take comfort in the fact that due diligence has resulted in proving the company is worthy of an investment? Complete disclosure with the truth resulted in very smart guys making informed decisions to invest..right?

- I ask, with all the smart folks, and the due diligence...in the past... do you think the investors knew it would go this way?

- do you think they were told everything? accurately? or do you think someone relied on plausible deniability? "I didn;t know the engine was trash! I had no clue the avionics were going in the garbage... well, you see, United, well, we can do a better job ourselves... Dayjet - yup they have 1430 orders, mostsly options, mostly way way into the future... so our order book is really around 800 or so...

The herd mentality which you are refering to, one where some other fool made a mistake, and other say "well, they did it, so why not me" is not good enough for me...a nd I suspect a lot of very very smart folks passed on Dayjet and e-clips.

airtaximan said...

(Z,

microsft LOST money in China for years and years, and is only NOW figuring out how to do business there. I suspect, someone with very deep pockets CAN make a go of e-clips, in some way shape or form... and it will take a long time to morph into a profitable venture based on sane production rates for a poorly designed plane, plus another plane to bring some degree of volume into the manufacturing cost predicament.

So far, there's no business case. In the future, if someone ponies up another $400 million or so, they can take over and make a real business plan work.

I suspect, it will have nothing to do with air taxi... unless they own Dayjet too...

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

Also, "don't throw good money after bad...".

;-)

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

"I realize talking about the long-term viability of Eclipse is not the most interesting subject"

actually, it’s the only subject... is it hard to produce a plane with the size, range, speed etc... of the e-500? NOPE. Been done before, and if not, well, just use the engine and build an airframe IF you think it’s a good idea.

Is there anything special about this airframe... nope = it’s just small, and under priced by the company to create the illusion of a larger than normal market.

OK, so, with the promised competitive advantages in the garbage, EJ-22 and AVIO, plus the also-ran FSW...what is there to talk about?

The very risky and as some would say, unrealistic plan to build thousands of planes a year, and the air taxi market... the "new" air taxi market that is - the one that is computer enabled, at $3 or $4 per mile for trips of around 200-300 miles... this is the promise land of thousands of planes.

An established, known company? NOPE... a sister-company invented by a buddy who received 30-40% off the price of his planes, to "have at it".

In the meantime, investors have plunked down a $Billion, and a few hundred million into Dayjet, too.

Plus, unsuspecting Ken-Meyer-types slept at a hotel in 2000/2001 timeframe, to be hooked on a plane that requires $1million up front... a year and a half or more in advance of receiving a plane that is unfinished, changing the avionics that is not functional, and has all sorts of issues...

These Meyer-die-hards take a back set to auctions, Dayjet and other priorities like "prototypes that are "not for sale"... while the company is on the brink of bankruptcy... and their planes are not even close to being in work.

Meanwhile the company keeps making hollow promises about production rates, improvements, etc... And the band plays on...

Kind of amusing from a spectators stand point.

Even more amusing is the faithful-Meyer-die-hard trumpet of the speed and range of the plane he paid for, in the hands of some other buyer... reported upon for the faithful to keep the money flowing.

As some really smart person pointed out here, perhaps Vern will not need more cash soon - the progress payments are due when called - notwithstanding the pissy track record of deliveries.

I would ask that all promised planes are delivered, BEFORE any other ponzi-meyers are requested to finance operations, development, certification or Dayjet's fleet, BEFORE anyone is required to pony up more at risk deposit money...

But, that's just me.

PS. at the promised rate, the one that is required to make a dent in deliveries and real cost... you might as well wait. There are two possible scenarios:
1- the company produces at the rate required for profitability… and there’s a glut – you’ll be able to buy the plane without a deposit, really. At least you’ll know when delivery might be. Now, you have no clue.
2- deliveries continue to lag, and the company will need to use your deposit money for someone else’s plane… until the music stops, and you are the one without a stool.

Conversely, pay now and forever hold your peace. There’s mo reason to do this, other than saving a few thousand dollars, maybe… in the grand scheme, it’s a bad bet… if what you really want is a plane. If you want a can of beans… go for it! I hear one out of five e-500 have been sold in the aftermarket already. This does not include the Dayjets, of course… count them out, and it about half.Noe of these buyers cared a lick about speed and range, except the risk associated with the speed at which Vern burns cash... and the distance (range) the company will have to travel to make a go of this business...

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

Gunner said... Sure, we don't know how much it costs to build an EA-50X, but we can be pretty generous in assuming it in the vicinity of $1.5mm to $2.2mm (and probably MUCH higher today).

Now there you go again. You just can't resist shoot your foot off.

Gunner said...

Some observations on Investment.

Smart Investors and Due Diligence:
From The Faithful way of telling things, Wall Street has never funded a dog; smart investors performed due diligence on every private and public failure since prior to the Great Depression. 'Nuff said.

Eclipse and The Money Tree:
There's no percentage in talking Macro-Dollars about the number of Progress Payments that might be called or the 40% final payments to be delivered. That simply clouds the issue of whether this company is cash flow positive or negative.

Look Micro for the answers....per plane. Sure, we don't know how much it costs to build an EA-50X, but we can be pretty generous in assuming it in the vicinity of $1.5mm to $2.2mm (and probably MUCH higher today).

How much is Eclipse taking in on the next 250 aircraft? Fair guess is far less than $1.5MM given prices for those planes and deposits blown. How much of a debt backlog does Eclipse have RIGHT NOW? Only a fool would believe the company was on the brink of Bankruptcy two months ago, but was current in all its obligations.

The $200mm infusion won't carry them thru to end-of-year. Not if they actually start producing the planes that are owed to Depositors.

The only question on the floor is, "How deep is the well"? Bottomless, perhaps. But I doubt it.

Companies like this get funded because there is NO DUE DILIGENCE POSSIBLE....their entire business plan is based on CREATION of a market that never before existed. You can't perform Due Diligence on an dice roll.

The investment community buys off on 20 such Plans, knowing that 19 will fail and 1 will return the Vegas odds. Still, 19 ultimately fail. Eclipse has only 2 hopes of getting additional funding: Insiders chasing their investment; Outsiders believing te Market might still materialize.

Competition, revelations on the Order Book and the telltale signs of incest in Boca Raton are starting to raise Red Flags. That's why they went to Highland in the first place; that's why Highland drove such hard bargain and pissed Vern off.
Gunner

airtaximan said...

Gunner,
No one is going to "believe" you regarding the cost of the plane... but coommon sense and a little expereince would dictate that you are being conservative. Again, there's beer around 500 folks working hard at assembling these things and have accomplished around 30 in a year, 40 in a 14-15 months. Again, its $1 million or so per plane, just in direct labor.

-the numbers are all ball park, but uess what, they are so under water on this, it does not matter. Indications are such that they are losing a bundle on each plane.

The bigest JOKE is "their entire business plan is based on CREATION of a market that never before existed."
what market never existed before?

It might take someone who knows nothing about this business to invest - the air taxi market has been around to the tune of thousands of planes, for a long, long time...

Ken Meyer said...

Redtail wrote,

"You just can't resist shoot your foot off."

Yeah, it's his modus operandi. I say he "fabricates, exaggerates and prevaricates." You say he "shoots his foot off."

I don't have any problem with naysayers digging up facts about the company. But lately the blog's specialty seems to be dire conclusions and predictions based on nothing but thin air.

It is amusing.

Ken

Gunner said...

Simple, universal truths are the bane of the Shill.
It's always been that way.

"You can't prove how much it costs to build one of these birds, so Evlipse must be making money". Gives a bad name to the word "logic". Smile and wave.
Gunner

Ken Meyer said...

The Boston Globe has an interesting article on Linear Air this morning. Key quotes:

"At Hanscom Field last Wednesday morning, Bill Herp loaded a prospective customer into his new Eclipse 500 jet and gave his pilots the OK to taxi to the end of the runway. After a short pause, the $1.5 million plane, with an interior that resembles a luxury sport utility vehicle, charged down the runway and lifted into the sky.

Herp is the founder and chief executive of Linear Air, a Concord aviation start-up, and his sales pitches don't require PowerPoint slides -- just a quick jaunt in the zippy, five-seat Eclipse. (Top speed is about 425 miles per hour.)

Linear will be one of two so-called "air taxi" services in the United States to start flying the Eclipse this fall; the plane, built in Albuquerque and bankrolled in part by Bill Gates, was only approved by the Federal Aviation Administration in 2006, and Linear took delivery of its first Eclipse earlier this month.

The goal is to make private jet travel more accessible to a wide range of businesspeople, with prices not far above the airlines' first-class or last-minute fares, helping them accomplish in a single day what would ordinarily require two or three days of travel by car or on a major carrier.

Analysts, aviation journalists, and even executives in the private jet industry have been extremely doubtful that a plane as inexpensive as the Eclipse could ever be built (a comparable jet made by Cessna, the Mustang, sells for $1 million more), that anyone would want to fly in it, and that a market exists for on-demand air taxi services. To which Herp says, "Entrepreneurs see things that other people can't see."

"A flight from Boston to Bangor on Linear would cost about $3,000 for three passengers, compared with about $1,800 on Delta for a last-minute purchase. The advantages Linear offers are a faster plane, the ability to set a custom schedule, and the option to fly to just about any airport in Maine for that price, not just the few served by commercial airlines. (Linear says that a roundtrip from Hanscom to Pittsfield would cost under $2,500 -- a trip that requires about five hours of driving and isn't served by scheduled flights.)"


Ken

Gunner said...

Ken-
Feel free to call me a "liar",while whining about "personal attacks" here, right up until you report home that you blew the Nest Egg. Doesn't really bother me, and certainly won't change the inevitable outcome.

Meantime, please do provide more funfacts about the cost of operation and maintenance...regardless of whether pros in the business have published numbers that "don't fit" the way you see things. Cessna should be paying you for the transparent desperation.
Gunner

airtaximan said...

