Wednesday, October 31, 2007

Another Milestone

Eclipse Aviation Brings Airline-Quality Safety Program to General Aviation

Company establishes first FAA-approved aircraft manufacturer FOQA program

ALBUQUERQUE, NM -- October 31, 2007 -- Eclipse Aviation, manufacturer of the world's first very light jet (VLJ), today announced that it has received approval of its Flight Operational Quality Assurance (FOQA - pronounced foh-qwah) program from the Federal Aviation Administration (FAA). Eclipse Aviation is the only aircraft manufacturer that has received FAA approval for a FOQA program that includes flight data monitoring capability consistent with the advanced programs used by commercial airline operations (FAR Part 121), the safest demonstrated flight operations in the world.Until now, FOQA was implemented only within resource-rich commercial airlines, and was largely unheard of in the general aviation and small corporate-fleet world. Eclipse's FOQA program is breaking new ground, and is largely enabled by the next-generation integrated avionics and data collection systems designed for and incorporated in the Eclipse 500 very light jet. "

At Eclipse, challenging general aviation norms and going beyond what's expected is a daily imperative," said Vern Raburn, president and CEO of Eclipse Aviation. "This FAA-approved FOQA program reflects our commitment to live up to these ideals by introducing a world-class flight operation strategy to general aviation that will deliver airline-quality safety to our customers. FOQA is a perfect addition to our progressive safety management system (SMS), which gives us the tools to proactively ensure the highest level of safety across all Eclipse 500 operations."

FOQA, used by most major airlines around the world, employs sophisticated software to capture and analyze recorded flight data. The information gathered by this system is used to proactively identify, assess and correct high-risk operating conditions before they cause an accident. FOQA programs are frequently cited as contributing to the impressive safety record of U.S. airlines over the past decade. FOQA initiatives have been used to identify and improve everything from deficiencies in pilot training programs, manuals and processes, to aircraft design issues and hazardous air traffic control procedures.

Eclipse Safety Management System (SMS)Consistent with the internationally-endorsed SMS philosophy, Eclipse has built a SMS that does not treat aviation safety risk management as the responsibility of a reactive independent group, but rather as an all-encompassing proactive safety culture. Instead of waiting for hazards to be identified through accidents, Eclipse's SMS creates a process and culture for pinpointing risks so they can be managed in advance of an incident or accident. FOQA is central to this process, using objective flight data and powerful software that allows Eclipse to understand what is actually happening with the Eclipse 500 in the field. Eclipse is currently developing a complementary program, called the Aviation Safety Action Program (ASAP), which will provide insight into why events are happening. Through ASAP, Eclipse 500 pilots will voluntarily identify and report on issues encountered while operating their aircraft. This system will correlate this subjective information with objective FOQA data, creating a comprehensive awareness of hazards and risks never before achieved by an aircraft manufacturer.

FOQA is the cornerstone for identifying, assessing and analyzing flight-related hazards within the Eclipse 500 fleet. A key enabler of this technology is the Eclipse 500's highly-integrated avionics design, Avio NG, which allows Eclipse to capture virtually everything that happens when an aircraft is operated. Once this data is collected, it is processed by sophisticated software created by Austin Digital, Inc., an industry leader in airline FOQA analysis systems. This software uses complex algorithms to continuously churn through thousands of hours of flight data, while highlighting and reporting abnormal events and trends across the fleet. This enables Eclipse to investigate and determine root causes, develop strategies to mitigate risks, and implement corrective actions. Finally, the FOQA system provides a mechanism to monitor and adjust the effectiveness of corrective actions, thus closing the loop on the process to ensure optimal operational safety."

FOQA programs are not new, but are today considered state-of-the-art in the airline industry," said Eclipse Aviation's Manager of Flight Safety Chris Solan. "Our program is revolutionary because as a general aviation aircraft manufacturer we are essentially taking on the role and responsibilities of a sophisticated airline, aggregating large amounts of data so systemic trends can be easily identified. When this trend data is combined with our Eclipse 500 aircraft design knowledge, pilot and maintenance training program oversight, aircraft manual and procedure authorship and tight-knit FAA working relationship - we can bring a tremendous improvement in safety to our customers, particularly individual or small-fleet operators."

