Tuesday, November 27, 2007


Where did it all go wrong?

This is the question I ponder as I sit in 22D, .76M at FL270 on an east bound AA flight this morning, returning to my current client’s company after a great Thanksgiving holiday with family. I hope all my fellow bloggers, regardless of which side of this discussion they come down on, had an equally fantastic holiday, and had the opportunity to give thanks for the blessing we each certainly enjoy.

Thinking back, Eclipse truly had it all, an A-List executive team, a great and talented design team, a clever little jet design, a truly innovative engine and avionics concept. All the benefit that experience, gathered from the best aviation companies around the world, could offer. An opportunity to build a true, best-of-breed, not only the design, but the processes, the procedures, the methods, the tools, the culture, in short, not just an opportunity to build a great plane but to build a great company.

And yet here we are, nearly ten years and well over a billion dollars later, no best of breed, just a small plane, half finished – a company that boasts ‘me too’ like the youngest child in a family of achievers around the Thanksgiving Day table – embarrassed and even angry about the successes of its siblings, muttering under its’ breath about ‘coulda’, ‘woulda’ and ‘shoulda’ – ‘if only’, and the ever present lament of the self-afflicted, ‘why me’.

Now, vendors languish, paid weeks later than agreed to, occasionally having to resort to withholding product or threatening mediation or litigation to get what they are owed.

Employees leave, having given up on the promise of stock-option riches, a dot-com era fairy tale, spun one too many times, diluted to the point of valuelessness by three, soon to be four unplanned additional rounds of financing.

Investors have nowhere to go, they did their part when they signed the paperwork – their promised ROI more diluted than the mixed drinks at a New Mexico casino.

But the bitterest pill to swallow comes for the customers – employees look around now to a revitalized and energetic industry with more work than bodies – investors will simply move on – even the State of New Mexico and its’ taxpayers.

No, the loyal customers are the ones who will ultimately feel the most pain. Originally promising near 700 deliveries in 2007, Eclipse will probably eek out around 80 or 90 this year, and not one will be the airplane promised. Not one will be fully functional. Not one will be fully usable, especially as we are now fully into icing season for much of the nation.

300 of these loyal customers were told, more than a year ago now, that they would have their jets in a matter of months, that their 60% progress payments were due, their jets imminent. Exactly how many paid about a half million dollars each is unknown as the Faithful will no doubt point out, but the issue is more the demand than the exact number effected. Only a month or two after demanding contractual progress payments for aircraft ‘soon to be delivered’, Eclipse announced that not only had they decided to end the relationship with Avio prime partner Avidyne (2nd prime partner, having already parted ways with ACS maker BAe Systems), that the decision had been made MONTHS prior, prior to the announcement, prior to the demand for progress payments. Eclipse reported it had in fact been quietly working on an Avio replacement for several months.

Grandiose promises about improved functionality were made, blame was assigned, and as with Williams and BAe Systems before it, once ‘world-class’ partner Avidyne was tossed under the bus by a guy who previously sat on its’ BoD. A pattern was emerging, each time the wunderjet approached the only significant milestone in any program – certification and delivery, Eclipse pulled the rug out from under itself, and blamed the rug.

Come now the present, and a major structural supplier has had to sue Eclipse for missing payments, this after renegotiating the previous volume pricing and working to freeze the design and make improvements for manufacturability. Dunn and Bradstreet shows Eclipse to be over 3 weeks late, on average, for vendors that report to D&B. Current and former vendors tell tales of engineering that has no tolerance for assembly resulting in massive scrap rates. Current and former employees tell tales of poor morale, poor to nonexistent leadership, and a singular lack of appreciation for the task of designing, certifying and delivering aircraft.

Preston Tucker boasted that his car company had the largest manufacturing facility on planet Earth, and it was true – Tucker had negotiated with the US government to give him a former war material plant, the single largest building on the planet at that time. Tucker used this massive building, flashy advertising, and his own ebullient character to raise a significant sum of money at that time, over $15M – to build the car of the future.

Tucker would later stand trial for fraud, having built only 50 cars after several years and many millions of dollars. Eventually acquitted, the similarities to Eclipse and Raburn are astonishing. Another comparison made more than once here is to that of Jim Bede and his diminutive BD5, the elusive ‘everyman’ plane. Here too we have an interesting idea, a very interesting character, thousands sold, hundreds delivered, and one of the greatest black eyes in aviation history – all for the want of an engine.

The difference for Eclipse lies only in the ability to continue to raise capital, and in the number of people around the world who will be adversely affected when this house of cards crumbles.

So where did it all go wrong? Did it start out as a scheme – I think not. I have made no secret about my early exposure to Eclipse, and that I have friends and acquaintances both within and without Eclipse. I heard the early stories, predictions of 1500 planes per year rolling out of Albuquerque, a sub-million dollar selling price – the predicted death of half-million dollar prop planes such as the Bonanza, the Cirrus, the Columbia, the Malibu and the Mooney. I heard tales of wonderment about a level of systems integration unseen on planes smaller than the 777.

It did not start out as a scheme I am sure, but each time the reality of the situation might have set in, Eclipse leadership chose to applaud the Emperor’s new clothes rather than point out he was, in fact, naked. The result is vendor after vendor failing for Eclipse where they each had track records of success for other larger and more successful customers dating back years, even decades. Of special importance here is the failure of key vendors, the chief enablers of the wunderjet if you believe the marketing hype, that is Williams International, manufacturer of the EJ-22 engine, and BAe Systems, architect of the computer system enabling Avio.

The real issue at the end of the day is that much like the dot com bubble from which Eclipse leadership hails, there is a sense that the rules don’t apply, that Eclipse is a special case, the ‘new economy’ version of aircraft. The new economy however was a bust, rules after all are rules. There is a reason that planes are designed and built they way they are and it has nothing to do with screwing the customer, creating artificially high pricing to dissuade customers from actually buying them, or just being monolithic dinosaurs mired by the inertia of their great size. No, when hundreds of millions or even billions of dollars, and hundreds if not thousands of jobs are on the line, a company owes its’ employees, its’ shareholders and its’ customers a certain amount of respect and the decisions must be taken seriously with an eye towards safety, reliability, and eventually ROI.