Ken;

"facts"?

How many "facts" have you posted here that turned out to be flat out wrong?

Many.

"Chris... everyone knows the world is FLAT - you need to stick with the FACTS!"

airtaximan said...

Facts?..

"Analysts, aviation journalists, and even executives in the private jet industry have been extremely doubtful that a plane as inexpensive as the Eclipse could ever be built (a comparable jet made by Cessna, the Mustang, sells for $1 million more), that anyone would want to fly in it, and that a market exists for on-demand air taxi services. To which Herp says, "Entrepreneurs see things that other people can't see."

So far, it has cost in excess of a Million per plane just for the direct labor associated with final assembly... how do entrepreneurs see this?

Ken Meyer said...

AT, this quote also came from the article:

"Steven Hankin, chief executive of Sentient Jet Inc., a Weymouth private jet operator, observes that the Eclipse is especially small. Sentient sells "membership cards," starting at about $100,000, which give members access to a fleet of private jets, priced at $3,500 to $9,000 an hour."

Funny, how the guys selling $100,000 air cards and flight time at $3500-$9000 are the ones complaining about the Eclipse, isn't it?

Ken

EclipseOwner387 said...

It was asked on this blog about untethered aircraft and owner/pilots. I stumbled across probably the most interesting owner pilot to have his Eclipse. His name is Henry Van Kesteren and his aircraft is N500VK. He is 87 years old according to the Eclipse500Club.org website. I googled his name and it turns out he was the first to take delivery of a Diamond TwinStar in the US and Diamond has a picture with him and Art Spengler standing next to his Diamond. The article said he has amassed 37,000 hours at the time. If you go to flightaware, you can see he has been recently enjoying his aircraft for hopping around in FL. I believe his home base is Albert Whitted in St. Pete (nice airport!) At 87 I think it would be fair to say he is the oldest and most experienced type rated Eclipse 500 pilot. Apparently he is also well known in the Mirage community for providing an STC for a Long Range fuel mod. If anyone knows him it sure would be interesting to get his feedback and views on his new toy. Seems to hang out in Gunner territory and has Dimond interest. Maybe Gunner knows him?

I hope we are all able to say we are still flying and passing checkrides at 87!! I bet he has some stories!!

WhyTech said...

Ken said:

"based on nothing but thin air. "

No, Ken, wrong again. Based on long experience, judgment, insight, AND facts.

WT

Gunner said...

Ken-
All that indicates is that Hankin is unimpressed with the Leisure Suit Larry nature of the aircraft. He deals in a completely different market.

Where's the beef?
Gunner

WhyTech said...

Ken quoted:

"Entrepreneurs see things that other people can't see."

Yes, this is sometimes the case. However, entrepreneurs are wrong far more often than they are right in exercising their "vision."

WT

cj3driver said...

"…Entrepreneurs see things that other people can't see…."

"…A flight from Boston to Bangor on Linear would cost about $3,000 … a roundtrip from Hanscom to Pittsfield would cost under $2,500…”


Boston to Bangor is 175 NM. – 35 to 40 min
Hanscom to Pittsfield is 89 NM. 20 to 25 min

The rates quoted by Linear are nothing out of the ordinary for typical charter … especially given the size of the Jet.

WhyTech said...

CJ3 said:

"Boston to Bangor is 175 NM. – 35 to 40 min
Hanscom to Pittsfield is 89 NM. 20 to 25 min"

Setting aside the cost (which I doubt few would be willing to pay for such a short trip), my guess is that driving is going to be close on time ALL THINGS considered, with the added convenience of going directly to one's destination rather than via an airport/rental car.

Bottom line: its going to take longer trips than these to make the economics/time tradeoffs work in favor of charter.

WT

redtail said...

ATM said... Again, there's bee(n) around 500 folks working hard at assembling these things and have accomplished around 30 in a year, 40 in a 14-15 months. Again, its $1 million or so per plane, just in direct labor.

Let's see. How many people would you estimate are directly working on the Mustangs? I'd say about the same number. Didn't Cessna get a FULL TC before Eclipse? Didn't Cessna get a PC well before Eclipse? How many Mustangs have been built? Quite a few fewer than Eclipse. It seems to me if you use that logic, then the cost of labor is lower per Eclipse built than a Mustang.

cj3driver said...

RT,
Last time I checked, there werent any Mustangs going out the door at $995K.

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

cj3driver said... RT, Last time I checked, there werent any Mustangs going out the door at $995K.

It seems to me that last Mustang issued a COA was #17. Considering Eclipse #42 was delivered last week, by my math that makes the labor costs of a Mustang almost 2-1/2 times more than that of the Eclipse. No wonder Cessna has to charge a million dollars more. I have no facts regarding labor costs of either manufacturer. I'm just using the same math you and ATM do.

Niner Zulu said...

Redtail, to make it a fair comparison you'd have to pull the Mustang off the assembly line when it's about 2/3 complete, just like the Eclipse.

;-)

PS - I don't see you flying one. Why not? It sounds like the only difference between you and the "naysayers" is the rhetoric.

Stan Blankenship said...

redtail,

Any head count or man-hour comparison between Eclipse and Cessna is meaningless.

Cessna fabs most of its own parts and assembles nearly all.

Eclipse by their own admission, is an assembler of large sub-assemblies. The wings, tail surfaces, nose and tailcone(?) are brought in nearly complete.

Early on, I seem to recall Vern or Oliver saying they would complete the airplanes in about 700 man-hours. If this was their target and the number used to establish a selling price, it looks like a bad gue$$.

airtaximan said...

RT,
"I'm just using the same math you and ATM do."

REALLY, this is great. Do you know how many direct emplyees are working the Mustang line over there at Cessna?

Once you know this number, perhaps you can "use the same math..." and explain it to us... so we can all be enlightened.

Funny thing is, if their labor cost are $1 million per plane, they still have a chance of not losing their ass on everyone out the door. E-clips... well, you do the math.

airtaximan said...

Ken:

if this is such a great plane, designed for high cycle, why has no established fractional ownership company risen to the occasion, and bought a fleet?

these guys all understand a few things.

- Payload range... for trips that folks consider flying a viable way to go
- durability associated with the smallest and lightest design points
- new manufacturers with teething pains that could go on for years and years
- support, support, support
- maintenance history
- resale avalue
- uptime vs downtime
- pool of qualified pilots
- reputation of the company

all the risks you claim to see... which you cannot even stomach to write down... and many, many more.

airsafetyman said...

Well, Cessna is producing NINE different Citation models and is designing a larger cabin class jet to compete with Dassault and Beech. Maybe they have evaluated the Mustang size market correctly and are building accordingly. I would not want to bet against Cessna marketing.

airtaximan said...

Ken:

how come you won't pony up your list of risks, but you make comments back at me with things that have nothing to do with any real point?

"Funny, how the guys selling $100,000 air cards and flight time at $3500-$9000 are the ones complaining about the Eclipse, isn't it?"

Funny? Nope. Complaining? no - someone asked what they thought of Linear's new plane... the guy gave an honest answer. Why does this offend you?

Do you think these guys, who have made a lot of money by making private air travel less expensive and more accessible and conveneint, saw a viable lower cost alternative (all things considered) they wouldn't take it?

They own a fleet of planes, now. Why wouldn't they consider buying e-clips? You should ask yourself... I hear they did mountains of due diligence just like most investors... and decided NO WAY JOSE... ask yourself, why?

Ken... begin to identify all the risks... associated witht he plane, and the company. You will probably come to the same conclusion...

Or, you are just a cheap billboard...

Stan Blankenship said...

redtail,

And one other thing to consider.

As an example, let's just isolate on the wing:

Cessna is building it and will want to sell it for about a 30% gross profit margin. So for every 70 cents it cost to build, they will sell it for a buck.

Fuji is building the Eclipse wing. They will price it to Eclipse based on a 30% gross profit margin.

Eclipse in turn will want to capture a 30% margin.

Each 70 cents cost for Fuji to build a wing costs Eclipse a dollar and to recover a 30% margin themselves, they will sell it to Ken for $1.43.

Cherokee Driver wrote about the cost to outsource last week. It only makes sense when the outside fabricator can do it much much less than what the OEM can do it in-house.

And since we are talking about Japan, that doesn't even factor into the equation transportation costs or the falling exchange rate which must be really hurting Fuji by now.

AlexA said...

Stan said “As an example, let's just isolate on the wing”

Once again Stan another assumption to justify your position without any factual background.

Cessna has to deal with the International Association of Machinists and Aerospace Workers. Fuji does not. In addition all contract costs have been negotiated in US dollars.

Take into account the size differential of both wings and your assumptions are once again garbage.

cj3driver said...

Comparing Cessna econoimics to Eclipse is almost comical... Even with labor unions.

The fact is, the Mustang is a drop the bucket for total sales at Cessna. They could lower the price of the Mustang to $1.8 million dollars, and build 150 them at full production for the next ten years, and still make an overall profit of $500,000,000 each year, at their current rate.

In fact, Cessna could give away Mustangs for free …. The entire scheduled production (150 units per year) … and the company would still make a profit overall.

I think Cessna is happy that Eclipse is bringing a pre-entry level jet to market.

I'm quite sure their largest and most profitable market is the larger Jets, Soverign, XLS, X, and yes, even CJ3’s. I would bet they make LESS profit on a Mustang, than they do on any other jet they produce.

I bet you a nickel that Mr Goode (1st Mustang) moves up to a CJ within 3 years.

Stan Blankenship said...

alexa,

Yours is a typical "value proposition" response from the faithful, obfuscate if at all possible.

Vern is able to exploit something viable out of a situation that defies a rational explanation.

Discount a legitimate comment by disputing a minor point, Cessna - Indy may (or may not) have IAM union representation or the fact the Mustang wing is larger.

