Eclipse Aviation Critic NG

A new era looms

2009-06-30T06:32:00.000-07:00

Folks, my time as custodian of the Eclipse Critic blog has come to an end. I thought it would be fun to provide you all with a photograph of myself in a genuine Irish pub, complete with pint of Guinness. It's the tall, dark and handsome one on the left. The more astute will have noticed the E500 model, a gift from Black Tulip, who in turn won it by correctly estimating the 'output' of Eclipse Aviation in 2007.

This is, I'm happy to say, the closest I'm ever likely to come to an Eclipse EA500....

Now it's my pleasure to introduce you to the new blog, which will offer a wider scope than this one ever could. I hope it will pick up on all that is good in GA, while keeping a wary eye out for anything 'fishy'. Phil Bell, with a background in aviation, has been working up to this since I put out my original announcement a few months ago. I wish him every success, and will contribute when the spirit moves me. Here's the new address:-

Aviation Critic & Enthusiast

Enjoy it as much as I have this one, and you won't go far wrong.

From me, it's a heartfelt 'So long, and thanks for all the fish'.

Shane

REFLECTIONS ON THE ECLIPSE SAGA

2009-06-22T00:08:00.000-07:00

July 2019

Ten years have passed since Shane Price relinquished the controls at Eclipse Aviation Critic NG. Much has happened in the last decade but some things never change – Eclipse is again for sale. The type certificate and intellectual property are up for auction next month. This time the assets are being bundled with those of Aerostar, Ercoupe and Lake Aircraft.

Colonel Mike Press leads a buyer’s syndicate and is enthusiastic about prospects for the new aircraft. “By combining the best qualities of these classic designs we expect to produce an airplane that will perform like no other. You can own a 350-knot twin-turbofan mid-wing amphibian with French doors and no rudder pedals.”

“We respect and appreciate the patience shown by Eclipse depositors,” continued Press. “We are allowing full credit for deposits made on the Eclipse 500.” The Colonel acknowledged that many of the original depositors have passed away, or no longer held airman’s medical certificates. But he pointed out that deposit certificates are family heirlooms, and have been passed down with reverence to grandchildren in some cases.

Press expects his group to prevail at the auction and requires only a modest advance from each participant. “Two hundred thousand Euros from each depositor and/or aircraft owner should guarantee a place at the table,” he said. “For owners, we offer a chance to finally standardize the fleet. In the years since the Eclipse was produced, many aircraft have been upgraded … but it is a mish-mash of field approvals and hardly any two aircraft are alike.”

“We located an old-timer in New Mexico who claims to have the complete code for Avio NG and promises we can get it up and running again,” Press added, catching his breath. “He says we can get rid of the ‘flight engineer’s panel’ with all the switches and circuit breakers and go back to electronic controls. This will be one more step in fulfilling the ultimate destiny of Eclipse Avio NG.”

A DECADE OF CHANGE
Looking back from 2019 over the last ten years… where do we start? President Barack Obama is mid-way through his third term of office and is campaigning for the 2020 election. Franklin Roosevelt is the only other President to have served four terms. Few would have anticipated the manner in which the U. S. Constitution has been amended.

Many of the changes in business and aviation occurred after the adoption of the Euro as the official currency of the United States. President Obama moved this easily through the Democratic-controlled legislature during his first term in order to “enhance our status as a citizen-in-good-standing in the global marketplace, and earn perpetual prestige with other peoples populating our plentiful planet.”

During the President’s second term, U.S. airlines were re-regulated and the nation’s aircraft industry was nationalized. “President Chavez of Venezuela has shown us the way and we will follow,” President Obama read from the Teleprompter.

Airbus and Boeing merged in 2014 to form AirBoeing. In spite of massive subsidies from both continents, the giant AirBoeing 797 continues to lag behind schedule. The aircraft has promised to be the ‘greenest’ airliner in history – made almost entirely of recycled composite materials. All manufacturing is outsourced, mostly to small countries in Asia with names ending in ‘…stan’. Initially the pilot slated for first flight expressed concern over the all-composite landing gear, fly-by-fiberoptic controls, single pilot operation and the carbon capture system. AirBoeing has reassured its customers and the pilot is no longer available for comment.

GENERAL AVIATION
No corner of aviation has been untouched in the last decade. Congressman Barney Frank (D-MA) sponsored the Air Equity Act of 2012 saying, “As demonstrated during the last century, it was unfair that some people could own homes but others could not. Not everyone can own an airplane but at least we can make the experience more equitable. Flying an aircraft that is pressurized and that can fly in icing conditions is a luxury that has been abused by the idle rich. The Air Equity Act levels the playing field once and for all, and will employ thousands in good jobs.”

However government-mandated aircraft designs have met with mixed reviews. The PelosiPussMoth can be rented at most airports but an older pilot offered, “It flies like a Luscombe without the power margin or handling ease.” But thanks to the PelosiPussMoth’s novel propulsion system there is an electrical outlet installed at virtually every tiedown at all U.S. airports. This multi-billion dollar, shovel-ready project was part of the Stimulus Two Package.

Several imported aircraft are available in the United States. The RiceRider III from China is available in tandem and side-by-side configurations.   The RedDotRocket from India has just been introduced.

The single and twin-jet designs of the late twentieth century seem a distant memory. The field is littered with companies that tried, failed or partially succeeded: Morane-Saulnier, Bede, Gulfstream, Leopard, Fox, Century, Adam, Aviation Technology, Diamond, Epic, Cirrus, Piper, and of course Eclipse. Larger jets continue to be produced by Embraer, Cessna, Hawker, Gulfstream and Bombardier but those are only used for the carriage of elected officials and government employees. Nancy Pelosi and Barney Frank have agreed to share their Gulfstream 550 in acknowledgement of the continued economic decline.

General aviation pilots are hopeful that Pratt & Whitney and Williams may re-start production of small turbofan engines when the old inventory runs out. Their optimism has an interesting background. President Obama’s Climate Equity Act was passed during his first term of office – with far-reaching consequences. This edict made it illegal for government funds to be used in “any university or industry research intended to prove non-anthropogenic climate change”. If caught, violators are sent to Denier’s Prison, in the Gore Wing of the Guantanamo complex.

