Thursday, January 10, 2008

Dear Eclipse Supplier,

Over the past few months, Eclipse has demonstrated measured improvements and sustained results in regards to achieving our delivery ramp, due in large part to the implementation of the Eclipse Production System. In 2007, Eclipse certified and delivered the first Avio-NG jet. A total of 104 E500s were certified of which 98 were delivered to customers since December 31, 2006. Currently, AC-142 has started the production process.

Unfortunately, recent developments have made it obvious that risk exists to the delivery plan issued September, 2007. While internally we have made significant progress, and a vast majority of our Suppliers have delivered as agreed, one key Supplier has not performed to our expectations in terms of production rate and product quality. This has directly affected the planned airworthiness certificates in December and through the first quarter of 2008. Eclipse has no choice but to adjust the 2008 production ramp and plan to align with this Supplier's expected performance.

We are extremely disappointed that we must take this action. Rest assured that we are attempting to work directly with this Supplier to assure delivery and improve their ability to deliver. We have offered them every possible resource at our disposal and are confident that the Integrated Team approach that we successfully deployed with our partners at Fuji Heavy Industry can be deployed with equal success here. That collaboration between Eclipse and Fuji teams yielded strong improvements that are a testament to the collective dedication of Eclipse and Fuji and to the effectiveness of Integrated Team approach.

In light of the foregoing, production ramp for 2008-2009 has been revised and loaded into MRP with updated Schedule Agreements to start being issued today. This revised ramp has 2008 certifications at 455 and 2009 at 810 certifications. In 2008 we are targeting achieving a 1.0/day delivery rate in April and growing to 2.0/day by December.

As always, please review the SA's, and communicate any issues within (5) days. If any issues or concerns develop, please contact your respective Buyer so we can mutually resolve any concerns.

We are grateful for the strong support and performance that our Suppliers have demonstrated in the past and are counting on your continued support to meet and exceed these adjusted projections.

Thank you for your continued support of the Eclipse 500 program.

Sincerely,

Bill Bonder
Vice President, Supply Chain

Dated: January 4, 2008

36 comments:

ColdWetMackarelofReality said...

As always, someone else's fault.

No mention of the failure to identify or rectify this problem anytime in the last year or two.

Hmmmm, quality problems with Fuji, seems a certain aquatic blogger predicted as much - how about that.

Wonder how they fixed that? Odds are they opened the ridiculous tolerances and made other quality offers.

On this subject, I have been hearing that vendors are slowing or stopping work due to this volume issue. They have invested in tooling, training, software, and personnel to meet the vaporware volume and are now not spending good money after bad.

Notice in the communication there is no new info about Eclipse even approaching the level of sales that would necessitate the production volume they are claiming for '08 and '09.

They will be out of firm sales sometime in 2009 if they hit their plan unless DayJet decides it wants another 1100 planes it can utilize for 35 revenue minutes per day, oh Monday through Friday, and to have 20% serve as spares.

Insert inane Faithful rebuttal here >>>

airtaximan said...

If anyone caught the Adam press release today, you'l be laughing your ass off right now. I am wondering, basically, who copied who?

airtaximan said...

well, I satnd corrected a bit... while Adam boasted about their equivalen to the eclipse prdiction system, they did not issue a release like this.

How are these things planned? There's a major release Monday, and this thingy pops out today?

Oh well... more replacement parts for the writers strike in Hollywood.

Man, this is really great stuff -

I wonder if they KNEW of this volume recast a few weeks ago, when they did the Midnight Special?

See my post a few nights ago, regarding how bad news always follows a request for more cash. ALWAYS.

And.. its always something they KNEW before asking for the cash...

Thieving Bastards, really.

OK, that's out. I wonder what the great new opportunity is for the 500?

- package service?
- China?

I can't wait.

PS. CWMR, you are a class act. Ken's obviously squirming again... somewhere.

airtaximan said...

PS.

we've always said one basic factual thing, here.