What does the size of the wing have to do the cost of doing business in Japan vs. the U.S. or performing under a contract written years ago vs. the reality of doing business today?

AlexA said...

Stan said “As What does the size of the wing have to do the cost of doing business in Japan vs. the U.S. or performing under a contract written years ago vs. the reality of doing business today?”

Stan you really are a dinosaur. FHI makes components for Boeing, the US Military and many many more. I would suggest you post of your Boeing critic web site tomorrow that Boeing is off base by having FHI make components. You seem to be much brighter then those poor folks at Boeing, Eclipse, US Military……

Have you checked the cost of aircraft grade aluminum lately?

mirage00 said...

Yours is a typical "value proposition" response from the faithful, obfuscate if at all possible.

You continue to talk out of your a$$ when commenting on the costs to build an E500. As I have said many many times, you have no idea what cost structure Eclipse has in place nor the hours required to build its E500. ZERO... NADA... ZILCH. Move on.

Now may we revisit RVSM, pitot, aeromods, training, production, etc...

Ken, Alexa, Redtail, E387... thanks for keeping it real.

I remain amused.

double 00

Stan Blankenship said...

alexa,

You are really naive if you think Boeing is outsourcing to Fuji to get the best possible deal. All Nippon Airways was the launch customer for the 787 and not so coincidentally, Fuji got the contract for the 787 wings.

Offset deals are part of the game for both Airbus and Boeing. Eclipse is not in that league.

Niner Zulu said...

Stan, not that any of the faithful really care, but you brought up a good point about Eclipse outsourcing their components from overseas where costs to manufacture have been much less, at least for the past few years.

But take a look at this chart of the US dollar:

US Dollar teetering on the brink

What is going on here? Well, a currency trader would tell you that the dollar is in a solid downtrend since 2001, has had a technical bounce, and is now retesting its previous low and in danger of a technical breakdown to the downside.

What does all of that mean for Eclipse? Simple - all of those cheap parts are going to get a LOT more expensive. Eclipse can't raise it's prices on planes already ordered, yet it is likely going to have to pay much more for the components that make up those planes.

Eclipse is swimming upstream against a current of megatrends that just aren't in it's favor - falling US dollar, tightening credit markets, and increasing oil prices.

By the way, Cessna is also vulnerable to the above, but much less so since their aircraft components are mostly produced here AND they are not a startup company looking for more capital to survive.

PS - I think that not only is the dollar going fall through it's support, it's going a LOT lower than most of us think it will. But that's just my opinion.

AlexA said...

Stan, Please share with us the delivered cost of the Eclipse 500 wing and the Cessna Mustang wing.

AlexA said...

Stan, I guess I can understand some of the hatred towards Eclipse. If Eclipse (we all know it’s a big if) can deliver anywhere close to the projected numbers in the next twelve month they will out deliver Cessna 2 to 1 in jet aircraft. They will bring in 75% of the revenue that Cessna derived over 14 different models. How many years did it take Cessna?

Other than speculating, assuming and plain ole hoping the only things you guys got in your bag is 1) Production, 2) Avio NG and 3) Profitability.

I can see where Eclipse went wrong.

Dinosaurs don’t like being called Dinosaurs;-)

AlexA said...

9Z said “What does all of that mean for Eclipse? Simple - all of those cheap parts are going to get a LOT more expensive.”

Sorry to ruin your dream 9Z. All of Eclipse’s outsourced contracts are negotiated on US DOLLARS. The company had been asked that question and made a public statement to the fact.

Common guys keep grasping at straws.

Gunner said...

Stan-
Please provide this cost.

ATM-
Tell us how many employees...

9Z-
Show us the hourly labor cost of....

Whytech-
Give us "facts" to back this or that up.

B&CA-
Your numbers are wrong; both for Eclipse AND Cessna. Here's the REAL numbers....

These have become the stock-in-trade of The Faithful, still reeling from Vern's boast that he was out of money; bankrupt, just 60 days ago. Every bit of VernSpin they regurgitate is "fact"; every bit of Real World observation we offer requires "proof".

All this within the context of, "Yeah, I like the Mustang, but you know it costs 30.19856% more to maintain".

If it weren't so very sad, it'd actually be comical.
Gunner

Gunner said...

Alexa said:
"D. Head. Welcome back"

Case in Point.


This last from the very poster who stated some months back, "If I can't play in the sandbox I can damn sue $h1t in it".

The maturity level of the Hardcore Faithful is obviously surpassed only by their intelligence. ;-)
Gunner

Gunner said...

Ooops, Alexa just erased His/Her previous ad hominem. I was obviously wrong....their maturity AND intelligence levels are clearly surpassed by their inability to stand behind their statements.

Good show, Alexa.
Gunner

WhyTech said...

gunner said:

"it'd actually be comical."

It IS comical (and also instructive) for those of us who have nothing to lose or gain directly from whatever outcome may befall E-clips.

What I cant understand is the faith of the faithful. Despite overwhelming evidence supporting the notion that E-clips is in deep do-do, they remain ... well, faithful. Guess that's what faith is all about. OK in religion, but in business, faith is not a strategy.

WT

AlexA said...

Gunner,

I did not see a reference to you in the post. But if the shoe fits…..

Gunner said...

Alexa-
Never said it referred to me. Doesn't much matter who it referred to.It was the maturity and intelligence level that it belied that was note worthy.

On another note, Alexa has repeatedly pointed out that "All of Eclipse’s outsourced contracts are negotiated on US DOLLARS."

Of course this belies a naivety unheard of in international trade circles. IF (and it's a BIG "if"), a company like Fuji entered into a long term contract for US Dollars without valuation adjustment with a startup like Eclipse in 2001, it just might be a first.

I guess it just might be possible. The Board of Fuji probably spends sleepless nights because they're now providing every wing at a loss due to the fact that they never gave any thought to currency exchanges when they cut a long term deal with His Holy Vernness.

It really does take an unbelievably, ummmm, "focused" world view to bring us "fact snippets" like this and crow about how Eclipse has the Japanese all wrapped up long term.
Gunner

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

Gunner,

It’s great to see “haters” like yourself discussing international monetary issues. As someone that has a propensity for exaggeration like yourself you are running out of material. This is usually when you start insulting comments.

Gunner said...

Alexa-
I simply pointed out that the contract you describe is unheard of in International Trade circles. Guaranteed the US Military didn't slip the currency valuation adjustment past Fuji the way you claim Vern did. Nor did Boeing, you can rest assured.

Doesn't seem to be the Critics launching the personal attacks around here of late. What got y'all so hormonal? Could it possibly be Vern's boast that he pissed away all your Deposits and Progress money? That would be enough to make me positively livid, too; I just wouldn't misdirect the anger.
Gunner

AlexA said...

Gunner,

Nice move erasing your post. Out of courtesy I removed mine. Whenever you want to discuss ethics and exaggeration let me know. The beauty of the information age.

AlexA said...

REPOST


Gunner,

You are way too easy…. You want proof here you go:

Gunner stated “As to your issue of SWAT, we produce 90K copies each month, in a mass production manner. We get a dozen complaints per issue of missing copies, mangled copies or missing pages. These each come direct to me and I personally REPLACE the damaged or missing product, no questions asked.”

According to your statement you produce over 1 million copies of your mag a year. According to industry sources the REAL NUMBER IS HALF OF THAT (500,000).

http://www.echo-media.com/MediaDetail.asp?IDNumber=10248

Before you concoct and excuse maybe you and Vern went to the same math class;-)

Ken Meyer said...

Oh dear.

Gunner got caught prevaricating, exaggerating and fabricating.

What a surprise.

Ken

Gunner said...

Alexa-
I'm easy?

Positively hilarious. Really. Echo Media is a Direct Response Advertising firm. They apparently produce those little junk-mail, card decks you sometimes receive. We've never done business with them and I'd never heard of them before your post.

If you wish to find out the circulation of a magazine, however, there are authoritative sources. One is The Audit Bureau of Circulations You have to be a Member there.

The other one is The US Postal Service. By law, we're required to print a Statement of Circulation and file it with USPS each year. Our numbers appear right in the publication, for all to see, every year, Alexa.

Run along and check one of those and report back on my "exaggeration". Meantime, perhaps you'd like to re-acquaint us with the issue of D-Jet Compressor Stalls or your "proof" that Stan was a rejected vendor by Eclipse.

You're really gonna dislocate a shoulder or sprain an ankle reaching like this, while kicking them dead horses. :-D
Gunner

Gunner said...

Alexa-
I erased nothing. You did, as evidenced by your "REPOST:" tag. I have now MOVED my previous posts in order, for confluence.

Brother Ken-
You seem unusually agitated tonight also. Guess you got the bad news, too, huh?
Gunner

AlexA said...

Ken,

We should leave gunner alone in his misery. Let’s get the blog back to Eclipse and its ailments. Let see Eclipse is delivering aircrafts capable of RSVM, with single pilot and aero-mods approved. IIRC aircraft number 63 is in manufacturing, the training logjam has been reduced in half. Oh yes Avio NG and production rate. Mirage00 might be right the end of this blog is near.

Gunner said...

Alexa states:
"Whenever you want to discuss ethics and exaggeration let me know."

You're on. Since you're not willing to engage on your previous attempt to impugn mine, how 'bout we move on to Vern and his shills. Then we can talk about Ken. Oops, once again, I repeat myself.

Gunner

AlexA said...

Gunner,

I don’t think discussing your ethics or lack of ethics would add anything to the content of this Blog. The records speak for themselves.

Obviously, this Blog is running out of steam. It’s gone from inside information to outright speculation. You are down to insults and nothing more.

AlexA said...

Gunner,

I have spoken with fellow bloggers and we don’t want you to hurt anyone. We are all chipping in and sending cardboard targets with Vern’s picture as the bull’s-eye. Good night

Gunner said...