Thanks to eclipseobserver for the update.

Tuesday, October 30, 2007

“And the days dwindle down

To a precious few

September, November...”

From the outside things appear quiet at Eclipse. The public relations machine is on mute and a few airplanes are rolling out to the ramp. On the inside I envision a futuristic scene. Remember the James Bond movie in which the hero defuses the hydrogen bomb with 007 seconds left to go?

The threat to Eclipse is a different nuclear device. The neutron bomb was developed during the Cold War to minimize damage to property but maximize destruction of people. During a previous recession certain real estate investments were known as neutron bombs because they destroyed investors but left buildings standing.

If there is a neutron bomb at Eclipse, it is probably connected to the balance sheet and the bank account. It is counting down in dollars, not seconds. The hangars, unfinished aircraft, airframe components, engines and friction stir welding jig are not in jeopardy. Employees and their families, investors, depositors, vendors, trade creditors and government officials could be.

I see this infernal engine ticking away in an Eclipse laboratory. The big red display is clicking off dollars at a furious rate. The instructions on the device read, “This neutron bomb can only be deactivated by connection to a fully functioning Avio NG system via the USB port below. Begin functional test by pressing red button.”

Black Tulip

The tulip mania peaked in the Netherlands during the 1630s. The black tulip was the most sought after, until found to be biologically impossible.

Friday, October 26, 2007


Responding to a comment from the one of the "Faithful" that perhaps the plane and the company is so "marvellous" that the blog has to resort to baloney to try to knock it?

ColdWetMackarelofReality in turn asked:

What specifically marvellous about demanding 60% "6-month" progress payments from hundreds of depositors last fall, raising over $100M then announcing weeks later that Avio was FUBAR and Avio NfG was underway BEFORE they demanded the progress payments?

What specifically is marvellous about the VP Engineering bailing out?

What specifically is marvellous about laying off 10% of the workforce? Sorry, 9.2% of the workforce.

What specifically is marvellous about FAILING to deliver on a single promise to date?

What specifically is marvellous about delivering about a crippled partially functioning preemie-jet?

What specifically is marvellous about Eclipse failing to sell enough airplanes in any given year, by any measure, to even approach the sales volume needed to break even?

What specifically is marvellous about burning through $1.X B to deliver 4 dozen partially completed abortions of an airplane?

What specifically is marvellous delivering an aircraft, knowingly, that had NO MECHANISM to update the GPS database, rendering the aircraft unusable in RVSM airspace for MONTHS?

What specifically is marvellous about the jet costing 2X the original price?

What specifically is marvellous about the jet weighing half-a-ton more than originally projected?

What specifically is marvellous about the DOC's being 2 to 3 times more than projected?

What specifically is marvellous about anything in this tale of ridiculous failure on a scale previously unknown to aviation?

Saturday, October 20, 2007

Eclipse Stumbling...

Or worse cratering at this point, while a welcome vindication for some, WOULD be bad for everyone as you (flightcenter) point out.

Bad for the employees who have no doubt sacrificed so much (their health, time with their families, career advancement elsewhere, putting up with childish tantrums and obscenity laden outbursts from the CEO); bad for suppliers who have tooled and staffed up and invested their own resources to support the outlandish production predictions; the taxpayers of New Mexico who have been conned into funnelling millions in hard investment and tens of millions in softer subsidies into the scheme; even more established and reliable companies like Cessna, Embraer, Diamond and Cirrus will be effected - because Eclipse has, through its' amazingly effective manipulation of the media, become 'THE' VLJ - despite the reality of a very crowded marketplace with some far more experienced and capable and reliable companies. Every time someone does something stupid in aviation (land 340 on highway - disappear in a Decathalon) all of us suffer - we are labelled as cavalier playboys with more money than sense. Only this time we are not dealing with an avoidable crash of a single plane, we are facing the avoidable crash of an entire company that will effect thousands of lives all around the world directly, and put a black eye on our industry when we can ill afford it.