Although officially suppressed, word has leaked of research at a university in Iceland suggesting some climate change may not be manmade after all. This has raised the tantalizing possibility that petroleum fuels may again be utilized in general aviation. NAOPA (Nationalized Aircraft Owners & Pilots Association) has refused comment.

The U.S. pilot population continues to decline, a trend underway for fifty years. Government officials acknowledge that regulations may play a role… for instance a two-hour TSA security briefing, inspection and de-briefing are required now for every flight – even a Saturday hundred-dollar hamburger run. The Obama administration hopes to encourage an increase the number of active airman’s certificates by reducing ATC user fees. The day VFR rate of €0.10 per nautical mile travelled would be dropped on weekends but the IFR rates would remain the same.

The airlines are so desperate to fill crew seats that they have coordinated a new industry/government program. Qualified inmates of federal penitentiaries are allowed early release if they agree to fly for the airlines. Starting copilot pay is €10,000 per year along with paid-up union dues and free housing at a local half-way house.

THE LAST TWO VORs
The GPS system was completed several years ago with redundant constellations of satellites. This brought an end for the VOR navigation system in the United States. Over a half-century old, the network is being closed as an economic measure. Hardly any pilot tuned VORs on airways anymore.

This brought about a crisis for Eclipse operations as the avionics are only approved for flight from VOR to VOR. The owners pooled resources, petitioned the government and have taken over the last two VOR stations in the country – Laredo (LRD) and Mc Allen (MFE) both in Texas. Located a hundred miles apart these transmitters are a living aviation museum for future generations. They are also rallying points for the last few Eclipses flying. On clear days they can be seen shuttling back and forth, just below RVSM airspace.

These stations were chosen because of their semi-arid climate. Forecast icing is seldom an issue. Eclipse pilots are noted for their weather forecasting ability and aeronautical decision making. There has never been a pilot report of in-flight ice buildup submitted by an Eclipse operator.

THE TRIAL
Vern Raburn suffered for the sins of Eclipse. The United States is now under the jurisdiction of the World Court. This has allowed our country to be judged by ‘a more consistent standard, in tune with a global society and a one-world standard’. Raburn was brought before a Spanish magistrate and accused of ‘crimes against aviation’. After the tribunal Raburn was imprisoned briefly and forced to listen repeatedly to a recording of the 2008 Congressional hearing on Eclipse.

PEANUT POWER
Ken and Shari Meyer remain High Priest and Priestess of Everything Eclipse. Their hangar is essentially an Eclipse museum and includes the Eclipse 400 Concept Jet. Ken is still sending Mexican vacation pictures and Eclipse panel shots to anyone that cares and some that don’t.

Many have marveled that the Meyers are able to keep their airplane running. When questioned about his three trailer loads of red-tagged Eclipse parts, Ken bristles, “That’s just plain wrong. All the components in our plane have been overhauled and green-tagged. I don’t deal with ‘paint-it-black, ship-it-back’ overhaul shops.”

“And I want you to know,” Ken added, “we still have the best fuel specifics around. We’re burning bio-fuel (peanut oil) in our Eclipse. It works out to about 2,000 raw peanuts per nautical mile, and has brought new meaning to the phrase, ‘I love the smell of jet fuel in the morning.”

ALBUQUERQUE
The State of New Mexico ‘invested’ €14,000,000 in Eclipse Aviation and for its trouble ended up with three large empty hangars on the airport. After much debate the buildings were used for: a vast and plush casino for the Sandia Pueblo, the Bill Richardson Memorial Library, and the largest adult book and mature video store in the Southwest. The latter is owned and operated by Martin Chavez, former mayor of the city.

WHERE ARE THEY NOW?
What became of Our Founder, Stan Blankenship? He relinquished U.S. citizenship years ago, moved to the South Pacific, and tends to a beautiful archipelago of islands. He has worked tirelessly to undo bad habits taught by early missionaries to the natives – habits such as reading the Bible and wearing clothes. He and his wife promise to be scuba diving at age one hundred.

And what of Shane Price? His exact whereabouts are unknown. Five years ago the English reasserted Protestant rule in Ireland resulting in the marginalization of the Catholic majority (again). Shane was not a man to take sides in a religious debate, but is an Irish patriot unable to tolerate English domination. With broad support he formed a guerilla band and is thought to be in the Maumturks Hills, Connemara in the west of Ireland. A natural leader, Shane is viewed as the Michael Collins of this century - hopefully with a happier ending.

Rich Lucibella, who so valiantly defended the Eclipse assault on the blog, is back in the forefront. He is thought to be providing the Irish rebels with technical advice and his office at SWAT Magazine is the seat of the government-in-exile.

It was investigative journalism by Karen Di Piazza that provided the first media look at the troubles of Eclipse Aviation. This was not easy for Karen, as aviation magazine editorial content was directly tied to advertising revenue. ‘Objective flying magazine’ is on the list of oxymorons along with colossal olives, jumbo shrimp and civil war. But Karen persisted, and now runs her fashion media empire in New York. She can be seen striding purposefully across Central Park in her trademark tiger stripe pants.

WEDGE AND ZOOM
After a long courtship Vern Raburn and Jim Campbell were married. The ceremony was held in the Green Mountains of Vermont, one of the first states to permit gay marriage. Vern offered an olive branch of reconciliation to the ‘Honor Roll’ by inviting them to the wedding. Few of the twenty-nine bloggers named in the 2008 lawsuit were able to attend. But a report came back that the newlyweds have acquired a bed-and-breakfast in a quaint Vermont village and produce the best blueberry pancakes in the state. “Our disruptive recipe represents a paradigm shift in early morning nutrition for the fair state of Vermont,” said Raburn. “The other bed-and-breakfasts just don’t get it. What would you expect of dinosaurs?”

Vern is still smarting over the handle assigned by the blog – ‘Wedge’, the simplest of tools. After all these years he is hoping to upgrade a step or two, to say… ‘Lever’ or ‘Pulley’. ‘Screw’ is available but he is not interested.

A used Collier Trophy recently showed up for sale on eBay. The nameplate has been removed and it carries a high auction reserve. It hasn’t sold yet.