- THEY RUN OUT OF REAL ORDERS, REAL SOON IF THEY MEET THEIR BLOATED VOLUME PREDICTIONS.

By god, they would be finished all the ordered planes by now, had they lived up to the intial ramp.

What does THIS tell you...

bill e. goat said...

"This revised ramp has 2008 certifications at 455 and 2009 at 810 certifications".

These buffoons truly have no shame.

ColdWetMackarelofReality said...

One Eclipse Owner Says:

"Why does Eclipse continue to issue such useless, inane press releases? It is wonderful that they are pursuing good, established maintenance procedures. In the mean time my million dollar aircraft is grounded in Michigan under the constant coverage of a Great Lakes Airmet for icing.

Where is the press release for FIKI?

When do I get my functioning Avio NG?

Until then, I think management should realize that is inflamatory to make these silly announcements until they have something important to say. Concentrate on a safe aircraft that will do what you say it will do rather than how the mechanics will have nice pictures to go along with their work instructions.Right now, my aircraft is neither safe, nor functional."


You can taste this poor guys' frustration - forget what I say, let's see Ken answer this guy.

bob said...

I wonder how many "ramp" revisions it will take for them to come to the number 300. Yup, that's my guess for the year providing suppliers are paid and are not too gun shy about cash flow exposure. If EAC is smart they will not blow all 150-200 million dollars (that they get on Monday) on the con jet.

Gunner said...

If this wasn't so old and so very sad it would really ALMOST be funny:

"one key Supplier has not performed to our expectations in terms of production rate and product quality"

Where have we heard this before and could somebody PULEASE run out and ask that Bus Driver to STOP revving his engine? I can't hear myself think in here!

"Rest assured that we are attempting to work directly with this Supplier to assure delivery and improve their ability to deliver. We have offered them every possible resource at our disposal"

Translation: You Dinosaurs suck and we're getting damned tired of carrying y'all. It makes us look bad and we're trying really hard to sell 2012 production to pay for Feb '07 bills. NOW GET WITH THE PROGRAM, ya damned ninnies!
______________________

On that note, I think it's time for me to leave this Blog in a huff. I may be back; but I intend to carefully camouflage my identity. Hey, I know. I'll register under a new Blogger handle. Nobody will be the wiser!
[insert rolleyes icon here]

Gunner

Niner Zulu said...
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Niner Zulu said...
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baron95 said...

I think the silver lining, if there is one is this:

1 - It appears that Eclipse has managed to raise some money and will go on producing jets in 2008 - my guess is that they will produce aobut 300. Their challenge is to do it with quality and steadily reduce build time to a semi-profitable level.

2 - It looks like a good portion of the design/engineers can now be put on the ECJ, if you assume that FIKI is just a cert/test issue and Avio NG is just a SW issue. And I use "just" not to mean simple, but simply contained.

If the above is indeed true, then the sales force can concentrate on selling EA50s for $1.8M and ECJs for $1.2M (when that program launches).

Will give them a semblance of success, so long as they can keep on covering the financial shortfall with new financing.

FreedomsJamtarts said...

Who would be dumb enough to waste another 150 million bucks on this nonsense, when Eclipse have had basically no new sales in the past two years?

Please note that every single blogger here who bothered to make a prediction for the number of deliveries in 2007 (the ones Flight center recorded for us) was signifcantly more accurate than eclipse management. Regardless whether the most pessimistic critic (Niner Zulu) or the most enthusiastic of the faithful (Alexa) we were all better at this basic management task than the Eclipse management.

There are no america soldiers in Baghdad!

My prediction for 2008 is still insolvency. Before that happens, I would guess they'll get 39 more partial eclipses through the door.

Flight center, what is the story on foriegn deliveries? Do the Export CofA's also show up in the FAA DB? Have any countries done a type validations yet? Obviously the EU countries require the EASA TC, but other countries will perform a more or less detailed type validation.

flightguy said...