I for one have deliberately used terms such as Ponzi scheme because I think that is what Eclipse has been for the past 2 or 3 years. I believe that Eclipse's senior management has been aware of the inability to deliver on the promises for some time and they have been working to create a situation (or at least drag the current situation out long enough) for a white knight to step in and save them from themselves (and still allow their options to be worth something). I believe they intended to build a company and a a plane to be proud of when they started out - but ego got in the way, and they have been unable to face up to the situation they are in for so long now that only a wholesale restructuring of the BoD (who continue to demonstrate they are not going to do anything) and the Executive team (incompetent does not even begin to describe) might allow for Eclipse to snatch victory from the jaws of defeat.

The hard reality is that they have burned a Billion plus to design, redesign, and design again, a small airplane that is not the cutting edge technological tour-de-force it was supposed to be, and they have struggled to manufacture and deliver even 5 dozen planes - having had a 12-18 month head start on many of them according to the company's own statements.

No one in their right mind would want to take on the liabilities of 1000 defrauded depositors, let alone a sister-company of sorts with a billion dollar business plan and no way to make it happen (in their minds anyway). There is simply not enough real value in the tools, methods, infrastructure or IP at Eclipse to justify that IMO.

To his credit, Vern has pulled more rabbits out of his, ummmm, hat, than I would have believed possible before his appearance on the scene so it is always dangerous to count him out - but you have to wonder if they have already picked the pockets, I mean low hanging fruit in terms of aircraft sales, surely they have done the same in the financial world (to the point they almost went TU just a couple months ago.

Gunner pointed out that Mike Press suggested in a recent post that September or October were make or break time and that deliveries needed to ramp up - that did not happen, now the VP Engineering has left, and 10% of the workforce got laid off.

Taken in context with the drastic measure announced earlier this year (come on, color copies and FedEx were too expensive?), the near bankruptcy a couple months ago, and the obvious failure to sell anywhere near enough aircraft in any given year to even approach their breakeven point - how long before Eclipse's announces signficiant restructuring?

A Saturday morning reality check from ColdWetMackarelofReality.

Tuesday, October 16, 2007

Press on Regardless

FlightCenter reminds us of how DayJet costs changed but the business plan remained steady on course.

We've (the blog) talked a lot about the performance guarantees made by Eclipse to its customers.

As a number of folks have pointed out, Ed should have been able to find any number of other aircraft with the performance numbers required to start an air taxi business.

That's true except for the amazing direct operating costs originally promised for the Eclipse 500.

The promise that convinced Ed to launch his air taxi busines with Eclipse, was that the Eclipse 500 would have a direct operating cost of 56 cents per mile. ($204.52 DOC per hour)

Ed's initial air taxi model and his customer demand projections were based on the assumption that the Eclipse 500 would achieve that direct operating cost and based on that cost, DayJet (Jetson) could very profitably sell seats at between $1 and $2 a mile.

At the time, the IRS was allowing 34 1/2 cents a mile for automobile mileage deductions.

If Ed could profitably deliver a flight in an jet aircraft to his customers for 3x the price of driving their own car, the problem was going to be getting enough aircraft, not getting enough customers.

And that is why Jetson (now DayJet) booked 715 orders and 715 options for the Eclipse 500.

Then came the decision to switch from Williams to Pratt. Direct operating costs were raised to 69 cents per mile ($262.61 DOC per hour) in January 2003 and have been rising ever since.

According to the Eclipse website, the current DOC is $424.75 per hour or $1.28 per mile.

That's 2.3x the original promise of 56 cents per mile.

Friday, October 12, 2007

From Flight International

Business jet start-ups face production challenges

By Graham Warwick

Successful start-ups are rare in aircraft manufacturing. Most fail to reach certi­fication, but even if they get that far these newcomers face steep hurdles acquiring the resources and expertise to move into volume production and profitability.

"It's turned out to be really hard," says Eclipse Aviation's chief executive Vern Raburn. The company secured type certification of its Eclipse 500 very light jet in September 2006, and production certification in April, but has struggled to ramp up to the high production rate planned. "We grossly underestimated the job," he says.