There was no new economy, only people who believed the rules did not apply to them – and for a while they were able to find enough unsophisticated marks who believed what they said – irrational exuberance ruled the market. A similar effort is just now completing in the real estate market – as some places see soft landings (a fitting euphemism for our discussion today), other have seen the bubble burst, and crashed and burned.

So we are left with one pivotal question – is Eclipse right and the rest of the world just doesn’t get it? This is surely the position of the Faithful. They suggest that Eclipse changes the rules, creates a whole new value-proposition.

Or is Eclipse and the business model that it and its’ major customer represent stillborn – e.g., are they dead and just don’t know it yet? This is the position of the critic, with some even allowing for a chance of success given a wholesale reorganization of the BoD, the executive team, another $300M and 18 months.

Occam’s razor suggests we get the best result when we use the least number of assumptions, and it is here that I believe Eclipse simply fails the smell test.

In order to accept the Eclipse explanation as to why five or six dozen partially completed planes are all they have to show after almost ten years, well over one billion dollars, and all the other pro’s I mentioned above, you have to believe the following:

A leading world-class avionics and vendor (BAe Systems) did not know what it was doing and is a failure

Another leading avionics vendor (Avidyne) did not know what it was doing and is a failure

A leading business jet engine maker (Williams International) did not know what it was doing and is a failure

A leading systems and lighting vendor (deVore) did not know what it was doing and is a failure

Boeing does not know what it is doing

Cessna does not know what it is doing

Hawker-Beechcraft does not know what it is doing

Traditional methods of setting price are wrongTraditional margins for aircraft OEM’s are low by a factor of 3 or 4

Or you can observe that it is in fact Eclipse that did not know what it was doing, evidenced not by crazy conspiracy theories (like OEM’s consciously NOT meeting demand to keep prices ‘artificially high’), but by facts such as:

Eclipse needing to select a new engine

Eclipse needing to redesign the avionics suite, twice

Eclipse failing to hit a single schedule

Eclipse missing the mark on MTOW by 28%

Eclipse missing the mark on needed fuel by 26%

Eclipse missing the mark on development costs by a factor of 4

Eclipse missing the time to develop by a factor of 2.

So I ask each of you, critic and Faithful alike to consider this – is Eclipse right and the rest of the world wrong, or is there a reason that planes are designed and built the way that they are designed and built?

Is there a reason why we see evolution more than revolution in aerospace?

Is there a reason that Raburn has failed, like Bede, and Moller and Tucker before him?

In a well managed program, risk is supposed to go down as time goes on – the further along you get the safer you are supposed to be – as you, supposedly, check off item after item on a well-planned effort – making progress towards the ultimate goal.

This should not result in being almost bankrupt when a finance round takes a few days or weeks longer than anticipated. This should not result in establishing a new low-water benchmark of delivering partially completed aircraft with significant but commonly expected functionality delivered in the form of an I.O.U. Incremental development and delivery might work for operating systems, it is nothing short of criminal to do it with a million dollar aircraft.

There are no free rides, there is no such thing as a free lunch, and if it sounds too good to be true, it probably is. These clich├ęs ring truer today than ever.

Contributed by ColdWetMackarelofReality.

63 comments:

John said...


Alexa Internet Traffic
tracking shows the DayJet site has less traffic today than in midsummer.

Ken Meyer said...

"This is the question I ponder as I sit in 22D, .76M at FL270 on an east bound AA flight this morning..."

Let's see if we have this right--you choose to fly a coach seat in an airliner, with all the hassle that entails--schedules never met, crowds, lining up to take your shoes off, then getting shoe-horned in between two other passengers, etc etc. But you're very comfortable knocking the Eclipse and the transporation freedom it provides to a class of folks who previously didn't have private jet transportation as an option.

I think I'd be a lot more inclined to embrace your opinion of which airline offers the most comfortable coach seats than which private jet manufacturer I should buy from :)

Ken

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

Ken-
By your reasoning:

Let's see if we have this right--Vern chose to leave a software company before the stock value skyrocketed; then he started several companies, none of which were of any notable success and one of which was a notable failure. Then he went to work as an employee of a rich guy.

Then he decided he would revolutionize aircraft manufacture. I think I'd be a lot more inclined to embrace his opinion of which job position was his failure than which private jet manufacturer I should buy from :)

Personally, Ken, I don't believe Vern's prior record has anything to do with his failure at Eclipse; any more than I believe ColdWet's choice of transport has anything to do with his expertise in aviation engineering and manufacture. But, by your reasoning, if the latter is true, the former must be.

Your intentional double standard in evaluating Eclipse vs the competition is as telling as your inconsistencies in evaluating the comments from The Faithful vs The Critics.
Gunner

ItsJustSad said...

From the Eclipse sales department this morning... you can almost "hear" the pleading...

"Time is running out on your chance to own an Eclipse 500 -- now. Eclipse Aviation's online auction for an Eclipse 500 very light jet ends this Thursday (November 29, 2007) at 5:00 p.m. (PST). Interest in the auction is high..."

And bidding on the auction is insanely low, with a whopping one bid so far. It appears unlikely at this point -- though possible, I suppose -- the clamor of those with more money than sense to Eclipse's door will exceed the first auction's "15 bids among six bidders."

So much for "the enormous demand for very light jets," to quote Vern from the last auction.

Or, at least, the enormous demand for this one.

WhyTech said...

(brought forward from previous thread)

retail said:

"This is a small company with financial challenges, but not a hack, and certainly not without talent."

It was not my intent to suggest that ISS is without talent or competence. My concern is that ISS displays are to be such a core part of the whole acft that their marginal status as a viable business presnts a great risk for E-clips owners.

The history of light jet aircraft to date suggests that these airplanes have a 20-30 year service life. Yes, a few motor on longer than this but most do not. This means that, potentially, the displays in the E-clips will need to be supported for this period of time. If one segments U.S. avionics vendors into three strata based on likely survivabilty and ability to support their products over 20-30 years, IMO, you get something like this:

Top tier:
Collins, Honeywell, Garmin, Universal

Middle tier:
Meggitt/STEC, Avidyne

Lowest tier:
Chelton, FreeFlight, ISS, Spectralux, and many, many others

I suppose that this is consistent with E-clips policy of maximizing risk at any cost.

WT

Turboprop_pilot said...