Long term finance and reason for meeting. That explains the emphasis for European aircraft to receive the upgrades.

http://www.flightglobal.com/articles/2008/01/11/220772/eclipse-obtains-financing-to-grow-eclipse-500-market.html

Turbine Power said...

Eclipse obtains financing to grow Eclipse 500 market
By John Croft

Eclipse Aviation has obtained long-term financing, likely from a source in Europe, and the first instalments had already arrived at the company the week of 31 December.

According to sources, the backing, in addition to Eclipse’s internal fund raising efforts, is of a magnitude that will allow the company to operate throughout 2008 and to reach profitability in terms of production – up to two aircraft per day from less than one presently -- and perhaps even launch a new model. Profitability could then place Eclipse in a favourable light for an initial public offering.

Eclipse has hinted that such financing was in the works and has planned a press conference at its headquarters in Albuquerque on 14 January to discuss an “important financing development, and discuss an exciting new opportunity to grow the Eclipse 500 market,” according to a press release issued 10 January.

There is some speculation that Eclipse will expand its operations into Europe to tap into high sales interest there once European certification is completed some time this year. About 120 of the company’s 2500 orders to date are from European buyers, principally from Luxembourg-based Etirc Aviation.

The good news for Eclipse comes as the company’s first post-production aircraft begins to receive promised upgrades -- Avio NG integrated avionics, external tip tank modifications, new wing deice boots and some minor upgrades – in the company’s Gainesville, Florida service centre...

Turbine Power said...

Compare that to these sage predictions from gunner:

"Something bad happens at Eclipse on the 15th of December, 15 days after Hampson's Nov 30 payment deadline." (1 December)

"Fear not:
The Train Has Left The Station; I suspect all passengers will catch a glimpse of the final destination on or about December 15." (2 December)

"The fifteenth is only days away.
Tick-Tock." (4 December)

And this one from mouse:

"What is the significance of Dec 15? Vern's last day. May not see the change but I'm most sure he plug will be pulled. I also suspect Eclipse will file for protection before the end of the year." (6 December)

Surprise, surprise. The haters got it all wrong again.

airtaximan said...
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ColdWetMackarelofReality said...

Hey look, our insomniac South AfriKen blogger is back.

How is the weather in Johannesburg Ken?

Hmmmm, had to go outside the American capital markets for more dough - I'd have figgered the PayDay Loan guys could've kept Eclipse afloat for a while and we could have kept that smart investment here.

Here is a newsflash - money alone will not solve this Charlie Foxtrot - if this investment partner is smart serious leadership changes will be made in ABQ, if that doesn't happen expect this new cash infusion to go down the same black hole the rest of it went.

Got that plane yet Ken?

Got your training yet Ken?

Flying in FIKI yet Ken?

Using an FMS yet Ken?

Have WAAS GPS yet Ken?

Thought so.

And don't forget this jewel from an Eclipse Owner:

So this means there will be significant numbers of Eclipse 500 Jet aircraft flying handicapped, with no FIKI capability well into, if not throughout, NEXT winter, 2008/2009. And that’s “his goal,” when have they EVER met a single goal or promise. Customers who have paid in full, who previously were given a November 2007 date for FIKI, in writing, in a contract. I think it is safe to say this is an unprecedented failure in modern aviation times, even with other recent startup manufacturers such as Cirrus, Columbia, Diamond and Galaxy.

This company continues to underwhelm in terms of customer experience. Long term, poor customer service, low satisfaction, and high executive and employee turnover does not bode well for Eclipse becoming a successful, lasting corporation.

Would an alternative be to spool up qualified outside contract companies to ramp up the work more quickly? Or bring more lines up at the three very large service centers?

Oops, we have paid in full, we have just a promise for eventual upgrades with no dates in writing, and outside assistance means more money out from Eclipse- we have no leverage and we are screwed. Oh well we are just the customers.