CALL A TAXI
Ed Iacobucci fulfilled his dream, if not his original vision. Ed founded DayJet and planned to dominate the ‘Per-Seat, On-Demand’ air taxi business.   The company lasted less than a year. Iacobucci blamed its demise on the credit crisis, not strategy. Financial reverses and the longest running economic slump in U.S. history have not treated Edwell. However he sees the bright side of Obama’s policies, “The lousy economy has stopped the influx of immigrants - I’ve found it easier to find work. I’m driving a taxi now in Sanford, Florida… I guess you could say I’m in the per-seat, on-demand business. My proudest legacy is introducing the term ‘ant farmer’ to the lexicon.”

THE ODD COUPLE
Peg Bilson, formerly at Eclipse, and Nicholas Sabatini, retired from the FAA, have teamed up. Both gained minor notoriety with their testimony before Congress in 2008, as credibility was in short supply.   Their skill sets are brought together in a new venture called MediJet. Bilson explains, “This is a harmonic convergence between two great needs. The former Eclipse 500 production line should be restarted and our nationalized healthcare system would benefit. ObamaCare has been criticized for consuming thirty percent of GDP. Why shouldn’t some of this be spent on aviation?”

She lays out the plan, “There is nothing wrong with socialized medicine that can’t be remedied with a good air ambulance system. With thousands of airports and thousands of MediJets (formerly known as Eclipse 500s), affordable healthcare can be in easy reach. The current version of ObamaCare Two has an earmark for production of two thousand MediJets. The mayor of Albuquerque and governor of New Mexico have provided a hundred million dollars in industrial revenue bonds.”

Peg sighed, “We’ve got one couple that shows up at McDonalds occasionally, ranting and raving that this is not going to work.   Their next Big Mac Meals will include ObamaCare Gold Certificates. That should take care of the gadflies.”

Asked for comment, Nicholas Sabatini said, “I am responsible for certification and I know the boys in Fort Worth won’t let me down. I still know how to work the system.”

MYSTERY
Of Roel Pieper, little is known. Al Mann, investor and director in Eclipse Aviation, won a ten-million dollar judgment (plus interest) against Pieper in New York court. It was viewed as uncollectable, even with The New World Global Order. We have learned that Mann travelled secretly to the Netherlands two years ago. One year ago, Roel Pieper was called before a Dutch magistrate. His testimony has only been roughly translated into English, but seems to involve the phrase, “Your Honour, I was repeatedly assured by the subject of this case, Else, that she had attained the age of majority, specifically the age of eighteen years.”

Some have questioned how Roel Pieper could have met such an inglorious end to his career. After his disappearance one observer noted, “Well, he put over a hundred million bucks into Eclipse didn’t he?”

TOYLAND
The Fisher-Price Toy Company was founded in 1930. Beginning with sixteen wooden toys, the company shaped children’s toy boxes for generations by producing timeless designs. In 1993 Fisher-Price was acquired by Mattel. Sadly the company became collateral damage after the failure of Eclipse Aviation. The Eclipse 500 was coined ‘Fisher-Price Jet’ by the blog and the stigma was just too much. Mattel quietly pulled the brand last year.

LINGERING LEGACY
In this ‘kinder-gentler world’ Vern Raburn might be viewed with sympathy. The business school case studies have come and gone. The ‘glass-half-full’ acolytes admire the spirit of entrepreneurship evident in the rise of Eclipse Aviation… the big tents at Oshkosh… taunting the dinosaurs with WCSYS buttons… raising a billion bucks to build a new airplane.

Others have listened to the CVR tape, read the FDR data and believe Vern Raburn personally commanded the biggest smoking crater in general aviation history. Many innocents were led to destruction.   The taking of deposits, given the conditions of the first flight, was widely viewed as unethical. Burning through hundreds of millions of non-escrowed deposits to fund operations, not build airplanes, left a bad taste. Many buyers, who expected an airplane, became unwitting investors in the company.

Even in the heady times of the late 1990s, the Eclipse business plan didn’t make sense. The company was supposed to become the dominant global supplier of jet aircraft selling them at a price that would not cover direct costs. Then there were the bad bets and poor technical risks taken by Eclipse. Engines, avionics… a man only gets so many chances.

Later Vern unveiled the Eclipse 400 Concept Jet… a desperate and cruel stunt. Eclipse bragged about 60% parts commonality between the 400 single jet and 500 twin jet. Future aircraft startups should be able to avoid at least 60% of the reasons for the Eclipse demise. Some have speculated that the enormity of the failure will hamper aviation ventures for years to come. So much capital was wasted with little to show for it.

Evolution by natural selection has long been a factor in aircraft, like any business. Nothing is more normal than for a company to produce some planes and then go out of business or be acquired. Many of these companies are remembered with fondness and their products are viewed as collectible classics. Take the Weaver Aircraft Company of Troy, Ohio – better known as WACO. Hundreds are still flying, seventy to eighty years after they were built. They have such value that even basket cases are rebuilt. How will the Eclipse fleet fare in comparison?

The controversial approach taken by Eclipse Aviation resulted in the formation of this blog. Stan’s original four-part post of April 11, 2006 remains a timeless classic. He brought smart people with broad experience together to exchange ideas. Shane picked up the baton and took it to the next level. Let’s hope this interchange continues - here or elsewhere with a broader aviation mandate. The Eclipse story has about played out but there will be others.

Probably no blogger here wanted the Eclipse story to end this way. Many of us love aviation and actively participate. The fact that an aircraft company name followed by the word ‘Critic’ emerged as an Internet Web Log, and gained influence is a story all its own…

Black Tulip

Words, as usual, fail me. Black Tulip has done himself, and all of us, proud. Thank you, kind sir, for your time, effort and unfailing support for the past 17 months.

This is my penultimate headline post. My final one, due at the end of the month, will be unlike any of the proceeding 105 in that it will be short.

And just a little bit special.

One last time (for me, anyway) I'd remind everyone that the tulip mania peaked in the Netherlands during the 1630s. The black tulip was the most sought after, until found to be biologically impossible.