Eclipse is not alone. Sino Swearingen Aircraft (SSAC) certificated the SJ30 light jet in December 2005, but delivered only its second customer aircraft in September. Adam Aircraft received initial approval for its A500 piston twin in May 2005, but has not finished certification and has delivered only a few aircraft.

The issues all start-ups face are similar: raising the financing to transition from type certification to rate production and setting up from scratch the production and quality systems essential for aircraft manufacture. For Adam and SSAC the hurdle has been financing: for Eclipse it has been building the infrastructure of a major manufacturer.

"Where are we? Nowhere near where we wanted to be," says Raburn. The company continues to work through the vendor issues that dogged certification, but its biggest challenge has been putting in place a high-rate production system. "We are not out of the woods yet, but we are seeing nothing that says we can't build at volume," he says.

Cirrus's success

The most successful recent start-up has been US light-aircraft manufacturer Cirrus Design. Certificating its all-composite SR20 in 1998, Cirrus delivered its 1,000th aircraft within four years and is coming up on its 4,000th. Contrast this with Columbia Aircraft, which like Cirrus grew out of the kitplane industry. Columbia also certificated its first piston single in 1998, but struggled to ramp up production, only delivering its 500th aircraft in 2006. It then hit a series of problems that led to the company filing for Chapter 11 bankruptcy protection in September.

The difference between the companies has been the resources available to ramp up production. Cirrus in 2001 sold a controlling stake to a Bahrain-backed investment firm for $100 million. A controlling interest in Columbia was sold in 2003 to government-backed Composite Technology Research Malaysia for $50 million, but by 2006 CTRM was looking to sell its stake. In September Cessna entered discussions to acquire the assets of the bankrupt manufacturer.

Similar stories can be found across the industry, and the founders of Adam and SSAC have both had to relinquish control of their companies to attract the additional investment required to ramp up production.

Rejigging production

After investing more than $700 million in SSAC, the company's Taiwanese backers have agreed to sell a controlling stake to a joint venture between US investment firm ACQ Capital and SJ30 distributor Action Aviation of the UK. A priority for the new owners is to rejig a manufacturing line that is producing only a trickle of aircraft.

New Adam president Duncan Koerbel says the Colorado-based company has secured $200 million in equity and debt financing in the last nine months and is revamping its manufacturing system with the goal of producing 150-240 A500s and A700 VLJs a year and delivering 1,000 of the all-composite aircraft within seven to 10 years.

But this ambition is eclipsed by Eclipse, which has set it sights on building at least two aircraft a day. When it handed over the first customer Eclipse 500 in December 2006, the New Mexico-based company predicted it would deliver more than 500 in 2007: so far just over 50 have entered service.

Raburn blames two problems: vendor issues carried over from certification and the challenge of setting up a high-rate production system. Both are tied to the VLJ pioneer's avowed goal of changing not only how people travel, but how aircraft are built.

"We have had significant problems with several vendors," he says. "Some we induced ourselves. We had an immature engineering organisation with a not very disciplined approach to design changes. We clearly caused problems for vendors - we still are today, but we are trying to clean up our side.

"But there are stark differences in how the vendors handled the problems, says Raburn, a former Microsoft executive. "I made some bad choices of vendors and I'm still paying the price. Some say I'm enraptured with technology and do not evaluate the risks enough. But it is compounded by vendors who do not stand by their promises.

"Raburn admits many established vendors no-bid when Eclipse was looking for suppliers because they did not believe the company could produce the aircraft at its price point, originally under $1 million and predicated on unheard-of production rates. "They did not believe in our business plan, so we paid hundreds of millions of dollars in non-recurring expenses to take the risk out of our different business model.

"Eclipse's search for innovative and low-cost suppliers has had mixed results. "There are places where aggressiveness with technology has worked, such as the electrical power system, which has never had a failure." He also cites Pratt & Whitney Canada: "They developed a new centreline engine and it has never had an inflight failure."

Raburn says 80% of failures in the fleet are in three areas: displays, autopilot and actuators. The orginal Avidyne displays will be replaced when the new Avio NG flightdeck is introduced in November, and Meggitt "is doing everything it can with the autopilot and we are seeing reliability improve", he says.