Ken:

Why insult someone for flying commercially? I have owned a TBM, Malibu and Meridian over the last 6 years and fly JetBlue from Boston to California regularly- it makes no sense to spend so much time, fuel and money on a long flight unless there is a lot of West Coast travel to justify the long trip. CWMOR's thoughtful post resulted from his contemplative time on the flight.

TP

Plastic_Planes said...

"But you're very comfortable knocking the Eclipse and the transporation freedom it provides to a class of folks who previously didn't have private jet transportation as an option."

Ken,

I will probably never own a private jet (don't see a financial need nor do I have the financial wherewithal to make the need a reality). I do, take some serious offense to your continued "class" superiority that rings out from your second stab at these remarks. We all saw your first reply - you've toned it down (some). It was prbably best left alone.

I am a million mile airline flyer (some of my good friends are 5 million or more). I hardly think I would ever have been able to accomplish this in my own aircarft (of any size) and still focus on my business objectives. Sure, being a premiere flyer has it's benefits (first class seats - when free - are more comfortable).

My father was a well respected Neurosurgeon (he's retired now). He was a lorean war vet who used his GI bill to learn to fly. Over the years he did, he obtatined his private pilot's license, commercial, IFR, GFI, CFII, MEL and and aerobatic certificate. He owned his own plane (a half share in a Cessna U206). He flew that plane to the beaches in Baja California, used it to fly to conferences, and even once fly it from Abby QQ to the Bahamas. When he finally stopped flying he had run up about 2000 hours. I was too young to fly then, though, I did fly with him just about every where he went. He walked away because in his life, there were other things that took priority over flying, his job, his family, his children and his love for other activities. He regularly flies common carrier, too.

Anyway, you can choose to partake in this sport/hobby/vocation of flying. I have no beef with that. I do, however, take offense at your cheap shots at the rest of us who don't. Perhaps you'll never respect my knowledge as an engineer. I have been in the industry for almost 25 years - half of which has been in the aerospace industry. I worked for Eclipse (and currently work for a competitor). I saw what went on there. I have several friends and acquaintences there, too. I hope for your sake you trust their judgement and skill when the put your plane together. You may not value my input, hopefully you respect theirs.

This blog has succeeded in polarizing the entire readership. I simply find that there are those that love Eclipse and all things it and Vern stand for. For them, there'll never be anything wrong. The other's tend to be more shades of gray from the "I think it's a good idea poorly executed", to "I wouldn't touch one with a ten foot pole".

Yes, Ken, I'm a "fired former disgruntled employee" (your words from the past, not mine) so you'll blow right through this. I just hope you get what you've asked for and it meets your expectations. Then you can spend time flying and leave the blog to the critics.

P_P

BTW, next time you get on an airplane, think aboout what part I may have worked on...

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

Dr. Meyer made mention of Eclipse's 2005 Collier win as proof of Eclipse's viability -- before his post was deleted.

It's worth noting the "real" experts at the NAA, cited by the good doctor, don't always get it right.

Even with the best intentions -- and even true innovation -- entities that win the Collier aren't guaranteed lasting success by any measure.

Some of these are more dubious than others, but in the end none proved (or have proven to date) to be overwhelming successes:

1921 - Grover C Loening, for development of the Aerial Yacht.

1930 - Harold F Pitcairn and associates, for development and application of the autogyro and its demonstration as safe aerial transport.

1936 - Pan American Airways, for establishment of a transpacific airline and the successful execution of extended overwater navigation in regular operations.

1938 - Howard Hughes and associates, for a successful global flight.

1973 - Skylab Program, with special recognition to William C Schneider, program director, and the three Skylab astronaut crews.

1976 - USAF, B-1 Industry Team, and Rockwell Intl Corp, for design and development of the B-1.

1990 - Bell-Boeing team for development of the V-22 Osprey tilt- rotor aircraft.

1993 - Hubble Space Telescope Repair Team.

2005 - Eclipse Aviation Corporation for leadership, innovation, and the advancement of general aviation.

(List complied from www.aerofiles.com)

Jake Pliskin said...

is it Ken constantly deleting his own posts? whats the deal doctor? stick to your guns, if you said it you meant it so leave your words up for all to see.

Redtail said...

Which other "disgruntled ex-employee" was it that months ago posted all the problems at Eclipse and had vast information/proof that he had accumulated and was going to turn over to the FAA regarding "serious" safety and manufacturing issues? Several others have made similar claims on this blog, including Stan. It all just dissipated like a fart in the wind. Amusing.

airsafetyman said...

"But you're very comfortable knocking the Eclipse and the transporation freedom it provides to a class of folks who previously didn't have private jet transportation as an option."

Maybe CWMR just wanted to be on an airplane where the weather radar, anti-ice, de-ice, anti-skid, ground spoilers, ground flaps, navigational systems, and autopilot were actually tested, proven, installed, and functional?

Ken Meyer said...

jake wrote,

"is it Ken constantly deleting his own posts?"

I didn't like the wording. But the sentiment remains--the underlying thesis of ColdWet's diatribe is false. His contention is that Eclipse frittered away its golden opportunity.

But real experts, like the NAA, experts who don't hide behind a goofy name on an obscure blog, think Eclipse did pretty doggone well, starting from scratch and building a new class of jet aircraft that offers features you cannot get at twice or three times the price. That's why, among other accolades, Eclipse was awarded the prestigious Collier Trophy.

Ken

Shane Price said...

Ken,

You can attack your fellow bloggers.

You can make negative remarks about alternative aircraft.

Hell, you can bang on (and on and on and on) about how Ad Fab the E500 is. You know, the one you refuse to buy.

But.....

Never, ever refer to this, the top listing on Google when you type 'eclipse blog' and hit search as ".... an obscure blog"

That, to use your own phrase.

I S

J U S T

P L A I N

W R O N G.

Shane

bob said...

Ken wrote:
But real experts, like the NAA, experts who don't hide behind a goofy name on an obscure blog.

Ken, that's too funny...lol I am off to find a better name.

JetProp Jockey said...

Shane

Actually if you type "Eclipse Aviation" into google the only entry that appears above the critic blog is Eclipse Home Page, which is there as a result of payments by Eclipse to google.

I will add my $.02 (ever notice that the cent sign has been dropped from keyboards) relative to commercial aviation.

Wealth is a realtive thing - but I can afford to own and operate my own aircraft worth +/- $1MM and I do enjoy flying.