Shane

A few lessons learned

2009-06-12T08:33:00.000-07:00

As I move from custodian of this blog back to an interested observer of VLJ's, I thought I'd put together a short essay highlighting what I've learned. Where appropriate I'd included comments from others and of course provided links to other web sites. There were many 'themes' on the blog during the past 18 months, which I'll try to interweave with my own opinions. So, with that short introduction, here goes...

Many people, myself included, were attracted by the siren call of a very light jet. The concept seem to offer a beguiling combination of speed, low cost of ownership and ability to get into may fields a larger aircraft would have problems with. In the 'age of Google' it's very easy to research almost any subject with a few mouse clicks, so pretty quickly I found myself orbiting the Eclipse Aviation web site, and associated stories. One caught my attention. It was of course, the original critic site, run by Stan Blankenship. Read his first headline post, which made many correct observations/predictions.

In April, 2006....

From the middle of 2007, I started to participate, having been a reader for many months. Stan 'kept house' with regular headline posts and his own comments, and a range of fascinating individuals (and Ken Meyer) kept the pot stirring. For reasons already explained by Stan, he decided in early 2008 to pull up his own drawbridge. Yours truly stepped up with 'this' blog, and we had a very 'clubby' atmosphere, which still managed to keep a critical view of the peculiar behavior in ABQ. One of the very first comments, from Gadfly, summed up what the blog was about during early 2008:-

"Put on the kettle, and this will seem like home in no time."

We also covered the 'Russian' factory, various suppliers disputes and FAA rumblings about the Production Certificate. Almost all material that reached me during this period was from suppliers, staff, customers or officials who had genuine concerns and felt that our blog was the only place remotely interested in what they had to say. I also took the opportunity to say why I'd gotten involved, by finishing one headline post with a favorite motto:-

"Only make promises you can keep. And keep the promises you make"

And then IT happened. On Friday the 18th of April 2008, an email hit my BlackBerry which began:-

"Google has received a civil subpoena that demands information regarding the source of anonymous comments posted on your blog eclipsecriticng.blogspot.com"

Things got very 'interesting', very quickly. Vern Raburn saw fit to go after 29 bloggers, alleging they were employees who'd violated a Non Disclosure Agreement or NDA. We were very fortunate that a civic minded publisher, Rich Lucibella, decided to head Vern Raburn off at the pass. And proved successful.

So successful that Vern himself was ejected from his own company exactly 100 days after I got that infamous notice. He was even forced to make the announcement himself, on the opening day of Oshkosh in July 2008. In typical style he said he was taking up an 'advisory' role in the company only to break all ties a few weeks later. He did, however, manage to hold onto an E500, for a limited period. I wonder if he's still flying it....

During this period we also saw contributions from many more parts of the world. The blog became more 'international', which was clearly a new experience for some of our longer serving American readers. A steep rise in the cost of oil, continuing doubts about the reality of the '2,700' orders and a very clear 'failure to launch' at DayJet cast a cloud over the future of Eclipse.

The House Transportation and Infrastructure Committee held a hearing on the 17th of September, regarding the Federal Aviation Administration's issuance of its type certificate (TC) granted to Eclipse Aviation Corp. for its Eclipse 500 very light jet (VLJ). The result was a 'victory' for EAC, in that nothing came out of the woodwork to question the original grant. However, in the fashion of 'don't get mad, get even', I learned that a very strict view would be taken of any future Production Certificate reviews.

Things looked up, at least for a short while, when Ken Meyer broke his (self imposed) exile from the blog and returned with a bang. I 'gave' him a headline post which he used in describing his many flights, the capabilities of the E500 and generally promoting the aircraft. The nicest part was his own description of himself as The Cardinal, which was a reference to his leading position with The Faithful. This was the name given by 'us critics' to those who supported the E500 through thick and thin.

However, this is not a month I look back to with any joy. My father passed away, suddenly, leaving us all shocked and saddened. The day before I buried him, one of the very few truly bad people I interacted with on the blog, sent me the following:-

"See you in court, thief.

Jim Campbell, Editor-In-Chief/CEO

Rocket Racing League X-Racer Mk 1 Rocket Pilot"

Have you noticed, in life, how the really small minded people always have the longest job descriptions? Captain Zoom is a prime example. All through his mindless support of Vern Raburn he parroted whatever EAC released as 'fact', without bothering to engage even the tiniest part of his brain in the most basic question which faces everyone in business, all the time.

Will I get paid?

Thankfully, there is a 'higher justice', and Zoom later got hit for $80,000 when EAC went bankrupt. Is it too much to hope that someone, who is a prime example of what we Irish call a gobshite, will make the same mistake again?

This month was generally a 'bad' one for EAC. The premise behind the vast order book was air taxi, the most prominent of which was of course DayJet based in Florida. On the 19th of September, without any notice, they closed their doors. They blamed the inability to raise further finance and difficulties they had had with the Eclipse 500.

During this period I was also allowed access to the customer conference calls given by Mike McConnell, with input from Roel Pieper. Both came across as dismissive of the depositors in particular and made very light of in service problems with the aircraft. There were lots of promises to 'get back to people' but (surprise, surprise) nothing happened.

All in all, probably the 'busiest' month during my time here.

October 2008 was not a good month for EAC, publicity wise. Richard Aboulafia of the Teal Group published his much anticipated report on the VLJ market. Basically, he rubbished the Eclipse 500 and predicted that EAC would not produce any aircraft in 2009, as he thought they'd be bankrupt. How right he was....

November was interesting, for several reasons. First, there was a temporary delay in payment for the staff, quickly corrected. EASA certification was granted, with conditions. Then Vern Raburn made a speech, fully reported only on the blog, at the VLJ Forum in West Palm Beach, FL, on Tuesday 11th November. He made several remarks that bear reviewing, but his venom for 'us' was clear, as was the denial that he had made any mistakes. This thread didn't last very long, as 4 days after I put it up we got this:-

Eclipse Aviation Seeks Court Approval for Restructuring under 363 Sale
Procedures and Debtor in Possession Financing

The 25th of November 2008 was the (long predicted) first step to bankruptcy and clearly a 'pre cooked' event. In a effort to control every aspect, Roel had a) valued the assets and set the price, and b) arranged the DIP finance with Al Mann. We all know now that he a) didn't have the money to buy the company and b) the didn't have the DIP either. He 'borrowed' it off Al, who's now suing him personally to recover it.