Post NG position holders beware, your time will come, you will face this treatment as well, just on another issue.

I’m sure prospective customers will be interested as they see how Eclipse treats existing customers when they decide where to bring their money. I can see the headlines now, Eclipse Jets to fly through two winters with no FIKI, Eclipse misses it’s contractually promised FIKI upgrade delivery dates by over 12 months, 100 customers who paid >$1 million for planes delivered two years late wait one full additional year for what they were promised, etc. etc. etc."


Couldn't have said it better myself.

Gunner said...

Ken-
Yep, I was dead wrong about the 15th. That's the basic difference between you and I...I find it much easier to simply admit when I'm wrong than to start pointing at others.

But, while we're on the subject, seems to me I offered you a pretty attractive wager that Eclipse wouldn't raise the $30 million from its captives. You passed on the bet.

Hindsight is 20:20, Brother. Looks like we were BOTH wrong, huh? ;-)
Gunner

Black Tulip said...

I'll bet the European money is coming from Transylvania. That region has a reputation for keeping things alive that refuse to die.

airtaximan said...

Hey, TP or Ken...

Put yourself in check regarding "group think" and convincing yourself the critics are "haters". We've been much more correct regarding the whacky events at eclipse... and it’s not based on hate.

Generally, we've always said Vern is the master at getting more money, and IF he continues to pull $100M rabbits out of his customers and finance-world friends' hats, this charade could continue for a long time.

All you are saying is they got more money and therefore more time.

They just reduced the expectations for 2008, making rate production and therefore LOWER COST, a huge problem, again.

The business plan is gone.

IF they continue to obtain money the time clock can keep going...but this does not change the reality. You already knew that, though - hence your continuous spin to keep the money flowing.

The hate thing is getting old - and it shouldn't really make you feel any better, now should it?

bill e. goat said...

Bob,
"If EAC is smart they will not blow all 150-200 million dollars (that they get on Monday) on the con jet".

MAN. ANOTHER 200-ish $M ??? I guess the hole to China is going pretty well. Should cut delivery costs from Fuji, I suppose.

Wish I was in the shovel business...

Gunner,
"What is the significance of Dec 15? Vern's last day. May not see the change but I'm most sure he plug will be pulled".

(I think Gunner's schedules might not be exact, but will be a lot more accurate than Eclipse's).

"I also suspect Eclipse will file for protection before the end of the year."

I've come to the conclusion, the ONLY thing that has kept them from this already is, a determined effort NOT to make a profit, but rather to BUY IN to the game, regardless of the losses. How much longer this thinking and perseverance will continue, is anybody's guess.

A "normal" business would have been belly up long ago. I guess that's the truly "disruptive" thing about Eclipse. I fear it will "disrupt" profits (ruin profits, actually, by promoting unrealistic pricing) at the other companies, that are running a sustainable business plan, and hurt the industry overall. I am sorry it will probably prove "disruptive" to those whose livelihoods depend upon well run businesses across the country.

FlightCenter said...

I find it fascinating to note that Bill Bonder's supplier communication and Vern's customer letter no longer make predictions regarding their production rate in terms of aircraft deliveries, they now only talk about plans for aircraft certifications.

The FAA registry database shows that there is typically a month between the time Eclipse receives a CofA and the time the aircraft title is transfered to a new owner.

So there seems to be a lot of work required between the time the aircraft is certified and the time the aircraft is actually ready to be delivered to a customer. Achieving CofA would not be the definition of "done" I'd be using to track an aircraft's completion if I was CEO.

For most businesses, the measure of success is not how many products you can produce, but how many products you can successfully deliver to your customers (and receive payment in full).

It makes me wonder whether Eclipse has concerns regarding their ability to deliver all the aircraft that they are able to certify in 2008.

flyger said...

END OF YEAR REVIEW FROM VERN RABURN
...
Admittedly, our supplier and production issues diminished our production projections and pushed back delivery times of your Eclipse 500.