Alexa

Yes, I can see why you might not wish to further engage on these issues. Now, where were we before you launched into that quickly aborted attack on my own ethics and veracity?

Oh, that's right, you got into a bit-o-trouble by lecturing us on how Vern tied up all the international suppliers with contracts stipulating payment in 2001 based US Dollars.....no exchange rate clause.

Let's please get back to that. It should, hopefully, be less embarrassing for you than your brief foray into the area of newsstand magazine production and circulation.

Exactly how does one get a long-term contract with Japanese manufacturers and convince them not to pay any attention to the Exchange Rate fluctuations? Positively fascinating stuff.
Gunner

redtail said...

The contracts were negotiated in US dollars with a CPI adjustment. The contracts were completed in Sept 2003, not 2001 as Gunner has stated. I don't know the term of the deal

Gunner said...

redtail-
Nobody will argue with your statement...such as it is. Though we can't grant it as a "fact", as you have not provided "proof", let's stick with what you've given us so far and flesh that theory out a bit.

Are you categorically stating that the 2003 contract pricing is the same contract that is in effect today; 4 years late and 90% off on volume?

Are you categorically stating that this 4+ year contract for manufactured goods, bought in Japan and sold mostly in the US of America, was penned without any stated adjustment for Exchange Rate fluctuation?
Gunner

Ken Meyer said...

gunner wrote,

"Are you categorically stating that the 2003 contract pricing is the same contract that is in effect today; 4 years late and 90% off on volume?"

What's the difference?

You've already told us the cost to produce the Eclipse is "$1.5mm to $2.2mm (and probably MUCH higher today)."

Why would you want to know any FACTS to back up your silly, pie-in-the-sky estimate? You've never wanted facts before. Putting facts into your writing at this late stage would only confuse people :)

Ken

AlexA said...

Gunner,

As far as embarrassment goes I do not have those “ethical” dilemmas that you have in your closet. So Gunner, how much does it cost to produce an E500?

Gunner said...

Ken and Alexa:
And why are you so eager to pull statements out of context and change the subject (once again), Brother Ken?

We're talking abut the "fact" that y'all claim Eclipse has multi-year contracts with MAJOR foreign manufacturers, for essential assemblies, paid in US dollars, with no adjustment for exchange rate fluctuation.

Now, we didn't bring this up. Y'all did....rather proudly. Allow us to better understand "the beauty of" these contracts, please.
Gunner

Gunner said...

Alexa, in a weak attempt to divert, asked:
"So Gunner, how much does it cost to produce an E500?"

Two answers to that:
One is opinion, which I stated before Ike and Mike attempted to parse it out of context:

"We can be pretty generous in assuming it in the vicinity of $1.5mm to $2.2mm (and probably MUCH higher today).


The other is FACT:
LOTS more than they're taking in on those planes since Vern admitted blowing all the Deposit and Progress Payment monies. Unless, of course, Mattel is now making the EA-50X in China. (Judging from the paint issues, that is entirely possible)

Now, back to your claim, Alexa, that Eclipse is immune from the rapidly failing dollar, because it locked the foreign suppliers up with no exchange rate clause.

Wanna put that one to rest once and for all. THIS is revolutionary, I assure you. Or it's a lie.
Gunner

Ken Meyer said...

gunner wrote,

"'So Gunner, how much does it cost to produce an E500?'

Two answers to that:
One is opinion...The other is FACT:
LOTS more than they're taking in on those planes since Vern admitted blowing all the Deposit and Progress Payment monies."


That's a nice ploy, Rich. I'll bet some people didn't notice it.

When you don't have any FACTS, just label what you write as FACT as put the word in capital letters.

That makes it fact alright.

In a gunner's world.

Ken

gadfly said...

Promises were made, to potential customers . . . and to the politicians of New Mexico, who were all too eager to react on "behalf of the taxpayers" of this state, and spend millions of their tax dollars. Political motivation is beyond the discussion of this blogsite. But for the "customers", there is a little clause that makes everything "come out right": "Data subject to change", right from Eclipse own web-page.

Yes, it covers their "tail feathers", legally, but promises are still promises.

gadfly

(My prediction stands: By the end of the year, not a single E500 will have been delivered that meets the "original" promises made for the little jet. Period!)

Gunner said...

Ken-
Ummmm, was there a point to that scree? I mean it really is LOW sophomoric....and unintelligible point to boot.

Unless of, course, you're willing to advance the proposition that, less the 60% deposit and progress payments he ADMITTEDLY blew on all aircraft being delivered, Vern is still producing planes at a cash flow positive.

But that would mean you posit the cost of producing an Eclipse is 60% of $995K-$1.6mm. Gee, that's pretty good. You claim the EA-50X is being produced at a cost between $400,000 and $1,000,000?

And that, My Brother, is the "fact" of the argument you just put forth. Just how badly do you need to embarrass yourself, Ken? I hope you get a buck out of this stuff. No, I take that back; I'd prefer you do it because you Truly Believe. It would make you far easier to feel sorry for.

Now, we were talking about the contract that y'all claim Vern aced over Boeing and the US Military. You remember, the one where he's paying 2007 US$ to foreign suppliers, based on a 4 year old contract, that they didn't realize had no Exchange Rate Clause.

They're getting soaked and Vern brings home the bacon(again).....OR.....someone's pullin' your leg (again), Ken.
Gunner

Niner Zulu said...

I think the faithful continue to read this blog because they are frustrated. Frustrated by the fact that they really want to believe the Eclipse fantasy, but they have a gut feeling they are being scammed. Instead of following their instincts which tell them to cut bait and run, they come to this website looking for some reassurance and find none. So, with herd mentality, they band together - patting each other on the back for "keeping it real". Attacking the messenger because they don't like the message. Getting nasty when, in fact, no one here is their enemy. No one here is making and then breaking promises. No one here is trying to take their money and give them an open-ended IOU.

That has got to be frustrating!

The faithful keep predicting the demise of this blog, yet week by week the number of posts and new contributors keeps growing. Hey, the posts and the number of posts are right there for everyone to see! Only in a troubled mind does an increasing number look like a decreasing one. A botched paint job is a masterpiece. A failure to perform is nothing more than an opportunity to really get it right. A lie is nothing more than a misunderstanding on our part.

Sad.

Six Romeo said...

Ken,

Please start your own blog. I offered a few suggestions for a name a while back, but this one is probably more apt: Eclipse Aviation Champion.

I am not saying this in jest. Please start your own blog! m00 or d00 as s/he calls her/himself can then be amused here, impressed there and still say nothing. Mirage is poetic: I see a post, but there is nothing there.

As added benefit to observers of this blog, we won't have to wade though so much of the discussion (being polite here) related to your input.

We can then compare Stan's blog to Ken's blog. Now that might actually be amusing...

Maybe we can even start a friendly wager on whose blog is more accurate.

If you are half the egomaniac you portray yourself to be, I can't imagine you not wanting to beat Stan.

You are a case study in cognitive dissonance.

mouse said...

Six Romeo,

You only hav to go to Eclipse's website to see thier Part 135 "Patners"...

Ken did an amazing thing and Eclipse could care less... He's not playing ball with them I guess :-)

The EA-500 will serve an outstanding platform for the PArt 135 operator, as a loss leader. It will bring 100's and someday maybe even 1000's of new people into the 135 realm, but watch and see how many migrate into bigger, faster, more travel worthy airplane.

Yes, the EA-500 will help to grow the "new" 135 market, but not in a domination role at all, a loss leader. Hey, beats nothing!

Jack said almost 2 years ago that the Cessna did not support the PArt 135 business for it's Mustang. He told me they did not want to get involved with all of the support issues in a high-time, revenue operation. It just ties up resources and headaches. Cessna wants the Mustang to be ib the hands of the low time flyer who is easier to please, support, and sell to.

The Mustang is primarly designed as an entry level jet to bring new customers into the Cessna family, and then have them continue to upgrade into the next Citation, and another, and another, Etc.

I believe the EA-500 will be a good step airplane for Cessna too.

mouse said...

AirTaxi,

I'm guessing most on this site don't realize how 135 charter operators really operate, as an owners offset.

They probably also don't realize that DayJet in bed with Eclipse is just like most of the fractionals. Look who owns this frax companies.. the OEM's so they have a way to artificailly sell airplanes to themselves to show investors they are selling airplanes.

Same model most car rental companies are (or were)... Go look and see who owns/used to own each of the respective car rental companies, and the frax companies..

Nothing new or revoltionary here folks... Move along to quote another famous or infamous blogger

mouse said...

Keep in mind the premise of Eclipse, high volume by automation (Automotive type assembly) and low price.

Without high volume automation is probably 4 times more expensive than manual build lines. Manual build = low production. Not any part of the original Eclipse model is working, will work, or makes any sense.

Ken won't come clean to us about his real situation, but I suspect he will be coming clean when Vern gives him his bath.

The resale and/or residual is everything in the airplane finance/lease market, and Eclipse offers nothing, and it's not looking good in the long run yet.

When any of the large fleet operators folds, Eclipse will fall onto their own double edged sword.

No more customers, and lots of airplanes dumped on the market. I personally tried to get Vern to understand the number of owners who would not keep their planes more than 18-24 months and the resale market would greatly hinder the Eclipse new sales market.

Owners like new, faster, bigger, more capable aircraft, and they like them every year of two.

No numbers, no need, no eclipse, no IPO, no nothing..

Looks like a nice book in the future telling of the "Eclipse in ABQ"

mouse said...

Hummer,

Eclipse is currently hiring 50+ per week for Mfg. The numbers and costs are going up, sure hope production does too!

mouse said...

Alexa,

The "first" round of vendor "discounts" pricing was based on 500 airplanes. The 155 number is an even greater discount geared to help Eclipse when they faultered early in production after TC.