The company's problems in ramping up production are "more deeply a culture issue", says Raburn. Eclipse deliberately hired experienced aviation-industry veterans to set up its manufacturing system, "but they came out of very established companies into a start-up - a baby that had lots to learn, like, who empties the trash? They were incapable of starting with a clean sheet."

Eclipse has "learned a hell of a lot" about high-rate production, he says. "Manufacturing at rate is like squeezing a balloon - something pops out somewhere." The company has learned tolerance build-up is more important than accuracy in high-rate manufacture. "A lot of the parts are machined. We thought that was all we needed for it to go together the same every time. It turns out that tolerancing and holding the part accurately is important."

After rebuilding its production staff, and bringing in automotive industry experience, Eclipse has moved to parallel production lines. "It's no longer single-piece flow," says Raburn. There are now three independent aft/forward-fuselage mate positions to avoid bottlenecks. "By later August we were starting to see the benefits."

Raburn defiant

Eclipse has proved that every position on the production line can run at a rate of at least one aircraft a day. "Have we got all of them to run at that rate at the same time? Not yet," Raburn says. "But our analysis shows we can get to one-and-a-half to two a day."

Inevitably, Eclipse's failure to deliver on its aggressive promises has drawn a backlash of criticism from Raburn's detractors, but he remains defiant. "It turned out to be really hard, but nothing has proven to be impossible. There is nothing we set out to do that we have not finally done," he says. "We have created a product that delivers on the promise to change the way we travel, and built a company with lasting value."

Thanks to mouse for sharing this revealing article.

Tuesday, October 09, 2007

Future Values

cj3driver 's prediction for the future re-sale value of the Eclipse:

There are many reasons why I think the Eclipse will continue to depreciate in a big way.

1. It was a huge mistake to pre-sell Eclipse’s at way, way below factory pricing, way too far out in the future.

The appeal of a sub-one million dollar jet, produced unheard of orders when re-announced, fueled by the dot-com boom and potential air-taxi operators. Eclipse committed to build hundred(s) of planes fixed at $995K. and many hundreds (thousands) more, at slightly higher price. Eclipse still to this day has a long way to go just to fill these orders. Even the most faithful of the faithful diehards would agree that Eclipse is losing money on these aircraft. Eclipse must make up this shortfall eventually, if it is to remain a viable business.

2. Production rates far exceed new orders.

It is usual and ordinary for new aircraft (similar to new cars) to pre-sell a number of units to purchasers anxious to get a new product. The problem with Eclipse, is that the number of units pre-sold far exceeds the normal market by more than ten fold. This is why there are a magnitude of position re-sales compared to new company orders. The company is competing for new orders with a very fierce competitor, …. their own customers. At the current rate of resale’s, and the number of slots available, this phenomenon will continue well into the future, and probably extend past the point of profitability for the company.

Contrast this with the Mustang. Since the ramp-up of production, Cessna has been selling realistic delivery slots FASTER than the scheduled production rate for the next 3 years. Since Cessna sold very few positions to “speculators” they do not have to compete with but a few slots which resell very quickly at a premium.

3. The owner-flown market at over $2 million is not even close to Eclipse’s proposed production rates.

Since the ramp-up of production at Eclipse, there have been 4 major aviation trade shows. EBACE, Oshkosh, NBAA and AOPA. If the market for Eclipse’s was 500 per year, … or even half that at 250, certainly there would have been hundreds of buyers making deposits prior the announced base price increase at Oshkosh. Given the fact Eclipse has a history of announcing sales achievements (ala Ken 2,700 orders) where are the new order announcements? There aren’t many (if any at all) because of the reasons above. Too much competition from their own customers, and does anyone think there would be an Eclipse “speculator” at this point? …. At least not a speculator of factory positions. The owner flown market has to many choices in the $350K per year arena.

4. Used Eclipses will be plentiful upon the demise of DayJet ETAL.

If DayJet fails, there will be dozens if not hundreds of used Eclipses on the market. These aircraft have a very low cost basis and can be dumped on the market by a lender, or by DayJet themselves at a price way below factory. These planes will compete with other used “owner planes” and unfilled factory positions.