As I recall, didn't a supplier sue Eclipse for being too slow and not paying? The blame game continues. Is their anybody left who wants to be an Eclipse vendor?

This year marks Eclipse Aviation’s tenth year of operation.

That says it all. 10 years, and still you have to wait for what you paid for.

In 2008 we will continue to set bolder and higher goals for Eclipse.

Setting goals has never been a problem with Eclipse. Meeting them, well...

You will see the progression toward our vision through some of the exciting news we will release in the next few months.

Yes, progress through future press releases. We are familiar with this MO.

The letter is actually pretty sad when you read between the lines. Pretty much all fluff and promises but no content. It seems 2008 goals are going to be recycled 2007 goals they didn't meet. They aren't even forecasting building as many airplanes as they forecast in 2007, so the forecast has negative growth.

Shadow said...

Methinks Turbine Power is either Ken or Zoom.

Niner Zulu said...
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Niner Zulu said...
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FlightCenter said...

The reason this blog exists is because Eclipse has historically set high expectations for themselves, but continues to miss the expectations they've set for themselves by wide margins.

There have been a number of discussions regarding the expectations Eclipse set for itself in terms of delivering FIKI.

Here is a recap of their FIKI commitments.

In May of 2000, when Eclipse accepted deposits for the first 160 aircraft, FIKI was expected to be included upon initial TC of the aircraft, which at that time was scheduled for Q2 2004.

In February 2003, Eclipse sent a letter resetting expectations after the Williams engine change. The aircraft specifications as detailed in that letter included: 375 kts, 1,280nm range, 2,250 lb. useful load, 26 cubic ft baggage space, full IFR, FMS, Dual GPS, IFR enroute and approach certified, FIKI, 3 axis autopilot and autothrottle. Certification now expected Q2 2006.

In June of 2006, customers received another letter. At that time, Vern promised that Type Certification was only a few weeks away and FIKI was promised by the end of 2006. At that time, expectations were set that the only change required for FIKI would be a delta to the AFM.


That letter included an Eclipse 500 Equipment Availability addendum that set expectations that aircraft delivered after Nov 2006 would be certified with full IFR, FMS, Dual GPS, IFR enroute and approach certified, FIKI, 3 axis autopilot, color radar, and Part 135 Package. Expectations were set that autothrottle, Int’l package, Stormscope, Skywatch, TAWS Class B and radar altimeter would all be retrofittable and available starting March of 2007.

In June of 2007, Eclipse modified the FIKI certification expectations to Dec 2007.
In Sep of 2007, Eclipse modified the FIKI certification expectations to early 2008 and informed customers that FIKI would require aircraft level retrofits for aircraft in the field.

The current commitment from Eclipse is that FIKI will be certified in a few months and that retrofits will be completed within the next twelve months.

FIKI Commit -- Delay
Q2 2004 -- 4 Years for cert + 1 year for retrofit
Q2 2006 -- 2 Years for cert + 1 year for retrofit
Dec 2006 -- 1 ¼ Years for cert + 1 year for retrofit
Dec 2007 -- ¼ Year for cert + 1 year for retrofit
Early 2008 -- TBD

FlightCenter said...

9Z,

Zoom should be nominated for head cheerleader.

That position was recently vacated by Ed Iacobucci (who is still on the squad, but not quite so enthusiastic).

Vern & head cheerleader - Ed

Disturbingly, Vern and Ed's wife are wearing the same outfit in this picture....

ColdWetMackarelofReality said...

Thanks to FC for his continued yeoman's work in tracking the trail of broken promises left in the wake of disruptive technology.

Makes the following from an Eclipse Owner or Owner-in-Waiting all the more poignant:

Why does Eclipse continue to issue such useless, inane press releases? It is wonderful that they are pursuing good, established maintenance procedures. In the mean time my million dollar aircraft is grounded in Michigan under the constant coverage of a Great Lakes Airmet for icing.

Where is the press release for FIKI?