Oh, and another thing. This was the month that America elected it's first president called Obama. Michelle will clearly be the second....

December 2008 was a time of 'Notices', a number of which first appeared here. Various groups formed, some to purchase the company, others to pursue lost deposits, still others to represent owners. The inbox became a job on it's own, almost to the point that I needed assistance. Thankfully it never came to that, but it was a very busy month 'behind the scenes'. What rapidly became clear was the 'false' feeling around Roel's bid. I became convinced that he either didn't care or had alternative motives. I still think there was a background to his activities which would not bear close scrutiny. Remember the background at this time was of increasing disorder in the financial markets, with banks being rescued and the capital markets in free fall.

2009 opened, as always, with January. Initially there was optimism for the staff at EAC, since Roel was on a clear run to purchase the assets and move forward. But I began to get informal hints that all was not as it seemed, especially from people 'close' to the process.

During February I posted an in depth headline written with help from several Eclipse 500 owners. It's worthwhile going over it, if you're ever tempted to buy one! However, this was also the month when the wheels and the wagon finally parted company. On the 18th almost all the remaining staff were furloughed and on the 25th the 'Senior Note Holders' filed a Chapter 7 motion, which the company didn't oppose. Again, the inbox filled rapidly, especially with notices from prospective purchasers. I talked to several, none of whom seemed to have access to enough money to a) satisfy the Note Holders and/or b) restart production.

March began with the formal notice from the Court, and proceeded with a 'beauty pageant' of various entities who were preparing bids. Of note was one from our very own ColdWetMakeralofReality, who's professional background in aviation and interesting 'take' on what should be done with the airframe is worth looking at. I was also filled in on the whole 'Russian' thing, some of which is so hot it's radioactive. My lawyers will publish the book, if I ever come to an untimely end.

The EOG (Eclipse Owners Group) scored a notable success early in April, when they persuaded Hawker Beechcraft to become involved with servicing the Eclipse 500. Mike Press got his bid going, initially with Roel Pieper, but then (wisely) dumped him. Stan Blankenship contributed a 'Birthday Post' which illuminated some of the background to his own blog experiences. I began the process of seeking 'another' to move the blog forward, and several interested parties contacted me.

The 'tail cone' issue came to the blog in May. I can't convey how much email I had around this single issue, all of it most helpful in reaching a successful conclusion. We also had our 'official' list of the good, the bad and the ugly. Finally, another update from Mike Press reminded us all how little had changed since the Chapter 7 motion was granted. Nobody bid enough to satisfy the Note Holders. Talented people continue to leave ABQ, and the whole sad affair seems destined to end with an orphan aircraft. I hope I'm wrong, but it sure looks that way.

I don't think Vern Raburn started Eclipse Aviation Corporation as a Ponzi scheme, but I pretty sure he ended up that way. Roel Pieper was probably the worst possible 'investor' at the time, but by Vern's own admission there was no option. Those worst affected by all of this sorry mess were, in this order, the staff of EAC, the suppliers to EAC, depositors who didn't get an aircraft and finally the owners of what will almost certainly be 'orphans'.

So there you have it. I can't include everything I've 'learned' as the inbox is vast and some of the correspondence is (still) too hot for a more general audience. We have a couple more headline posts before I sign off, at least one of which will be worth reading.

I know, I've seen the drafts...

Shane

We live in interesting times

2009-06-02T10:00:00.000-07:00

How times change. This time last year there were loads of E500's on Controller, and even some E400 'positions'. Mustangs were in shorter supply, but there were plenty of people seeking a profit in the earlier production slots. Now, sadly, there are only 12 of our favorite toy jets on the site, the 'most affordable' at just under one million dollars. Meanwhile, Cessna's entry level offering continues to enjoy a following, with 35 jet/positions for sale, the 'best value' at just under $2.3 million for one of the earliest made.

Not that anyone is actually paying this sort of money, it's just what's been asked....

The Trustee of the Chapter 7 process has sought an extension, through the 1st of July, to provide extra time in the search for a buyer. This is positive as it indicates some interest may be (finally) brewing from a 'serious' party. Whispers reach me about one firm in particular, of which more anon.

More Court documents come into my possession, where a detail therefrom caught my beady eye. It appears that EAC values its 'Work in Process' at $22,554,491 and zero cents, alongside 'Finished Goods' at $3,610,235 (and zero cents, for accuracy). Bear with me for a while, as I might be stretching things a little here, but the last time I looked there were 29 E500's in various states of build. Quite a few were (I'm told) brought fairly close to the finishing line, between November and March. Lets take a stab at it and say that 15 (roughly half) were 'almost' finished and the remaining 14 were partially complete. Take that $26 million dollars as the cost for 15 pretty complete and 14 (say, 50% ready) and I'm computing the cost of an E500 was $1.35 million. I fully understand that these numbers can be messed toyed with all year, but we finally have an internal number that places a direct value on what we know was the work in progress and finished goods. Anyone with a better handle on the numbers is invited to participate in the blog....

And another thing. The whole of GA is under a variety of attacks, to which several of you have reacted by drawing my attention to Greenjets, a company who paid for a well placed ad (copy above) to draw President Obamas' attention to the benefits of private jet travel. After all, he has not one, but several at his disposal, without which his job would be impossible. What is actually wrong with using the right tools for any job?

Some positive news reaches me from Gainesville, the (former) hub of all things E500 down there in sunny Florida. Seems a viable service business in E500's has grown up, almost organically, with regular arrivals and, more important, subsequent departures. In the dim and distant past, when DayJet was the future, I had several glowing reports of the skills employed on keeping the early aircraft flying, based on this very field. I'm sure others are, like me, intrigued and would love to learn more. I would welcome contact with any owners or pilots who've experienced this facility recently, to the blog email eclipsecriticng@gmail.com

The same email address applies to anyone looking for a 'tail cone' repair for the damage highlighted in my last headline post. It appears that a repair procedure has been successfully developed, and is ready for prime time. Congratulations to the shop concerned, which is currently working out pricing and more accurate timescales for those of you requiring such a service. I'm delighted to support this example of the classical American 'can do' approach when faced with adversity, which also encourages me that a way forward will be found to support the E500.