I live in SE PA and own a home in West Palm Beach,FL. I can do to trip non stop in about 3:45 (I know the E500 could do it at least :45 faster, but maybe not nonstop)

But, most of the trips I do I choose to use my plane to get to BWI and take a non stop with Southwest to PBI.

Just makes sense to me from an economic standpoint unless there are 3 or 4 of us traveling.

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

JPJ:

Alt 0 1 6 2

As in my 2¢ worth.

A freebie from a former E-Clips employee who's full of grunt (I'm not "Dis" gruntled)

: )

P_P

JetFan said...

From Vern:

Last week, I shared some of my reflections of our recent momentum. By our own accounts, this year we have come up short in several of our projections for aircraft deliveries and program schedules. But, as measured against any other general aviation manufacturer, our accomplishments this year are unparalleled.
Eclipse has always benefited from the strong partnership with our customers. Whenever feasible, we try to honor your commitment and patience by extending the value of the Eclipse 500. As such, we are offering you a one-of-a-kind opportunity to save significant money on your aircraft while also supporting Eclipse. However, before I get into the details of this offer, let me first update you on the status of current programs and aircraft production.
Avio NG Certification Program
The Avio NG certification program has completed several milestones in the last few days. As of today, we are 82% complete with all certification testing. This exceptional news means that certification is now expected within 30 days. Production incorporation of Avio NG is occurring as planned, with the first Avio NG equipped customer aircraft assemblies now rolling down the line. A detailed upgrade plan for in-service customers will be communicated by the end of the year.
Flight Into Known Icing Certification
To date, we have completed all high-risk development flight testing using artificial shapes on the airfoils to simulate flight into known icing conditions and we will begin natural ice testing next week. While this required flight testing is not for credit, it reduces the unknowns in the FAA certification flight test program. The formal certification flight testing will be conducted in two phases, with ice shape testing occurring in January and natural ice testing occurring in February. The new de-icing boot required for flight into known icing conditions has been qualified and is now being installed on all production aircraft.
Foreign Certification Programs
Our first foreign certification priority is EASA (most European countries). This certification program is well underway but is dependant on Avio NG functionality. EASA certification activities will accelerate in early 2008 with expected completion in the early second quarter of 2008. Following achievement of EASA certification, Eclipse will continue other foreign country certification activities based on customer deliveries.
Training Programs
We acknowledge that, for many reasons, we have not met demand for pilot training. In an effort to correct this situation, we have made significant investments in human and physical resources. We currently have two fixed based Flight Training Devices (FTD) in operation at our new Customer Training Center at Double Eagle II Airport in Albuquerque, NM. The second FTD was delivered earlier this month and became operational last week. These FTDs are being used to improve skills and conduct portions of the type rating training.
By the end of January, we will have two full motion simulators in operation in addition to one of the FTDs. That FTD will be converted to a third full motion simulator in March. With these investments online, we will be able to close the gap between customer aircraft delivery and customer pilot training.
Eclipse Service Centers
Two additional Eclipse Service Centers, one in Albany, NY and another in Van Nuys, CA, will open in early 2008. Combined with our Eclipse Service Centers in Gainesville, FL and Albuquerque, NM, this network is prepared to support in-service customers around the country. Additionally, a detailed capacity planning exercise is underway to ensure all customer aircraft upgrades are completed as quickly as possible via our service center network.
Aircraft Delivery
We continue to increase our production rate through improved cycle times across the line and increased efficiency in our manufacturing processes. As of today, aircraft 85 received its certificate of airworthiness. We are now building Eclipse 500s at a faster rate while becoming more predictable and reliable. This year alone, we expect to deliver more than 100 aircraft. You can see a video of the Eclipse 500 assembly process on YouTube (click here to view). This video was produced early this November and tracks the process from friction stir welding to completion.
I am proud to tell you that aircraft 58 was our first aircraft to complete production flight testing with zero flight squawks. Subsequent aircraft are also showing few or no squawks. Our customers who have taken delivery are giving us a tremendous amount of positive feedback about the flying qualities and aircraft reliability. Last week the total customer fleet passed the 5,100 flight hour mark. Nothing makes me happier than hearing our customers talk about how much they love flying their Eclipse 500.
Limited Offer
Since the inception of the company, Eclipse has made it a priority to give something back when we were forced to make a change or didn't perform as we planned. Here are a few examples.
In 2003, after Williams International failed, we were forced to raise the aircraft price, but raised yours much less than the market price. We also made your positions fully transferable, which allowed you to realize the increased value of your position based on customer demand and price increases.
In 2005, when we increased the price of the Eclipse 500, we offered certain position holders whose deposits were in escrow, the opportunity to release their money from escrow, and save more than $30,000.
In early 2007, when our delivery schedule slipped, we offered affected customers an interest payment for every month we were delayed delivering their aircraft.
We are proud to have already built more jet aircraft at a faster rate than any other general aviation manufacturer in history. While this is quite a feat, our production is still not where we projected it to be. Our business model is based on high rate production and when we fall behind, there are more consequences than simply a delay when you will receive your long-anticipated airplane. One consequence is that our need for capital has increased. Therefore, we are making a special offer to our customers to help meet our need for short term funds while our production capability matures and we put in place additional long-term financing.
As a result of the shortfall versus our production targets referred to earlier in this note, the company is raising additional financing. The financing we are seeking is relatively small as a percentage of the total capital we have raised to date. We have been successful in the past in our ability to raise capital and believe we will be able to close this financing within 120 days. In the meantime, we are looking to raise funds now so that we can complete our financing in an orderly fashion.
For a limited time, we are offering, an opportunity to fix the Standard Aircraft Price of your Eclipse 500 aircraft at $1,250,000 USD without any future price adjustments. The price will be fixed in exchange for a payment of $625,000, which will save you hundreds of thousands of dollars.
The details are as follows:
You may lock in your Standard Aircraft Price for your Eclipse 500 at $1.25M USD. This means:
Your Standard Aircraft Price will not be subject to further price escalation due to inflation.
Your purchase price will be fixed, regardless of what changes Eclipse may make to the price of the Eclipse 500 in the future.
The Standard Aircraft Price does not include any optional equipment you may select six months prior to delivery.
To fix your Standard Aircraft Price, you must sign and deliver to Eclipse a standard Eclipse 500 Aircraft Purchase Agreement, an Escrow Agreement, and remit to Eclipse Aviation $625,000 USD (50% of your new fixed Standard Aircraft Price), by December 14, 2007 (or such earlier date as Eclipse may terminate this offer).
The $625,000 USD payment is in addition to any deposits you have already paid.
The $625,000 USD payment will be held in an escrow account until Eclipse has received at least $30M USD from customers accepting this offer. We believe that this amount, combined with other financing activities being pursued will be sufficient to provide Eclipse with the time to complete our capital raising activities.
Upon reaching $30M USD, funds can be drawn from escrow and made available as needed for use by Eclipse in its operations.
Eclipse Aviation will honor this special offer to customers on a first-come, first-served basis only.
This offer is valid only for customers that have not yet assigned and delivered an Eclipse 500 Aircraft Purchase Agreement or remitted the progress payment due six months before delivery.
Eclipse Aviation reserves the right to discontinue this offer at any time.
This is a chance for you to save a substantial amount on the purchase of your Eclipse 500 aircraft. By fixing the price at $1,250,000 USD, you are protected from changes in price due to increases in CPI-W or from other factors.
To demonstrate this incredible savings, consider the following. If you purchased an Eclipse 500 for $1,295,000 USD with a delivery date in 2008, you would save approximately $360,000 USD - that's more than half of the $625,000 USD deposit. If you purchased an Eclipse 500 for $1,595,000 USD with a delivery date in 2010 you would save over a half-million dollars!
The chart below indicates your potential savings based on when your aircraft is slated for delivery versus its base price. These are approximate amounts and represent estimates of CPI-W through your anticipated delivery date. The following also assumes savings on the Standard Aircraft Price only and does not include the price of Aircraft Optional Equipment.
Potential Savings ($000's) by Delivery Year
Base Aircraft Price ($M) 2008 2009 2010
$1.045 $57 $69 -
$1.070 $79 - -
$1.270 $326 $364 -
$1.295 $359 $409 -
$1.520 $350 $413 $426
$1.595 - - $509