When do I get my functioning Avio NG?


Until then, I think management should realize that is inflamatory to make these silly announcements until they have something important to say. Concentrate on a safe aircraft that will do what you say it will do rather than how the mechanics will have nice pictures to go along with their work instructions. Right now, my aircraft is neither safe, nor functional."

Gunner said...

Second the thanks to FC for the factual Tale of the Trail.
Gunner

bob said...

The incoming cash that EAC is announcing on Monday is not investor money and is not from a company looking to buy them. Any guesses on this one?

Copernicus said...

My information is that the new financial support is coming from an aviation-related company in Europe, perhaps one that has or will have a commercial relationship with Eclipse. The funds will be in the form of a shareholding pari passu with current shareholders.

Remember last June when there were venture funds at hand but Eclipse rejected them because of onerous terms? The implication was at that time that the funds being offered would result in dilution or management/board giveup to an unacceptable degree. The existing shareholders put up more money instead of taking a dilution hit. Evidently, the terms now are kinder to existing owners and management.

The new investor must be seeing the 100 airplanes in 2007 plus the certification of Avio NG as a sign that Eclipse can actually "make it". So these items of accomplishment, while less than promised to customers, are evidently enough to raise the value of Eclipse among potential investors.

Predictions on this Blog of Vern removal, pink slips, layoffs, etc. in December, 2007 proved incorrect. Eclipse now gets another shot at achieving breakeven with enough money to last quite a while. With 200 airplanes delivered in 2008, they might well run out again so the predictions can be dusted off with 08 substituted for 07. If they manage to actually get to 450, they might just hit breakeven. If it's in between, then we will be back here in a year or 18 months with a company that is almost making it, but just needs a bit more time and a bit more money.

Plumer said...

Guys I enjoy your discussion. Here is one topic I want to bring to your experience: Flying Overloaded. As we all know (I am flying 07 Meridian overloaded all the time) to get the mission I need. What about flying an overloaded jet like Eclipse? Can you still get the low altitude performance you get with TP? And get the same distances? Stall speeds overloaded etc.?

On the other had, I am really disappointed with ALL of the available VL jets. (or future available) With a range of 1000nm, In the place I am flying that is not really a solution I cannot get from Vilnius to Milan without an fuel stop. My fiends are operating Beach Premier1, can never go to London w/o fuel stop. Now try to explain that to a customer, “we kind of need to make a stop, from FL 410 in Germany some place, to buy expensive fuel 2Euro, a Liter, to continue, cause there is 70kts north head wind.. Before departure you get a slot, on some small airfield. That sucks. It takes 2hrs to get back to FL 410 if all goes smoothly. Now this rich guy is pist of , and asking questions. We learn to smile, I guess in US the distances are much bigger.

Shadow said...

Plumer, the aircraft must meet the mission. Period, end of story. So if the Premier I doesn't fit the mission, then for sure neither will the Eclipse.

BTW, unlike Europe the U.S. doesn't have the oppressive slot restriction problem, at least not yet. The Bush Administration still has another year to finish tearing apart the national airspace system, so there's still time.

Black Tulip said...

Plumer,

You may be operating your turboprop overweight but I would be very conscious of obeying maximum gross weight in flying a turbofan. You will find that second-stage climb performance and ceiling suffer dramatically with increased weight, especially on a hot day.

Regarding a fuel stop in North Central Europe, I recommend Luxembourg (ELLX) for good Jet-A pricing and a reasonable turnaround time. My wife and I stopped there this summer (in a turboprop). From memory, the price of fuel was less than half the price in Germany.

Beedriver said...

I would be very careful about overloading the Meridan. the manuvering speed is 127 knots and it appears that a very high number of the Malibu family of airplane accidents involve inflight breakups. I lost a good friend's father when he hit turblence 20 miles from a thunderstorm. The TBM 700 and the PC 12 are designed to be much stronger and have not had a history of inflight breakups.