The Eclipse Aviation web site has not been, how shall I put this, a hive of activity recently. The most recent bit I could find makes sorry reading, especially since it's out of date. I was tempted to try the phone number listed, but decided it wasn't worth the cost of a trans Atlantic call.

Especially to listen to Mike McConnell....

Several of you have been kind enough to contact me with words of encouragement and offers of assistance in moving this blog forward. Suggestions have included conversion to a 'forum' format, continuing in traditional blog style but with a wider remit. To be perfectly clear, I intend closing this particular site on (or shortly after) the end of June. This won't of course be the end of the discussions we've all enjoyed, which I'm confident will find a new home, under other 'management'. I also have another few headline posts before I pass the baton, so I'm not quite finished yet!

In the meantime, enjoy the summer sun, as I did over the Bank Holiday weekend just past. The people were in good form, the beer was nicely chilled and family and friends were kind enough to grace me with their companionship. Keep your chins up and look forward in a positive manner.

That's what works for me....

Shane

Eclipse Aerospace, the 'new' EAC?

2009-05-19T07:00:00.000-07:00

Clearly efforts to attract funds continue apace, since any investor in this troubled sector requires proof (in the form of cash) that the owners will support the 'new' company. So, Mike Press is asking, politely, for $100,000 as evidence that his effort merits more funding than that of say, the EOG. Several parts of the communiqué below intrigue me, in particular the offer to purchase existing aircraft. If, as I suspect, this refers to the ex DayJet fleet I'm surprised that attention is being drawn to it in this way. After all, one of the key issues in restarting anything is how much revenue is possible from the current fleet. And we all have our opinions as to how many E500's are actually flying...

Anyway, read it, in full, and try and work out what Mike and his merry crew are up to. Whatever happens on the 24th of June, I wish each and every one of the bidders the very best.

Shane

TO: ALL ECLIPSE 500 OWNERS AND DEPOSITORS
FROM: MIKE PRESS (S/N 4) AND MASON HOLLAND (S/N 473)

Our last communiqué was on April 24, 2009. We would like to take this opportunity to give you an update on the status of our progress since that date. We have a lot of exciting news to cover in this document.

We would also like to present our offer to owners of current aircraft serial numbers 1-260, as well as our process for performing upgrades beginning on or about July 1, 2009. (Note: This communiqué discusses the service, support and modifications to be performed in the United States. We are still in discussions with our European partners and will provide an update on Europe in the near future.)

Current Status of Asset Acquisition
We are pleased to announce that we are now in the process of finalizing the legal documents required for the acquisition of the assets of Eclipse Aviation Corporation. Many of you have heard that there is a proposed sale date of the Eclipse assets on June 24, 2009. This sale assumes that a qualified bidder (such as ourselves) submits a properly drafted Asset Purchase Agreement (APA) and it is accepted through a short auction process managed by the bankruptcy trustee.

Based on our current estimates, we have the investment funds committed not only for the purchase of the assets but also for working capital to get the company restarted. Of course this is an estimate depending on whether there are any other bidders and how high the bid for the assets goes. We believe that it is in the owners’ best interests that only the strongest bidder is at the table so the balance of the investment raise that is not used for the acquisition could be applied to working capital. Therefore, by the June 24th closing date, we feel confident that if we are awarded the assets, we will be fully funded and ready to resume operations of the company.

In going through the legal paperwork, we have settled on a permanent name for our company moving forward. From this point forward, we will now be known as Eclipse Aerospace. Eclipse Aerospace will have two primary divisions, which include the production arm of Eclipse Aviation and a separate and distinct division, Eclipse Service Network, which will operate and manage the network of company owned and third-party service centers.

Progress On Modifications
FIKI Modification- We are excited to announce that we have received FAA approval to begin FIKI modifications immediately, regardless of whether we obtain the assets of Eclipse Aviation Corporation. Therefore, we are ready to start performing these modifications immediately in our Chicago ESN Service Center.

1.5 Modification- Immediately upon obtaining the assets of Eclipse Aviation Corporation, we will also be able to begin the 1.5 upgrade. Our ESN team has sourced all the necessary parts and FAA approvals were already obtained by the manufacturer prior to the bankruptcy. Therefore, we are confident that these upgrades can begin shortly after the assets are acquired.

AvioNG Modification- Immediately upon obtaining the assets of Eclipse, we will also be able to begin the NG upgrade. Our ESN team has sourced all the necessary parts and FAA approvals were already obtained by the manufacturer prior to the bankruptcy. Therefore, we are confident that these upgrades can begin shortly after the assets are acquired.

ETT Modification- We are in negotiations with third party vendors who will be able to perform the major airframe modifications for these aircraft. This will allow our company resources to focus on other modifications and aircraft refurbishments. It will also allow us to begin the ETT modifications earlier, and in parallel, with the other modifications.

Aircraft Buy Back and Refurbishment Program
We have a number of owners who wish to sell their airplanes to our new company. We are negotiating terms with each of these owners on an individual basis. As we take possession of these aircraft, we will update the aircraft to full functionality, refurbish the paint and interior as needed, perform a full inspection, and make them available as Eclipse pre-owned aircraft complete with a warranty from the factory. These highly desirable aircraft will be offered first to deposit holders of the past company at substantial savings over a new production aircraft.

Offer presented to Owners of serial numbers 1-260
We have been in discussions with the Eclipse Owners Group Steering Committee (EOG), and proposed numerous ways we could work together in a future endeavor. Unfortunately, all of our suggestions have been rejected, and there have been no counter proposals from the EOG. Therefore, we would like to reach out to each owner and extend the following offer:

We are now taking deposits for modifications of aircraft. For each aircraft owner that submits a
refundable deposit to our escrow account prior to the deadline, (to be used solely as a credit towards the completion of modifications and service), the owner will receive:

• Priority Service – We will schedule upgrades for FIKI, AVIO NG, and NG 1.5,
beginning immediately, in the order in which the forms and deposits are received.
FIKI modifications will begin at ESN’s Chicago facility on June 1, 2009.