Please take the time to review and absorb this offer. We have organized a special team that is prepared to provide the specific details of this offer, including all required documentation. This team's unique phone number is 866-436-9954, which will be staffed Monday through Friday from 8:30 a.m. to 6:00 p.m. Mountain Time. Phone calls placed into Eclipse Customer Care regarding this offer will be re-directed to this specialized team. Again, this offer is available for a limited time only.
Eclipse has accomplished many remarkable feats and is on the cusp of completing many more milestones. We are delivering an outstanding aircraft at an unbeatable value. We remain driven to providing you with the best customer experience in the industry, and we hope this opportunity further enhances our commitment to you.
Sincerely,

Vern Raburn
President and CEO

gadfly said...

"Prop Wash" and "Con Trails" take on new meaning.

gadfly

Black Tulip said...

Ken, are you in?
Yes or no,
Give us the spin.

Gunner said...

Limited offer of $1.25 Mill, huh? Looks like the "Annual Going Out of Business Sale" at the second hand furniture store down the street. Brilliant marketing, that.

Wonder how many people have ponied up their $600+K in progress payments that are not enjoying a price of $1.25 Mill?

Clump, Clump go the bus wheels.
Gunner

Gunner said...

Come to think of it....ouch.

What's this pricing gonna do to the Position Sales on Controller? Look like, as predicted here, Eclipse has finally realized it needs to compete with it's own position holders to sell aircraft.

I know what a "death spiral" looks like; but I was always morbidly interested in knowing what one actually SOUNDS like. Now I do.
Gunner

Black Dog said...

Would this not ruin the Auction why pay 1.8 mill wnen u can have one for 1.25 mill?

Or have I read this wrong?

FlightCenter said...

Speaking of auctions....

Cessna was the winner in the auction to buy Columbia today.

They bumped their original offer by about $2.4M in the auction.

That means that the value of the TC (including all the tooling for both Columbia 350 and 400 aircraft) went for just under $4M.

The deal will close on December 4th.

The real winners in the auction are the Columbia owners.

These fantastic airplanes have now found a home where the owners can be very confident that they will be supported for the long haul. The resale value of their aircraft went up a lot today.

FlightCenter said...

I should have mentioned that the final bid for Columbia Aircraft was $16.4M.

That is very short money.

Cessna should have no problem selling 200 to 300 (or more) of these aircraft per year.

FlightCenter said...

WT,

Meggitt sold S-Tec to Cobham for $38M earlier this month.

Not sure what happens to your list as a result.

You have to believe that there is substantially less focus at S-Tec on getting the latest release of AvioNG out the door during this transition period.

The Eclipse 500 uses several products from Meggitt as well as the custom designed autopilot from S-Tec.

This means that Eclipse finds themselves with yet another vendor in their ever growing list vendors.

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

gunner wrote,

"Clump, Clump go the bus wheels.
Gunner
"

Colorful as always, but I seem to recall you've been calling for the demise of Eclipse since about the time they ejected you as a customer. It hasn't happened yet. Maybe if you keep calling for it for a few more years it will? 85 aircraft produced so far this year and production is picking up speed.

On another note--I do wish you well with your Epic LT homebuilt project. I think that plane will be a very good choice for you. What made you decide for the LT over the Dynasty? You're okay with the disadvantages of a homebuilt over the certified version?

Ken

WhyTech said...

Vern said:

"We have organized a special team that is prepared to provide the specific details of this offer"

Operators are standing by! And to show our commitment to you, if you call within the next 10 minutes, we will allow you buy two E-clips at this remarkable price. This offer wont last! Operators are standing by! Call now!

Is this desperation or what?

WT

WhyTech said...

FC said:

"Meggitt sold S-Tec to Cobham for $38M earlier this month.

Not sure what happens to your list as a result. "

STEC moves from Middle Tier to Lowest Tier. Cobham is merely a collection of Lowest Tier avionics manufacturers, IMO. As part of one parent company they may move up over time, but so far Cobham is playing garbage collector.

BTW, I think that the efforts to figure out what Cessna paid for the Columbia TC may not be taking into consideration that the accountants may be trying to apportion the purchase price to the various parts in order to get this number as low as possible for accounting reasons, and is not likely an indicator of the value Cessna places on the TC/R&D.

WT

Gunner said...