Vendors are not going to make moneyat an even faster rate (lose more) than Eclipse if they keep Eclipse in their business plans and labor slots...

It's not going to be pretty for a lot of good companies, or Eclipse

redtail said...

Mouse said... Jack said almost 2 years ago that the Cessna did not support the Part 135 business for it's Mustang. He told me they did not want to get involved with all of the support issues in a high-time, revenue operation. It just ties up resources and headaches. Cessna wants the Mustang to be in the hands of the low time flyer who is easier to please, support, and sell to.

Oh, now that's ripe. Cessna builds a plane that they admit won't be able to handle anything more than the limited number of hours of LOW TIME USE. Would you really want a plane that was designed for only the owner/pilot flying 100-200 hours per year?

ExEclipser said...

From AvWeb.com:

http://tinyurl.com/2fsshs

North American Jet Charter became the first air taxi operator to put the Eclipse 500 very light jet to its much-anticipated use as a point-to-point charter aircraft. According to CharterX, a charter industry Web site, North American Jet CEO Ken Ross flew as pilot in command on the round trip from Chicago to Baltimore with two passengers on board on Friday. As we reported Thursday, North American was also the first to receive Part 135 approval to use the Eclipse in commercial service, a distinction that many in the industry assumed would go to DayJet, a Florida-based air taxi company that is also Eclipse's biggest customer. Eclipse was uncharacteristically quiet about North American's achievement, which, after all, was the culmination of eight years of work by the start-up manufacturer and its founder Vern Raburn. Eclipse usually chronicles its achievements with a wide distribution of press releases and photos but, to the best of our knowledge, there was no such effort on this milestone. An e-mail request for comment from Eclipse was not answered by press time.

AlexA said...

Mouse,

Thank you, for confirming that vendors are giving deeper discounts on the first 150 or so part kits. There is wild speculation (wishful thinking) on this Blog that Eclipse was going to loose globs of money on the first 150 aircraft. IMO Eclipse will loose some on the first few hundred aircrafts but certainly not the numbers speculated here.

I understand that an additional 66 line workers were added to the line last week. In addition Eclipse was supposed to streamline production into two lines over the weekend.

airsafetyman said...

Maybe Cessna justs wants customers who pay their bills, which leaves out a lot of Part 135 operations!

It is amazing that you can imply the Eclipse will stand up to air taxi use while the Cessna would not. On what possible basis to you say that? Eclipse can't even keep the windshields stuck to the airframe for more than 100 hours! I know of an corporate operatator who got 900 hours a year on their 421 for several years in a row with excellent support from Cessna.

airsafetyman said...

Cessna is going to take DECADES of experience learned supporting part 135 operators like Cessna 402 Cape Air operation on the East Coast, and hundreds of Caravan users, and hundreds of other Cessna charter operators worldwide, then they are NOT going to incorporate the lessons learned into the Mustang and the rest of their fleet?

Ken Meyer said...

airsafetyman wrote,

"Eclipse can't even keep the windshields stuck to the airframe for more than 100 hours!".

Not so fast; that one's not correct. There was never a problem keeping the windows "stuck to the airframe." There was a problem with tiny cracks in one layer of the acrylic. That problem has been addressed.

And it was never a 100 hour issue.

Stick to the facts, gentlemen.

Ken

sparky said...

Ken,

Could you please show me where anybody said that eclipse would never gain certification, deliver and aircraft or any of the other BS you claim to have read here.

I believe that the main contention has been, and continues to be, that vern's business plan is not sustainable. I believe the fact that after delivering 42 aircraft and collecting progress payments for about 200, they still needed a $200M cash infusion to keep the doors open says a lot.

I stated a long time ago, after all the hurrahs were being passed around by the faithful that declaring victory was a little pre-mature. You're still stumbling out of the blocks.

Come talk when eclipse starts turning a PROFIT. That's all that matters now. Make money, come talk. until then shut the hell up about fuel burn and being amused.

Ken Meyer said...

DayJet to Launch Later this Month

"Air taxi startup DayJet late last week was in the final stages of proving runs with its small fleet of Eclipse 500 Very Light Jets in preparation for the launch of commercial operations by the end of the month, founder, President and CEO Ed Iacobucci said last week. Completing the proving runs and adding the Eclipse aircraft to DayJet's Part 135 certificate are the final steps remaining for DayJet to begin its "per-seat" air taxi service, Iacobucci told BA in a telephone interview Thursday.

The company had flown more than 25 hours with an FAA inspector on board by last week, he said, adding that the flights "have been going very well." The DayJet Eclipse fleet had accrued 855 flight hours by last week and the first aircraft just underwent a 300-hour check.

Operations could begin on a limited basis later this week if everything goes smoothly, Iacobucci said, but the company is actually targeting the end of the month to begin air taxi revenue flights."


Ken

airtaximan said...

Ken:

you like to think that what you wrote is so... but it just isn't.

Most of the criticisms here have been regarding the BS claims on rate production, timing, jettisoning of suppliers, program issues like training, missed schedules and promises...as well as IOU's and fixes.

The basic issues are that this is not a revolutionary product, and the company has been deceptive about most aspects.

Whether the companies lives to see another quarter has always been about rasing money, and I for one, and most other here, think they are just another investor or two from that....every few months.

Vern can rasie money, bu cannot seem to stick to a schedule or product, really. This one is not finished, and is in flux. There's another one already prototyped...

These are the serious and intersting issues.

Whether you like the revised performance claims or not, is well, a flea on an elephant's ass.

Little issue in the grand scheme...

airtaximan said...

mouse,

I never thought about this until you put it so well...

"..DayJet in bed with Eclipse is just like most of the fractionals. Look who owns this frax companies.. the OEM's so they have a way to artificailly sell airplanes to themselves to show investors they are selling airplanes."

-the frax don't make money, except Netjets, really... and they are arms length with all the manufacturers.

mirage00 said...

Come talk when eclipse starts turning a PROFIT. That's all that matters now. Make money, come talk. until then shut the hell up about fuel burn and being amused.

Wow... Yes indeed, the tide has turned.

I remain amused

double 00

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

M00,

Thank you for your insight. I for one appreciate all that you have contributed to this blog.

Keep on keeping it real, and for god's sake, remain amused.

Gunner said...

Alexa said:
"Eclipse will loose some on the first few hundred aircrafts but certainly not the numbers speculated here."

Here's a "fact" for you:
You now admit they're gonna lose money on the "first few hundred", but are unwilling to recognize the scope of that loss.

For a clue, look to the amount of money blown on this design thru June 2007 and compare it to what Adam and Epic have burned to get to where they are. Based on that, it's gonna be a helluva greater loss than you might imagine; just as the Billion Plus, so far squandered, was about three times what you expected in 2002.

This project has been an investor's "alligator" from jump....an investment that will eat you alive.

The problem, Alexa, is yours. You need to convince the next 300 Depositors to pony up monies to build YOUR plane; and you need to further convince them to convince the third 300 to pony up yet more $$$ to build the planes of the depositors who are paying for yours.

And, guess what, none of these planes is even complete!
Gunner

mirage00 said...

Thank you for your insight. I for one appreciate all that you have contributed to this blog.

Thanks to you as well.

I remain amused.

double 00

WhyTech said...

exe quoted:

"Eclipse was uncharacteristically quiet about North American's achievement,"


Of course they were. Vern and Ed were one upped at their own game!

WT

redtail said...

airsafetyman said... It is amazing that you can imply the Eclipse will stand up to air taxi use while the Cessna would not.

Cool your jets. I didn't say that or, imply that. I was only commenting on the fact that Pelton was claimed to have stated that Cessna didn't want the problems of higher hour utilization. That does not speak well of their own design.

airtaximan said...

Epic Books $40 Million In Oshkosh Orders
Epic Aircraft says it took nonrefundable deposits on orders worth $40 million for its kit and certified aircraft during EAA AirVenture last month. Epic President Rick Schrameck said much of the interest came from its two very light jets introduced at the show, the single-engine Victory and twin-engine Elite. He also noted that the company took secure orders worth $23 million at Sun 'n Fun in Florida in April. He said having the jets on display at AirVenture allowed side-by-side comparisons with competitors and he believes his company's products stand up well to other offerings in the same market. Currently, the jets and the six-place turboprop Dynasty are available as kits but there are plans to certify all three models. Schrameck says the first kit-built Victories will be delivered to customers by the end of the year. Victory kits come with a Pratt & Whitney Canada PW615 engine while the factory models will have the more powerful PW617.

How many e-clips' were sold at these two shows?

Gunner said...

Redtail-
I note you avoided responding my questions regarding the Eclipse international vendors and whether the 2003 contracts included currency exchange rate adjustments.

I think we can take your avoidance as an answer and label that interesting Myth, "B-U-S-T-E-D".

No worries, though; Alexa or Ken are sure to offer a replacement Fairy Tale as "fact" before the day is out. That's the beauty of it.
Gunner

airtaximan said...

I think someone needs to explain how a company can take a deposit and progress payment for planes, while the money is used for something else?

Does e-clips have the rest of the paid in progress-payment money in the bank? If not, where did it all go?

ExEclipser said...

Into the company, duh. I don't know that there is any requirement to tie money received to a serial number.

Now, some of the earlier deposits were held in escrow, but I don't think that is part of the deposit agreement now. I think that if the company bellies up (which it wont - someone will buy it before it closes), the depositors are scroood.

I still think they need to license PhostrEx and get it out to the thousands of companies willing to pay premiums for it.

I've said all along that PhostrEx is SO lucrative that if they dedicated a team of 10 people on that subsidiary alone, they could fund the entire EA500 project without trying to go out and raise money.

I know that my company has inquired about it, but no response has been received.

redtail said...

gunner said... Redtail- I note you avoided responding my questions regarding the Eclipse international vendors and whether the 2003 contracts included currency exchange rate adjustments.