• Discount – Each aircraft owner who places a deposit prior to the deadline will receive
a 20% discount off of the retail price of all parts for the modifications. We have not
established a retail price for the upgrades yet, but we have stated in previous
communications that we will set a reasonable retail price based on industry standard
markups.

• License to Assets – Each aircraft owner who places a deposit prior to the deadline
will receive a royalty-free, perpetual license for the components of the type certificate
and intellectual property needed to provide service and upgrades to their aircraft on
an ongoing basis should our effort fail in the future. This license will remain in full
force and effect at the cost of our company until such time as the fleet reaches a total
size of 750 aircraft, at which time the license will expire.

The deposit amount is $100,000 regardless of what upgrade is needed. All deposits will be placed in a third party escrow account and are fully refundable until and unless we win the Eclipse assets. The deposits will be used to secure your place in line for modifications only. Once we have established the final price for the modification, you will be presented with a quote, and upon your acceptance of the quote and no more than 60 days prior to your scheduled modification date, your deposit will become nonrefundable and used to order parts as well as provide working capital for the modification effort. This offer is open up to May 31, 2009, which is the deposit deadline.

If you would like to place your deposit and be placed in the scheduling queue, please contact Ken Ross or Cary Winter of our ESN team to request the deposit form. The contact information is listed below.

Summary
Our Eclipse Aerospace team stands committed from day one to provide a “Customer First” experience in restarting Eclipse Aviation, immediately offering service and upgrades, and eventually restarting production of the Eclipse 500 over the course of the next several years. Our business plan has been very clearly defined, our financials are in order, and members of our team are receiving great acceptance and co-operational spirit in dealing with the appropriate departments within the FAA and other regulatory bodies.

In addition, our team is in communication with all the major suppliers, and we are planning a supplier summit to be held in early June in Albuquerque. At that time we will begin a major effort to reestablish parts inventory and make parts available to owners on the most cost effective basis possible.

This cooperative effort of our investment group, the current owners of Eclipse Aircraft, suppliers, and future owners of Eclipse aircraft has been fantastic. We appreciate everyone’s participation, and we hope that within the next several weeks, we will be able to see a positive end to this part of the process that will keep your aircraft in service and ultimately bring the Eclipse back into production.

Should you have any questions about how the upgrades will be performed and in what order, or if you wish to secure your position for upgrades, please do not hesitate to contact members of our ESN team, Ken Ross and Cary Winter, using the following contact information. If you have any questions about investment opportunities, the structure of our company, or the escrow account for the deposits, please feel free to contact Mason Holland or Mike Press using the contact information below.

We look forward to working with you.

In order to schedule your modification and request a deposit form please contact:
Ken Ross: phone- (847) 325-1180 or e mail- ross@eclipseservicenetwork.com
Cary Winter: phone- (847) 325-1177 or e mail- winter@eclipseservicenetwork.com

For all other questions or comments please contact:
Mason Holland: mason.holland@eclipseaerospace.net
Mike Press: mike.press@eclipseaerospace.net

Questions and Answers about this Communiqué

How safe is my money if it is not in escrow and you're using it for
day-to-day operations?
The dollars on deposit for modifications will remain in an escrow account until the official sale of the company. If Eclipse Aerospace wins the bid, these deposits (only with your approval of the quoted price and in no event prior to 60 days before your scheduled modification) will then be released in order to obtain parts from suppliers and to staff and re tool the Service Centers. In the alternative, you may request a refund.

Isn't this what happened with Eclipse? What's to stop you from using the deposit money and never providing my upgrade?
No, old Eclipse did not use escrow accounts and did use deposits for working capital as they were collected. We are funding an escrow account and will not release your funds from the account until you have approved the final price for the upgrades and have a scheduled date for your modifications no more than 60 days out.

Why even collect the deposits now if they are refundable?
It is important to our investor group to ascertain the true need for establishing a separate holding company which will provide the perpetual license for the TC and IP on an individual basis. Therefore, we are making this offer as part of the purchase of the assets of Eclipse. Those who feel this is an important value point for them should strongly consider this offer and participate.

In addition, we are also trying to quantify the demand for the upgrades and plan accordingly for them during our first 6-12 months of operations. One of our main goals from day one is to get aircraft 1- 260 fully conforming including all modifications as soon as possible.

What are the details of the license to the assets?
Simultaneously with or shortly after the purchase of the assets from the Trustee, Eclipse Aerospace intends to place the Type Certificate and certain intellectual property into a separate holding company (separate and distinct from the assets of Eclipse Aerospace). Each aircraft owner who has made the deposit for modifications prior to May 31, 2009 will be issued a royalty-free, perpetual license for the components of the type certificate and intellectual property needed to provide service and upgrades to their aircraft on an ongoing basis should our effort fail in the future. In addition, this license will transferable with the aircraft when and if it is ever sold.

What if I do not send in a deposit by May 31?
You will still receive service and we have no intent of charging service access fees. You will simply be charged our retail pricing (not eligible for the discounts above), your place in line for modifications will be scheduled after those who had placed deposits for the deadline, and you would not receive the royalty free perpetual license for your aircraft.

Villains, Victims and an Honorable Crew

2009-05-15T01:20:00.000-07:00

Since in the future the blog may be used by historians researching the Eclipse saga, we thought it might be appropriate to highlight those most responsible for the dastardly deeds and some who suffered the consequences, as well as 'the few' who tried to point out what was going astray. Stan and I co-operated to put this together (isn't the interweb a wonderful thingy) and we both trust you'll enjoy discussing our logic.

If, that is, there is any logic in this convoluted story!

The Villains

1. Easy one this. Vern Raburn, who wanted to make his mark on aviation. He did, as the biggest scam artist in its' history, with a self confessed more than '$1 billion' burned!

2. Roel Pieper, the slippery old Dutchman thought he could pull a fast one and steal an airplane company. He ended up with a tarnished image and a plane load of legal troubles.

3. Al Mann, a member of the board since day one. Should have asked more questions, demanded more answers and taken an active rather than a passive role.

4. Kent Kresa, also on the board. Like Mann another pushover who failed in his role.

5. Harold Poling, the third independent member of the board. Like Mann and Kresa, never showed any backbone, never made any attempt to pull back on the stick even though the nose was pointed straight at terra firma. These guys didn't even pull the trigger on Vern. It was Pieper, in one of his few 'good' decisions, who showed Vern the door.