Ken said:
"I seem to recall you've been calling for the demise of Eclipse since about the time they ejected you as a customer"

And you've been repeatedly claiming they ejected me, when it's public knowledge that I demanded my Deposit back and got it. But then, you don't play very well with messengers of Bad News, do you?

Predicting their demise, Ken? Nope. I repeatedly stated they'd be "out of money" in October '07. They've finally fessed up to needing more funds and are fire-selling their product to help raise those funds. What month is it?

Besides, how can you predict the demise of a still-born product?

Clump-Clump.

Gunner said...

Ken said:
I do wish you well with your Epic LT homebuilt project. I think that plane will be a very good choice for you. What made you decide for the LT over the Dynasty? You're okay with the disadvantages of a homebuilt over the certified version?

Thanks for the kind words. I chose the LT because I like the plane a LOT and because the certified Epic that I have the most interest in waiting for is the Elite. I have a position on that one for 2010 and, in the meantime, intend to build my turbine hours in the LT and D-Jet.

There are very obvious risks and disadvantages of owning an experimental. I recognize those clearly. I think that's important when you deal with new aircraft companies or homebuilts. Nice thing about the LT: it is what it is; no IOU's. And virtually no dependence on Epic's success to maintain it's airworthiness.

Gunner

Shane Price said...

Jetfan,

As no one else has said it, I will.

Thanks!

The bit I caught was the draw down from escrow when they get to $30 million.

What happens if 50 odd punters don't pony up? With no real hope of improving their prospects of delivery? No 'carrot', all 'stick'?

Or it takes more than 4 months to raise 'a percentage' of what Vern has already collected?

And Cessna buy an aircaft COMPANY for slightly more than 10% of what Vern hopes his customers will put at risk.

Now, I'm sorry, I might be a thick Irish lad, but this sounds pretty terminal stuff to me....

What's your read on it, Fred?

Shane

Shane Price said...

Gunner,

Ken's just mad at you. After all, you will be flying your new LT before he has to start explaining the missing money to the REAL management in the Meyer household.

And you have made an excellent choice. If you can spare the time, can you indicate why you chose the LT over the PC-12?

Thanks in advance.

Shane

Black Tulip said...

Frank Sinatra sang...

“And now, the end is near;

And so I face the final curtain.

My friend, I’ll say it clear,

I’ll state my case, of which I’m certain.

…And did it my way!”

airsafetyman said...

"Again, this offer is available for a limited time only."

You could not make this stuff up.

Dave said...

The $625,000 USD payment will be held in an escrow account until Eclipse has received at least $30M USD from customers accepting this offer. We believe that this amount, combined with other financing activities being pursued will be sufficient to provide Eclipse with the time to complete our capital raising activities.

So Vern is saying this might be Eclipse's swan song unless existing customers cough up $30 million dollars and on top of that they'll need outside financing too....the $30 million alone (assuming they got it) wont cut it.

No wonder Eclipse wanted wanted people to sign an NDA to see the finance report despite Eclipse being a publicly-financed organization. That way they could trick potential future customers by keeping them in the dark as to how desperate Eclipse is for funding. I guess Eclipse put it off for as long as it thought it could until it went public with the fire sale and news that financing for continued operations might be insufficient.

FlightCenter said...

WT,

Thank you for your perspective on how the accountants would want to value the TC.

Shane Price said...

Ken,

The LT is not, by even the wildest possible reach, a 'homebuilt'.

As you are fully aware, Epic are using a quaint gap in the rules to expedite delivery for customers.

Said customers spend most of the time they are on site making themselves fully familiar with the aircraft, its systems and performance.

And they have just enough input to the build to satisfy said rules.

Quite a good idea all round.

So, when do you get to homebuild your E500?

Before or after you stump up that EXTRA $625,000?

Seems like the right time to talk to Mike Press about your positions.

Maybe, just maybe, it's time to CONSIDER your position...

Shane

gadfly said...

In 1963, Jimmy Durante produced a masterpiece called “It’s a Mad Mad Mad Mad World” . . . and he makes his final appearance on screen, in the very first scene.

Is this latest Eclipse “plea for funds” not an attempt to do a final “one up” on Durante, and (in the process) “break” the screen writer’s strike?

In the movie, the “prize” was $350K, under a “W”. In this “re-write”, the prize seems to be . . . no, it can’t be! . . . but it is “$360K” found under “CPI-W” . . . tell me it isn’t so!

The only thing left seems to be the “hi-light” of the movie (which occurs right at the start) when Jimmy Durante literally “kicks the bucket”, and we know that it’s all over. The rest is just “fluff” to keep the audience occupied for the following two hours . . . and, for whatever it’s worth, it’s a lot of laughs and entertainment. Which brings us all back to this “website”.

From the start, the end was a “done deal”, but there is much entertainment (and a little sadness) in watching it all “play out” . . . even the twin-engine “fly-through”.

gadfly

(Question: Does Vern play “Spencer Tracy”, or is it the other way ‘round?)

Gunner said...

Shane asked:
"If you can spare the time, can you indicate why you chose the LT over the PC-12?"

Shane-
From a mission standpoint the PC-12 is hauling around a LOT more room than I require. I prefer the smaller cabin / greater speed tradeoff of the Epic. Price certainly plays a factor, also.

Perhaps most important, was what we saw at the company. Morale is great; the staff is small; the place is organized and, most important, this was the softest seell I've seen in any major purchase I've ever made. The company basically looks for the product to sell itself. They simply stand by and answer questions. I liked that, though as a stakeholder it's almost worrisome.
Gunner

ColdWetMackarelofReality said...

You know, being right never gets old - Eclipse needs AT LEAST $50M, RIGHT NOW, plus additional ongoing fundraising activities.

Things are worse than I thought - how long until Ron Popeil is pitching the Ronco Eclips-o-matic on late night TV.

I mean come on - operators are standing by?

You have got to be kidding me - is this an airplane company or Billy Mays and household cleaning supplies?

And I must say, Ken's convoluted elitist-everyman strawman argument continues to humor me.

I flew a little over 900nm one-way - total time, door to door one-way was about 5 hours, cost was $330. Round trip.

That's an equivalent DOC of $.18/nm, $.16/sm, or less than 1/10th the CLAIMED cost of the never yet delivered Eclipse.

In a decent single-engine aircraft the cost would have been $.51/mi, taken the same amount of time - total cost $918, round trip - staying in the low teens I would have avoided icing, flying GPS direct using a certified panel mount navigator.