I wasn't avoiding it, I thought it was answered. My understanding is as stated. There are many products in the world that are manufactured in other countries, and priced for sale in US dollars. These prices don't change every time the exchange rate fluctuates. The same goes for contract vendors. As I said, I do not know the length of the term of the original agreement, but I am not aware of any currency adjustments.

AlexA said...

Gunner said “You now admit they're gonna lose money on the "first few hundred", but are unwilling to recognize the scope of that loss.” No Gunner you are incorrect again. You assumed that the cost to build the first few hundred aircraft was the same as the next few hundred. You attempted to backup your hatred of the company with made up numbers. The only problem is that you can spew, speculate, assume, imagine or even guess but you have no facts as to the cost involved in manufacturing. You happen to be a very disgruntled former depositor. It’s got to burn your butt that now with more and more aircraft being delivered and more IOU’s being resolved you walked away at the altar. Fret not brother Ken should be able to give you a ride in late December;-)

I on the other hand had information that vendors had a financial stake in the first 155 aircrafts. The information was verified by no other than Mouse. I’m hoping that other sources will confirm the move to a double production line. I’ll try to share some more Avio NG news later today. Happy days are here again!

Gunner said...

Redtail said:
"There are many products in the world that are manufactured in other countries, and priced for sale in US dollars. These prices don't change every time the exchange rate fluctuates."

First off, thanks for the honest and polite response. Refreshing, really.

Nobody talked about prices floating with the exchange rate. Nor are we talking about a contract for goods to be delivered a year or two from now.

What we're talking about is The Faithfuls' claim that Eclipse put in place a long-term (4 years and counting) contract for major assemblies with no regard to the vagaries of exchange rates.

That would be World Class Stupid as the exchange rate might well have gone the other way, putting Eclipse out of business (The Yen has fluctuated more than 100% against the dollar over the past three decades).

Companies that wish to manufacture or assemble goods, try to make their money on the manufacture or assembly. Companies that wish to bet on long term exchange rates do so in the (volatile) financial and commodities markets; not with good and services.

If you know other companies that have done the same as Vern, kindly name two, the products involved and the contract lengths.

Alexa-
As to your last, let me know when you're off your period. Perhaps we might have an intelligent discussion then.
Gunner

WhyTech said...

exe said:

"I think that if the company bellies up (which it wont - someone will buy it before it closes), the depositors are scroood."

They could be scrood even if the company is sold. A buyer could choose to purchase only selected assets and liabailities, and jettison the low margin orders/depositors. Depends om what version of hardball the buyer believes is necessary to survive.

AlexA said...

Gunner said “As to your last, let me know when you're off your period. Perhaps we might have an intelligent discussion then.”

Gunner that would mean your intelligence would not be clouded by your hatred and we all know that’s not likely to happen. I hope you are having fun in your own little sandbox.

By the way Epic is having a two for one sale. Maybe it’s a good time to cancel the D-Jet and order six Epics.

Gunner said...

Alexa-
I can't afford six of 'em. I didn't think to lock the pricing in, back in 2003, and tie it to the unadjusted Ruble.

Ahhh, me. ;-)
Gunner

airtaximan said...

notwithstanding any specific language which might cause e-clips to spend someone's "progress payments" or "deposits" as they wish... or need...

It's remains a "deposit" to reserve a delivery position for a plane... and a "progress payment" for the production of that plane...

...so how could any company withstand scrutiny regarding spending that money for someone else's plane(s) (ponzi) or keeping the lights on (fraud?

I bet they cannot... and no matter what language regarding spending the deposit and progress payments at the company's will, I bet it canot "legally and in good faith" be spent on:

- paying for a sister company's planes
- paying to develop a new prototype
- paying for general and admin expenses
- paying for ads, tours to Europe or black and white copies...
etc..

Something is WRONG in ABQ.
especially since the decree of "they tried to bankrupt us... but I saved the day" Vern the Burn Ra-Ra-Raburn

Consider that it is e-clips' contract - any ambiguity in the contract goes against them...

Somoene will eventually look into this, and conclude...

...Ken was screwed, while he keeps smiling and cheering, so that other i might get screwed in his place.

Nice.

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

ATM said:

"I bet they cannot"

Not to be argumentative, but I bet they can. I am not a lawyer, but I play one on TV, and my best guess based on the depositor contract I have seen is that there is no restriction on how a deposit may be used. Acceptance of a deposit likley creates a liability for E-clips, but it appears that in an accountling and legal sense, a depositor's cash is not segregated from other funds (except for those few with escrow provisions). E-clips only obligation to a depositor is to deliver an airplane IF THEY ARE ABLE TO DO SO.

If E-clips is unable to do so, a depositor may be able to seek legal remedies, but will likely have to get in a long line behind many others.

WT

Ken Meyer said...

"...Ken was screwed, while he keeps smiling and cheering, so that other i might get screwed in his place."

That's a great theory, AT.

Only I didn't get screwed. As Mike Press points out in the latest market analysis, those of us with 2007 positions are sitting on profits.

I don't love everything the company does, but if I really felt like I was being screwed, I'd sell out, take my profit, and buy something else.

The problem is what could I buy that can do what the Eclipse can? That's right; there is nothing in that price range that offers what the Eclipse does--twin jet safety and speed with turboprop efficiency.

So, I'd probably settle for a 2006 Meridian at $1.6 million. But I'm a multiengine pilot--I'm leery of planes with only one engine. And Meridians are really losing value fast because of the arrival of the VLJ era.

More importantly, by this time next year, I'd be feeling pretty bad whenever I saw one of the flock of hundreds Eclipse 500's flying somewhere :)

Ken

WhyTech said...

Ken said:

"And Meridians are really losing value fast because of the arrival of the VLJ era."

Ken, in case you hadnt noticed, Meridian's have been losing value even before VLJ's were a hot concept. This acft is not known for holding its value.

OTH, the PC-12 is actually increasing in value. I can sell my 2 year old 12/45 for more than I paid for it.

There is an interesting article in the latest Flying re the resurgence of, yes,turboprops!

WT

Gunner said...

AT-
In retrospect, it may appear that spending deposits on things other than the owners plane is a diversion of funds. It isn't.

That's because, it's ASS-umed that you're dealing with a company that will remain in business. That being the assumption, you wouldn't care what they spend your specific bucks on; as Whytech has pointed out, they still have a legal obligation to provide you an aircraft.

Unless, of course, that obligation is wiped out by a bankruptcy proceeding. The Deposit holders would be first in line for losses there....they are simply unsecured creditors.

That's why it is so important for companies like this to be credible, balanced in their spending habits and completely honest in their business dealings. Sound like the Eclipse we all know and love?
Gunner

Gunner said...

Whytech-
If Epic gets the Dynasty certified (and there's no reason to believe they won't), I think it's gonna be a heck of a big hit. 340 kts from a single engine turboprop? At around 60 GPH? With that kind of payload? I think a whole lot of VLJ interest will move in their direction.
Gunner

WhyTech said...

Ken said:

"Only I didn't get screwed"

Ken, you need to add the word "yet" to the end of this sentence. If E-clips proves unable to deliver your airplane at all, or to retrofit it with Avio NG, or to support it after you have it, you will get screwed to one degaree or another. Enjoy!

WT

WhyTech said...

Gunner said:

"I think it's gonna be a heck of a big hit."

If owner experience with the LT is any kind of useful data point, its going to be HUGE! I want one! But, no way I an going to place a deposit on an acft that is not certified and in series production. YMMV.

WT

Gunner said...

WT-
There deposit is $40K and I've not yet explored options for securing that deposit. Explain the definition of "series production", please.
Gunner

Ken Meyer said...

Whytech wrote,

"you will get screwed to one degaree or another. Enjoy!"

There you have it folks. The nastiness and anger of the naysayers. Whytech thinks I'll wind up screwed, and he's delighted!

That's the difference between the naysayers and the plane's defenders. I don't wish that Whytech (or any of you) suffers something bad in order to make me feel better.

It seems to me that some of you have let your anger with the company so overwhelm you that you're now wishing bad things on the company's customers.

That's amazing, and very telling.

Ken

Gunner said...

Now, THAT's funny.
Gunner

airtaximan said...

G: true or false, in bankruptcy proceedings, criminal or fraudulent acts by executives or directors might make them personally liable for certain debts of the company... also, diverted funds from purchases versus investments (planes purchased, vs. equity) might provide additional relief to the depositors.

In any case, one has a good faith belief that a deposit or progress payment will be used to buy parts, systems, sub assemblies and actually go towards building your plane.

hiding behind BS language might prove less of a shield than some execs and investors want to believe.

IMHO



This is my point.

WhyTech said...

Ken said:

" he's delighted!"

As usual, Ken, you read into a post whatever suits your purpose. To be perfectly candid, I dont give a rip whether you get screwed or not. If you get screwed, you should consider the possibility that through your immunity to reason, prudence, and critical thinking, you brought it on yourself.

WT

airtaximan said...

There you have it folks. The nastiness and anger of the naysayers. Whytech thinks I'll wind up screwed, and he's delighted!

I disagree with your characterization of his post... BUT,

why don't you just list the risks as you claim to really see them with the e-clips program, and spare us the BS...

STOP BEING A CHEAP BILLBOARD promoting e-clips, just so you come closer to getting some aluminium for your deposit and progress payment that was already squandered... Ken.

WhyTech said...

Gunners said:

"Explain the definition of "series production", please."

The production process is up and running smoothly, with quality airplanes rolling of the line consistently. It takes awhile to debug the production process; I want an airplane built after that has happened. IMO, E-clips is not yet in series production - each acft is an adventure.

WT

Gunner said...

WT-
Understood and agreed. That's why I was happy with an Eclipse position in year 3 of production (until I realized I'd probably never see it); that's why I took Diamond positions in year two.