5. New Eclipses positions will be plentiful as orders are cancelled.

Anyone who bought an Eclipse at $1,295,000 (00 dollars) would be better off to write off the original deposit and purchase a resale today. Same goes for the $1,520K slots. Even with complete loss of the original deposit, you can have an Eclipse sooner for less money (from a resale position) than risking any more money and taking delivery year(s) later.

6. In the next several months, the true cost of ownership will be realized and there will be many used planes up for sale.

7. The shaky financials will cause existing position holders to continue to drop the premiums.

8. Due to increased costs the price of the E500 will continue to force the price higher, further reducing demand, and accelerating the demise of the company due to competition.

9. The weak dollar may further hurt Eclipse as may of the components are outsourced to foreign companies.

FlightCenter added a tenth point:

10. The problem for Eclipse is going to come when Cirrus and Diamond start delivering their jet products at lower price points than Eclipse, then they will be the ones to capture the lions share of the folks stepping up from the piston world.

Eclipse is the middle of a sandwich, getting squeezed from above and squeezed from below.

Monday, October 08, 2007

The blog's a year and a half old

With 165 posts and over 14,000 comments, there is really not much new to cover that has not been hashed and re-hashed on this board.

Yet questions certainly remain. What's going on in ABQ? How many airplanes are getting their C of A's? How many are being delivered? Why is there such a lag in getting deliveries and C of A information posted to the FAA site? How many pilots are being trained? How many units are on lease back to the company? How many units are in the hands of owners and being used in a practical manner? What are the post aero-mod empty weights and CG locations? What is the plan for the next round of financing which most admit will surely be needed? Excluding the DayJet options, what is the true picture of the order backlog? When will AvioNG be certified?

My expectations were that a clearer picture would emerge after NBAA. In fact, the picture seems cloudier. Since July, Eclipse has only issued two press releases, one in August on the auction and one in September on the opening of the Double Eagle Training facility. And other than telling the world he has a 'green' airplane, Vern did not say much else at NBAA, even refused to make any future predictions.

In the Eclipse glory days, nearly everything written about the program would get re-posted on the Eclipse web site. Now that the press has caught on, and more critical articles are being written, Eclipse is no longer quick to repeat what is being said. The latest article Eclipse wanted to preserve for posterity has an August dateline.

Even Mike Press has found a way to avoid writing about questionable issues in ABQ, find an impressionable owner-pilot, give him a ride in the left seat and presto, his monthly column is written by a surrogate.

Tuesday, October 02, 2007

DayJet Takes Off...

Launching New Era in Regional Transportation

World's First "Per-Seat, On-Demand" Jet Service to Improve Productivity and Quality of Life for Southeastern Business Travelers

TALLAHASSEE, Fla.--(BUSINESS WIRE)--Tomorrow DayJet Corporation will formally announce the launch of the world's first "Per-Seat, On-Demand" jet service in Florida. DayJet members - which number more than 1,500 business travelers - can now book just the seat they need aboard DayJet's fleet of Eclipse 500(TM) very light jets (VLJs); customize travel according to their time and budget requirements; fly point-to-point between an initial five Florida DayPort(TM) airports; and return home in a single day. Prices start at a modest premium to equivalent full-fare economy coach airfares and will expand to dozens of additional DayPort locations in Alabama, Georgia, Mississippi, North Carolina, South Carolina and Tennessee.

The service inauguration and grand opening of its first DayPort facilities in Boca Raton, Gainesville, Lakeland, Pensacola and Tallahassee, Florida, will be marked by a press conference in Tallahassee on Wednesday October 3, 2007 at 9am.

Joining DayJet President and CEO Ed Iacobucci will be Florida Lt. Governor Jeff Kottkamp, Tallahassee Mayor John Marks, Eclipse Aviation President and CEO Vern Raburn, state and local elected officials as well as leaders from the business community.

Thanks to HotDog for keeping readers of the blog informed as to this important event. The air taxi business and DayJet in particular, is the lynch pin for Vern Raburn's business plan.