In the Eclipse I could not have gone, due to icing - unless I wanted to fly at 14,000 feet, navigating VOR to VOR, using my trusty handheld Garmin 496 for 'situational awareness'.

But, if I trusted in the engine anti-ice as some might suggest, and went in the Eclipse anyway, it would have taken about an hour and half less time (all due to time at the airport - assuming I did not feel the need to stop for fuel being at the max range for most of the 'delivered' Eclipse's). Total cost would have been about $3000 (using Eclipse's DOC figure which I believe to be at least 20% low) - or an order of magnitude more.

Same trip in Gunner's LT, which will be fully functioning this time next year on the other hand, would have taken the same time as the Eclipse (within 20 minutes), for a total cost of $1476.

Tell me the story about the poor rich man again Uncle Ken, or was it the rich poor man.

Ken, I believe you owe it to us on the blog to let us know when you sent in your deposit to keep God from calling Vern home and lock-in your price at only $1.25M.

rcflyer said...

Dave said,

"No wonder Eclipse wanted wanted people to sign an NDA to see the finance report despite Eclipse being a publicly-financed organization."

The state of New Mexico is a substantial investor in Eclipse Aviation. That does NOT make Eclipse a publicly traded company, with the attendant reporting requirements.

State governments often make investments in privately-held corporations. If those investments carried a public disclosure requirement, I guarantee that no private firm would want their money.

Eclipse is not an unusual case here. It is naive to think that because they got "public" money, their financials should be made public.

R.C.

gadfly said...

RC

'Hopefully, someone at the "Albuquerque Journal" will pick up your statements about "public disclosure" and share with the local readers how their tax money is invested. ". . . Journal, are you getting this down?" Your "readership" is worthy of being informed!

gadfly

airtaximan said...

re: VErn LEtter regarding MORE deposits...

I thought we were to refrain from SATIRE.

This is undoubtedly the lowest form of sheisterism I've yet seen.

Check out the recent PODCAT on AVWEB, with Richard Aboulafia, regarding how history will look back on the VLJs.

Basically a sick joke on aviation.

The headlines in 2006 of the VLJ revolution - 1 delivery of a half finished plane.
- The claims of VLJs revolution in 2007 - 10 percent of the projected deliveries....

Basically, a market for all VLJS including those established companies with accurate predictions, and the over blown predictions of one company will amount to 300 planes a year. IMpressive when including the normal increases seen in turboprops.

Air taxi - a non started. The bold new models and companies - will not sustain their own overhead and burns due to heavy capital.

Don;t rely on my memory... listen for yourself, and then read Verns Plea... for more cash.

GGGRrriinnnnddd...

as predicted

Gunner said...

RC-
OTOH, I can pretty much guarantee that because the company's investors include the taxpayers of New Mexico, those finances WILL be made public sooner or later.

Note that the company is going to escrow the monies until they reach a critical mass of $30MM. Note also the money must be raised by the 14th, one day before a critical date that Mouse mentioned. (How am I doing at the "follow the money game", mouse?).

In any case, I suspect a large payment is due on the 15th...something like $30 Million. If the company were to raise money thru Vern's latest Fire Sale and spend it on ops, knowing that they have no chance of avoiding a default on the 15th, that would probably constitute a criminal act. But, if the company can raise the amount necessary to avoid the default, they can hand over all the nice depositors dollars to the lender on the 15th and still be in business; though fresh out of money AGAIN.

Does anyone believe the company came up with this Operator's Are Standing By Christmas Sale because they just realized they have a cash problem? (Umm, not you, Ken). Anyone believe they announced this before beating the investment and Board bushes for additional capital?

Someone do the math on the ROI they're offering Depositors for that $600K payment. That's less than the ROI the Board Members and Wall Street community have recently said "No thank you" to.

This is Vern's time to really prove there's a sucker born every minute. Personally, I have more faith in my fellow man; but, based on this Blog, I never cease to be amazed at the Faith of The Faithful.

Gurgle, Gurgle.
Gunner

gadfly said...

Hey, you forgot the little bit at the bottom about “Shipping and Handling”. ‘How do you think these folks make a profit?

gadfly

(Oh, that's right: Without a tail, it will come by "ground".)

Dave said...

That does NOT make Eclipse a publicly traded company, with the attendant reporting requirements.

Don't put words into my mouth. I didn't say Eclipse was a publicly traded company.

Eclipse is not an unusual case here. It is naive to think that because they got "public" money, their financials should be made public.

Of course they should be made public if for no other reason than to evaluate the politicians who spent the taxpayer's money. Taxpayer money isn't just meant to go down a black hole. Irrespective of Eclipse, it's bad for taxpayers if politicians can just throw the taxpayer money around at private businesses and then have no accounting for it - it would be absolutely begging for graft. Generally the only time it's considered somewhat acceptable (but now even this scenario is coming under scrutiny) is for classified government contracts where public disclosure could harm national security. Currently two of the politicians involved want to go on to bigger things - one wants to be POTUS and the other wants to be in the US Senate. The voters should be able to full evaluate their performance and judgment.

gadfly said...

Dave

'Let's keep up the pressure, for the sake of New Mexico, and maybe even the sake of the nation, not to mention general aviation.

gadfly

(Eclipse wants to make waves in the aviation industry, . . . OK, let's help it along toward that goal.)

airtaximan said...

OH, I almost forgot -

NO MENTION OF HAMPSOM in Vern's plea???? WHY NOT? I thought this issue was fait accompli?

Certainly, Investor/depositor/unsecurred credttors would need to know the status of this litigation, and availability of reliable supply from a major assembly supplier to the planes they are depositing money against? WHAT?

Also, some time ago, I said "someone must have told Vern he could not ask for more depsit money" noticing his lack of fortitude regarding delivery predictions at NBAA. I maintain this observation as ACCURATE and very telling. The first few hundred "die-hards" as Vern calls them, have been milked and lied to for over a year now, regarding promised deliveries, and NOW, after a year of BS and missing predictions by 80%, no one would ever be able to claim with a straight face or legal impunity -"hey, it was an educated-believed- to-be-accurate estimate of production and delivery dates for their planes - all 300 or so of them suckers who put up hard money for planes, so we DEMANDED 60% progress payments in good faith."