Epic is now selling 2009 production and I don't see the pricing going anywhere but up. If the deposits is small enough (and I think $40K is) or secured, I'd not think twice about that 2009 position, knowing it can always be pushed back.
Gunner

WhyTech said...

Gunner said:

"If the deposits is small "

Agree. I was thinking in terms of a much larger deposit. 60% comes to mind for some reason!

WT

Gunner said...

Ouch!

And Ken paints you as dour.
Gunner

Niner Zulu said...

Ken, I personally don't want to see you or anyone else screwed by Eclipse. In fact, nothing would please me more than to someday hear you say "I told you so".

I don't see that happening anytime soon, and until it does, prepare to be slapped around a bit ;-)

mirage00 said...

The production process is up and running smoothly, with quality airplanes rolling of the line consistently. It takes awhile to debug the production process; I want an airplane built after that has happened. IMO, E-clips is not yet in series production - each acft is an adventure.

I think you mentioned 5 years in a prior post not too long ago?

I remain amused

double 00

WhyTech said...

Moo said:

"I think you mentioned 5 years in a prior post not too long ago?"

Yes, I did. It shouldnt take five years after cert to reach series production. The five years is related to safety record, relaibility, support effectiveness, etc. For a new company doing its first airplane, I'd want five years. For an established company (Cessna) doing a variation on a product thaey have lots of experience with (Mustang) I'd settle for series production.

WT

mirage00 said...

The five years is related to safety record, relaibility, support effectiveness, etc. For a new company doing its first airplane, I'd want five years. For an established company (Cessna) doing a variation on a product thaey have lots of experience with (Mustang) I'd settle for series production.

Ok, thanks. So in the case of EPIC, you would use your 5 year timeline.

I remain amused

double 00

Ringtail said...

It looks like another owner is using their Eclipse right now. ABQ-DTO, FL350, 338KTS ground speed. Reportedly serial # 27

WhyTech said...

Moo said:

"EPIC, you would use your 5 year timeline. "

Probably. I'd make that call when the acft is certified and in series production. No point in making the decision until then, and much more will be known at that time.

WT

Gunner said...

"ABQ-DTO, FL350, 338KTS ground speed. Reportedly serial # 27

Yep, looks like a 20+kt tailwind advantage to make that 330kts. Must be another "proving run". BTW, what are they all trying to prove, anyway? That the jet can fly 60kts slower than its claims?
Gunner

Ringtail said...

Gunner said "what are they all trying to prove, anyway? That the jet can fly 60kts slower than its claims"

I'm not saying they are trying to prove anything nor do I think this is a 135. Rather, we are seeing and hearing more and more about utility being had out of this jet. It may be time to shut the blog down

Gunner said...

rt-
Seriously, though. Why do they all seem to wanna fly at about 300kts true? This is a short enough flight to easily make in one leg at max cruise.
Gunner

Ringtail said...

Gunner,

I too am curious about the ground speeds we see on flightaware, although I do believe the AFM. When or if EO gets some time in his next purchase, lets get a true picture from him.

Gunner said...

Fair enough, RT, especially as you admit it seems a bit curious to you also. I'll withhold judgment until we get "facts" and "proof".

Meantime, I hope you'll understand why I remain skeptical about everything this company claims. Just look at the typical performance profiles on the Mustangs that have been flying RVSM for months. In many cases, the FlightAware profiles show them exceeding book.
Gunner

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

ringtail wrote,

"I too am curious about the ground speeds we see on flightaware, although I do believe the AFM."

It was pretty warm even at FL350--forecast temp was ISA + 13 along that route. The PW610F engines (like most jets) lose thrust at altitude with non-standard warm temperature.

At ISA + 13 at FL350, book highspeed cruise for the non-aeromod Eclipse aircraft is 317 KTAS (5500 lbs) and 324 KTAS (5000 lbs). With aeromods, those book numbers improve to 329 KTAS (5500 lbs) and 336 KTAS (5000 lbs).

Essentially, the high temps force you to cruise closer to longrange cruise. You do actually get better range and fuel efficiency on a hot day for that reason, though your cruise speed will be lower.

Ken

cj3driver said...

Mike Press posted his August update. He as posted the “post-Oshkosh” delivery schedule, and gives some interesting comments on the last round of funding. It seems to be an honest report, especially regarding financial risk. Too bad he doesn’t post performance numbers, now that he is flying the flight levels.

" ...Eclipse seems to have dodged a bullet financially when they secured over $200 million in additional equity funding in July. However, this will only last them a couple of months if Eclipse does not get into rate production. Again, September looks to be the critical month for Eclipse ..."

www.spjets.com

cj3driver said...

The article goes on to say,

"...Once they get into rate production (30 per month), then they likely will be good on cash flow and will not need to go to the credit markets again. With a production rate of 30 per month, revenue will equate to over $50 million per month as Eclipse will be able to collect on delivered aircraft and call for 60% deposits on aircraft to be delivered six-months out (at a rate of 60 per month production rate)..."

Hopefully the faithful get thier 60% letters AFTER the production rate exceeds 45 per day.

The schedule now reads:

thru June - 25 planes
July - 11 planes
August - 11 planes
September - 30 planes
October - 30 planes
November - 55 planes
December - 38 planes

Gunner said...

That's the beauty of it. The Faithful can lift what they like from Mike's report, hoist it on their shoulders and parade it from post to post for days.

For the rest....simply demand the "proof":
"Where's your facts, Mike? You don't know how much money Eclipse has or needs. Nobody knows, not even Vern. You're just a disgruntled former Eclipse reseller. Your hatred for Eclipse clouds your judgment."

Just keepin' it real.
Gunner

Black Tulip said...

Ken said..."It was pretty warm even at FL350--forecast temp was ISA + 13 along that route. The PW610F engines (like most jets) lose thrust at altitude with non-standard warm temperature.

Essentially, the high temps force you to cruise closer to longrange cruise. You do actually get better range and fuel efficiency on a hot day for that reason, though your cruise speed will be lower."

Ken, it is frequently 'warm' at 35,000 feet.

As I said last week...

"The aircraft’s operational range will be a disappointment to many owners. This will be true especially around metropolitan areas where higher flight levels may not be available. The Eclipse will be passed by most jets and some turboprops when it is set up for long range cruise.

Many owners are moving from pistons or turboprops because this is the jet they can afford. At first they will be thrilled by the fans spooling up….”Takeoff power set, airspeed alive and crosschecked, vee one, rotate, positive rate, gear up, four hundred feet, flaps up…”

As the novelty wears off, owners will begin to long for a plane that carries more, goes farther and faster. Who can say about resale value and depreciation, especially if the market has been flooded with hundreds or thousands of units?"

Black Tulip

Ken Meyer said...

black tulip wrote,

"As I said last week...

"The aircraft’s operational range will be a disappointment to many owners."


Funny you should say that. What I left out of the previous posting is the specific range of the Eclipse under ISA vs hot conditions.

Midweight ISA, FL350, the Eclipse gets .79 nm per pound. ISA + 20, it jumps all the way up to .87 nm per pound.

Guys may decide they're unhappy with Eclipse performance, but it won't be because of the range they get in hot conditions. The range at HSC is considerably better in hot conditions than standard conditions.

Ken

redtail said...

BT said... especially if the market has been flooded with hundreds or thousands of units?"

Wouldn't that be great! Thousands, or tens of thousands, of units built and delivered. Not bad for a company that can't get out of it's own way.

mouse said...

Redtail,

since you work for Eclipse and are so smart, why don't you tell us what it costs to build an EA-500?

How about within $250K of what it costs?

Maybe you can give us the price of any one single major system, say: The landing gear, or trim actuators, AVIO, Flight control cables, Flight controls, Cockpit nose section, Engines, Interior, Throttle quadrant, Etc.?

Just one price of anything Ijust mentioned might give you credability...

Thought so...

Gunner said...

Dunno if anyone picked up on it, but Mike Press indicates that $200+MM, picked up in July, will "only last a couple of months". He indicates that without more of tomorrow's Faith Dollars to pay for yesterday's Partial-Planes, the company will be broke again in September.

That's about a $70 MILLION burn rate per month. WOW! And to think, we postulated it at only $30 MILLION per month. Silly us.

Seventy Meeelion bucks per month. For how many jets? What's that work out to in Cost per Delivery?

Then again, what's Mike know. He has no "proof". Probably just another Hater-in-Waiting.

Smile and wave, people. That'd be your deposit going into the Coke machine this month. Cha-Ching, Cha-Ching, Cha-Ching. ;-)
Gunner

airtaximan said...

Mouse,

IF a supplier whispered in my ear and said: "basically, we charged e-clips the going rate for the system we are supplying based on 100 units per year or less, and then took the price down a little for every hundred more, until approximately 25%-30% off at around 500 units per year... at which point the curve gets flat pretty fast, and the savings are very little after that, perhaps another 15% for 2000 units per year..." would he be lying?

Ken Meyer said...

Oh, but Mike Press said a few other things. Since some seem inclined to cherry pick his writing, let's cherry pick some of the good parts too:

"The news from Eclipse was very positive and significant progress has been made on many technical issues. The good news has caused more demand and interest in the Eclipse, here and in Europe."

"2007 delivery positions are still selling at a premium over factory price"

"Also announced at Oshkosh, Eclipse received certification of the Aero Modification and Extended Range Tip Tanks. These have been installed on production aircraft beginning with serial number 39. All previous serial number aircraft will get the retrofits starting in September or October."

"Eclipse has trained more instructors and delays in training are becoming shorter...Eclipse has stated that they plan to be back on schedule by October. The course is still being given in the owner’s airplane. Starting in September the first class to use the FTD simulator will start at Double Eagle airport in Albuquerque. The second simulator (full-motion) will be available in October. Use of these simulators and the move to Double Eagle should start closing the gap in training. Also, many more mentor pilots are now trained, so some owners are taking delivery and hiring a mentor pilot to provide pre-factory training while they wait for their class date."