NOW, with a few planes delivered in the first 9 months of 2007, and a total of perhaps 80 this year (man, I hope 105) - its a just bold faced BS story if they ever TRIED to hose more depsitors based on scheduled deliveries.

So, now it a "Act by midnight tonight" "Special offer" for an incomplete plane, where there are 300 folks in line in front of you, plus the Arabs, plus Dayjet, plus, Pogo, Plus Euro-ed...plus Ebay... and a stupid story about how this OPPORTUTINY to get hosed ofr more money becomes your gateway to a lower cost plane...OHG!

I guess how life will be so terrifc when you get your "locked in priced" promise-for-a-plane? Or should I say promise for a plane AGAIN?

Ken, you in? (you are already in, this for for the "Greater Fools" - GREATER FOOLS) Billboard(s) to follow. Ken is around 50 greater foold from getting something for HIS position/deposit and progress payment THAT's BEN SPET ON SOMEONE ELSE'S PLANE A LONG TIME AGO.

My guess is this immediate money is needed to pay Hampson.... just a hunch - remember, "the lawsuit is NOT about the fact that we cannot pay" Vern raBURN, last week 2OO7.

REALLY? why the call for cash the next week?

Sounds like deposit calls based on the sonn to be garbage ej22...

Sounds like the progress payments demanded just prior to the soon to be garbage Avio... and United training....

nothing but an SEC/DOJ investigation waiting to happen.

FlightCenter said...

"we are offering, an opportunity to fix the Standard Aircraft Price of your Eclipse 500 aircraft at $1,250,000 USD without any future price adjustments."

"To fix your Standard Aircraft Price, you must sign and deliver to Eclipse a standard Eclipse 500 Aircraft Purchase Agreement, an Escrow Agreement, and remit to Eclipse Aviation $625,000 USD"

I'd bet that the definition of "a standard Eclipse 500 Aircraft Purchase Agreement" is one that has not been modified by the buyer in any way whatsoever.

And like previous Eclipse Purchase Agreements, I'd bet it will contain clauses like this -

"Upon any termination of this Agreement by Buyer on account of an Event of Default by Seller, Buyer shall be entitled to receive from Seller a full refund of all Pre-delivery Payments paid by Buyer to Seller in respect of undelivered Aircraft that are the subject of such termination, less any amounts then due to Seller under this Agreement."

and this

"Upon any termination of this Agreement by Seller on account of an Event of Default by Buyer, Seller (i) is entitled to retain any Pre-delivery Payments received from Buyer as liquidated damages for Buyer’s default..."

and this

"...the Pre-delivery Payments shall be non-refundable, except if ...(iii) Seller unilaterally raises the Standard Aircraft Price (each, a “Refund Event”)."

Platinum depositors have heard this type of offer before when Vern asked for $155,000 to fix the price at $837,500. And then they were offered a refund when the price was raised to $950,000. And again offered a refund when the price was raised to $995,000.

On these occasions, Eclipse went hat in hand to its customers and said, I'm sorry, circumstances beyond our control have changed, we can no longer honor our commitment. If you want your money back, we'll gladly refund it.

Past performance is no guarantee of future performance, but there is a pattern that ought to be considered before sending that $625,000 check to ABQ.

It will also be interesting to see if the new Purchase Agreement restricts the depositor's ability to resell the aircraft or the delivery position.

Gunner said...

ATM-
It's a Hail Mary pass.
Nobody's gonna send in their money. We're past The Faithful putting Happy Faces on this situation. (Mae West looked less made up prior to her death).

My prediction:
The Faithful presence here will rapidly dry up. They'll go fetal as they attempt to comprehend the situation. Then they'll gather with each other...the only crowd where they can declare righteous indignation and gain some "solace" regarding the "fact" that there was simply no way to see this coming.

When they're done, they declare that they never liked Vern; never trusted him. Then they'll be the ones at the front of the lynching party.

Mike Press will quietly move on; just a bump in the road for his business, I suspect.
Gunner

FlightCenter said...

I suspect that this offer does not apply to Ken's serial # 151 because it is scheduled for delivery within the next six months. That means he's already paid the 60% progress payment and according to Vern's letter, wouldn't be eligible for the opportunity to get the discount.

If Shari's position is not scheduled for delivery within the next 6 months, then she'll be able to get the discount.

I'm sure there are a number of folks who have recently made their 60% progress payments who are on the phone to ABQ right now.

Ringtail said...

Gunner, I think you made a good move on purchasing an Epic. From what I can tell, they seem pretty solid. My gut tells me you should unload the D-Jet(s)

FlightCenter said...

In the interests of being 100% accurate, just because Eclipse has secured a CofA on serial #85 does not mean that Eclipse has secured CofAs for 85 aircraft.

The lastest FAA records (yesterday) show that 68 CofAs had been issued with the highest serial # being #74.

Serial # 59, 62, 64, 72 and 73 have not secured CofAs according the FAA database.

Eclipse informed the FAA on 10/18/07 that they had started production on a batch of 10 aircraft. Serial #85 was the highest serial # in that batch of aircraft.

Ken Meyer said...

gunner wrote,

"It's a Hail Mary pass.
Nobody's gonna send in their money."


Wrong again, oh wise one.

I've just learned that several people ALREADY have signed onto the deal.

It is actually a good arrangement for many of the customers. I am, myself, contemplating it.

Ken

Lloyd said...

Gunner,

You should see the Pilatus Factory in Stans before you compare to the Epic.

flightguy said...

How big is the current discount for the 60% payment holders? Is it cut deeper than the $1.25 Mil? Is Eclipse possibly minimizing their losses due to lack of full production? At some point payment holders may be getting their planes for free (not quite, but getting closer day by day).

Gunner said...

Lloyd-
I didn't intimate that the Pilatus op was anything but First Class. If you got that impression I apologize.

What I said was that the PC-12 is overkill for my space requirements and that the LT allowed me to trade that space for speed (with minimal payload penalty); that price was a factor; and that I like the culture at Epic.

I consider Pilatus to be a premier aircraft company and I hardly turn my nose up when I see on on the ramp.

D-Jet? Where do you think many of The Faithful are gonna go when they recover from the emotional and financial shock? I'm betting (obviously) that D-Jet has a bright future.
Gunner

Dave said...

Paging Vern. It's a mister Ponzi on the line. He claims you stole his business method.