"Once they get into rate production (30 per month), then they likely will be good on cash flow and will not need to go to the credit markets again. With a production rate of 30 per month, revenue will equate to over $50 million per month as Eclipse will be able to collect on delivered aircraft and call for 60% deposits on aircraft to be delivered six-months out (at a rate of 60 per month production rate)."

"The European market is still quite strong. At Oshkosh, Eclipse projects EASA full certification (JAR 23) in 4th quarter 2007 and commercial certification (JAR-OPS 1) in 1st quarter 2008. Flight-into-Known Icing is still projected to get certification in 4th quarter of 2007."

"Prices for Eclipse 500 have rebounded and remain quite strong for delivered airplanes and near delivered airplanes."

"Eclipse has worked through most of their technical issues and are delivering airplanes at low rate. They are projecting to start high rate production (one-per-day) beginning in September. This will be a critical month for Eclipse as their business model depends on high rate production.

The forecast for the secondary market is still bullish. The prices and demand for early delivered airplanes is quite high and prices are going up as demand increases. The airplane is a joy to fly as I have been flying it around the country. Everywhere I stop, people gather to look and ask questions about its price and economy. Most are pleased with what they see. Demand should increase as this jet gets better known to the public."


Ken

mouse said...

Redtail,

You are too sharp on Cessna either, are you?

Cessna is building exactly to plan, with the overhead in labor they planned. The Cessna factory builds lots of things, including the parts of th airplane they are rolling out.

Eclipse on the other hand builds exactly nothing on the airplane, they just put together pieces of parts that get shipped in and built by about 25 times the number of people at Cessna, just from the vendor head count alone.

You are now ahead of Ken in the "Are you kidding me, do you believe the crap coming out of your own mouth" score...

Go back and read what you have written, then get smart or shut up!

Gunner said...

Ken-
By all means post all of Mike's Report. Post the entire text of War and Peace, if you'd like. But it won't drown out the single most important nugget of Truth that Mike's dropped on you.

The Eclipse burn rate is about $70 MILLION bucks per month. That comes out to what? $2.3 Million US$ every day, seven days a week? How much is that per plane, Ken?

I think we can return to my previous statement that, "We can be pretty generous in assuming it in the vicinity of $1.5mm to $2.2mm (and probably MUCH higher today)."

Looks like Mike falls on my side of that argument. He agrees I WAS being pretty generous to Vern & Co.

Will the next 300 Depositors kindly report to the accounting department. And, please, smile for the cameras. The world is watching.
Gunner

mouse said...

Stan,

another point is the pay scale between Cessna and Eclipse.

Eclipse has to pay dearly to get workers to move to ABQ. The average salary (yes, salary) of the initial mfg team (the first 12 guys was $75K (winter of 2002). The average of the first 20 (when we reached that head count)(April of '02) was still $60K.

In the spring of 2001 the average salary and fee of each engineer (the wet behind the ears fresh out of school, and the senior people) was $150K each, that's the average. Until operations moved to ABQ from Walled Lake 97% of the "employees" were contractors. Prior to the move in October of 2001 I was still one of the few ABQ employees (direct hire by corporate) and there were less than 35 of us before we all moved to ABQ.

Maybe you can give us an idea of what Cessna pays...?

paul said...

According to Aviation Employment Aerotek is recruiting sheetmetal mechanics for a "ABQ, NM leading edge aviation manufacturer"
I could not cut and paste, but it is on www.aviationemployment.com

paul said...

Forgot to mention, the rate is $29/hour straight time, 37 OT, with plenty of OT.

mouse said...

The Frax guys want the VLJ's so bad they can't sleep at night. They also won't place one single order until they know what maintenance and operation will cost, and how will the service be handled. They don't care about promises or guarantees of maintenance costs like JetInComplete either. Promises don't keep the planes flying and making money.

The typical frax customer flies in whatever is cheapest when the money times are poor, or it's a lesser passenger not needing to be impressed. They use the bigger planes when they move thier customers around or lots of their people.

The VLJ looks to cost 1/2 of their lowest cost airplane, the BeechJet which goes for about $3400 per hour, where a VLJ would go for $1700 per hour.. Big margins, but not worth the risk until there is operational history and proven facts, not promises or guarantees..

mouse said...

AirTaxi,

to add to your Frax info...

Without motion based sims, a full, working in place service center network, spare parts, full funtionality (FIKI, Radar, Navigation & other Avionics) they would not consider the Eclipse if it was free.

They only train to the highest, most stringent levels to maintain thier dafety record, and insurance rates, not to mention thier passengers safety and security..

Ken Meyer said...

mouse wrote,

"Eclipse on the other hand builds exactly nothing on the airplane, they just put together pieces of parts that get shipped in"

Mouse, that's just wrong.

Didn't you say you once worked there?

Must have been a long time ago, because what you've written is completely false today. The entire fuselage is built-up in primary assembly. How could you not know that???

Ken

mouse said...

Alexa,

I thought you were smarter than that, or is RedTail writing for you?

Here are some simple economic facts to building a VLJ.

If the sales price of a real jet is $4M and the EA-500 is $2M (for ease of math purposes), than any single component or system has to be at least 1/2 of the cost of the $4M jet.

If the real jet pays $30K for its FADEC throttle quadrant (throttle, and switches, Etc.), than the Eclipse has to pay $15K. Eclipse pays $22K (throttle, switches, Etc.)

If you want to sell something for 1/2 of the price you have to pay 1/2 of the price for everything. Aluminum cost the same, labor should be similiar, especially if you want to sell the plane to someone else someday).

Eclipse labor + vendor costs have to be at least 1/2 or its all at a loss. The only exception would be if you could do some of the major cost items for a whole bunch less, like 25% of what a real jet costs.

Not forgetting that many of the items on the Eclipse are the same of higher than the real jet, there better be a huge offset.. Guess what? There is not.

Ken, maybe you can tell us what Eclipse does at 25% of the bigger jets that actaully adds up to real cost savings?

Oh yeah, lets not forget the higher labor rates Eclipse pays, the free pop when it's not being rationed, Etc.

At least Eclipse should save on shipping parts from vendors since the port of ABQ offers such great barge rates, and all of the major seaports, train tracks, and highways converge on ABQ... Guess they better dredge the Rio Grande cause the barges are getting stuck...

mouse said...

Gunner,

Too bad ALexa and Ken don't understand the printing/circulation business... The numbers count subscriptions and trackable issues, not the rest. Advertizing, free copies, Promos, Etc. and print overruns, waste, Etc.

No wonder they have no clue on what it costs to mfg or produce anything.

And yes, their all a bit pissy because they know they are wrong and can't do anything to save face. If they were right and we were wrong they would never log back on and comment...

They hang around here so they can justify or substantiate their poor decisions and losses.

When and if the Eclipse is successful, and they produce a real working airplane (all systems functioning that are promised to be there) then they could always come and buy the plane. To buy an Eclipse at such an early date, before it was even close to being done, much less certified is just a game for the wealthy who can afford to lose their deposit. The EA-500 was and still is just a lottery ticket. It might payout some day, but the odds are long...

cherokee driver said...

N502LT is up again, struggling against a headwind, heading back to mama. Check out the flight made by N910SY today and see what a real jet can do. Perhaps Ken can give us another brilliant analysis.

mouse said...

AirTaxi,

Pretty close actually. The problem is Vern promised so much volume up front and the vendorspricing was predicated on those numbers. Another price increase built into each part is part of the requirement for making the parts last for a long time. The vendors knew they could not guarantee long life on unproven parts designed by Eclipse or their own design to Eclipse specifications, so the way they meet the long time-between-failure or time-between-unscheduled-removal is to charge for multiple parts upfront. In other words built in replacement and warranty costs to replace early/premature failures.

Eclipse is not getting any bargins unless they hit 500+ per year... 499 doesn't count...

This ain't horseshoes or hand-grenades...

It really is a house of cards and the winds are picking up. Eclipse better batten down the hatches if they want to ride out the storm...

mouse said...

Ken,

the entire forward fuselage is assembled in ABQ from other suppliers parts and pieces. Eclipse does nothing more tan drill holes when speaking ablut producing parts.

Lots of fabrication, and not one piece of manufacturing any of the parts that go into it. The first tool puts together the cabin sides, internal structure, flight controls, Etc. But not one of the pieces in Mfg by Eclipse.. all are assembled however.

You just keep reading what you want and understanding on your own level..

I understand you take delivery of your plan this December.. is that going to happen?

Ken Meyer said...

"But not one of the pieces in Mfg by Eclipse.. all are assembled however."

You think they should smelt the aluminum themselves before it counts as manufacturing? Everybody starts with raw materials of one form or another.

Eclipse begins with a bunch of sheet aluminum and turns out a fuselage. What did you think they did with the big FSW gantries--give demos all day long?

Ken

Gunner said...

Mouse-
Yep, December is Magic Month for Ken.

Using Mike Press' own numbers and ASSuming 1 plane a day 24/7, Vern only needs to cover an additional 300 Million Dollars in losses AFTER the last 200 Million runs out, in order to deliver Ken's DreamJet.

Then Brother Ken will be home free, except for avionics, performance, maintenance costs, reliability, safety and resale value.

Cakewalk.
Gunner

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

9Z-
What you've seen is not the point. You have no "proof". The point is that The Faithful cry "foul" over every reasonable evaluation of the Eclipse business model for lack of "fact".

Yet they hold Mike Press up as the Poster Boy for "What's not to like?". Well, guess what? Here's Mike Press disclosing a burn rate about TWICE as high as or own best guesses.

I think it's high time we dismiss all of our assumptions; after all, we have no "facts and proof". Let's just go with the numbers offered by one of their very own, closer to the program than even Ken:

$200+ Million, 90 days bleed, at best.
Gunner

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