6. Marion Blakey, head of the FAA. She undoubtedly compromised the integrity of the FAA with her machinations. Sadly she, proved herself to be just another one of the thousands of dirt bags in government, putting self interest above doing the right thing.

7. Nick Sabatini, now retired FAA high-level manager. Played kiss-ass politics rather than sticking up for the long standing, safety based, principles of the FAA.

8. John Hickey, career FAA mid-level manager. Sold his soul to the devil by bending if not breaking the rules at the behest of his superiors.

9. John Hickey's hand picked MIDO inspectors used to replace the Ft. Worth MIDO team. The new group of wimps, signed off on questionable manufacturing practices and overlooked problems during the inspection of new aircraft (none of which the Ft. Worth group would accept).

10. James Campbell, known on the blog and elsewhere as Capt. Zoom. Became Vern's dupe and the main conduit for the propaganda emanating from Albuquerque. Even today, Zoomie would claim it was all good journalism, despite being listed as a creditor owed $80,000. Yeh, that's real 'quid pro quo' journalism.

The Victims

1. Al Mann, again. Tops this list because he lost the most money. Just too gullible for his own good.

2. All the suppliers (except Pratt & Whitney). Got suckered into the hype with disastrous results for themselves and their employees. P & W well it's hard to feel sorry for them, they have dealt with enough start up programs. They should definitely have known better.

3. Eclipse employees who hung on until the bitter end. Not easy to find replacement jobs in the collapsing economy, not easy to sell their houses if forced to relocate.

4. The owners. The dream of owning a jet on the cheap overcame their rational thinking. Now with their dreams AOG or nearly AOG, they face an uncertain future. Well not quite uncertain, if one considers anguish as a probability.

5. The depositors. Perhaps they are the lucky ones, who only lost their deposits. They're not paying insurance or hangar rent or being recruited by the various coalitions wanting them to $ign up. This group probably sleeps a lot better than the owners, as they've taken their write-offs and can move on.

6. New Mexico taxpayers. Stuck with worthless notes paid for with million of dollars of hard earned taxpayer monies.

7. Albuquerque taxpayers. Stuck with a bunch of worthless IRB's secured by most of Eclipse's hard assets like friction stir welding machines, a gold plated flight test telemetry center, tools, assembly fixtures, furniture, buildings and whatever else Eclipse management could pawn off on the unsuspecting.

8. Brian Barents. Hoped his role on the board would pave the way to finance his dream, a supersonic business jet. The $3 billion Eclipse loss burst that bubble and serves as a reminder that starting a new aviation company is not easy especially when new technology is involved. For the record, there is a rumor floating around that he will be making a big announcement this month.

9. National Aeronautic Association committee who selected the 2005 winner of the Collier trophy. This pathetic group did not even follow the Association's ground rules for selecting a winner. The award is intended for those who have accomplished something. Not pie-in-the-sky bullshit that Vern was putting out that the committee gobbled up like contestants in Nathan's hot dog eating contest.

10. The aviation community as a whole. What was billed as a revolution that would change the aircraft industry, change the way we travel, turned into an embarrassment to us all.

The Honorable Crew

1. Stan Blankenship, who launched the original Critic Blog way back in April 2006, before blogging was popular. His very first headline posited the principle concerns about what was then the 'great white hope' for many in GA.

2. Our very own Honor Roll, reproduced below. These guys (and gals, for all I know) were singled out by EAC lawyers, no doubt instructed by Vern Raburn, with the spurious notion that NDA's had been breeched. Thanks to our next 'good man', EAC were opposed in court, Vern got fired and EAC dropped the suit days later.

3. Rich Lucibella, aka 'Gunner', who paid for his own, very excellent lawyer Norman Malinski to defend the blog in it's hour of need. To go paraphrase Winston Churchill, never was so much, owed by so many, to so few.

4. A few journalists, including Karen DiPiazza, who's singular focus on Vern's machinations got her into trouble with a whole range of people. She stayed on it though, and wrote several telling articles, most notable about the 'Midway' throttle quadrant accident.

5. The long serving blog correspondents, many of whom are now in contact with each other. You guys (and gals) have illuminated our lives over the past three years, with wit, wisdom and more than your fair share of common humanity. Our sincere thanks to each and every one of you.

Stan Blankenship (and a few lines from Shane Price)
May 2009

The 'Honor Roll', just in case anyone forgot...

TURN-AND-BURN
COLDWETMACKARELOFREALITY
NINER ZULU
BLACKTULIP
FLIGHTCENTER
GADFLY
AIRTAXIMAN
FLIGHTGUY
ECLIPSO
RINGTAIL
METALGUY
TURBOPROP-PILOT
BRICKLINNG
FREEDOMSJAMTARTS
EXEAC
EASYBAKEPLANE
PLUMER
VOVA_K
AIRSAFETYMAN
CARLOS
FRED
BILL E.GOAT
MOUNTAINHIGH
PLASTIC_PLANES
AGROTH
EXPILOT
THE REAL FRANK CASTLE
WHYTECH
ISPACE

The tail end of Eclipse?

2009-05-05T04:13:00.001-07:00

OK that's a pretty weak play with words, which I'm sure you'll forgive me for, eventually.

Some pretty damming correspondence reaches me, from several sources, about the number of instances (16, by one report) of this problem. While investigations continue, the issue would appear to be caused by 'incorrect procedures' either with a low battery initial start or wet restart. The delamination, which can be seen on the photo (top right) of the inside at about the 6.30 position, is (according to witnesses) clearly caused by excessive heat in this one location. Note that the exterior shot makes it clear that a visual inspection from outside fails to pick up the problem.

But now things get more interesting. Not only are there multiple instances in the fleet, but there does not seem to be any quick (or low cost) way to fix it. Clearly Eclipse Aviation are no longer in a position to provide technical assistance. Third party shops stuck with the problem are concerned about the consequences of a) devising a repair themselves and b) implementing and documenting it outside the normal approval cycle. This is perfectly understandable in the circumstances.

Which leads to my salient point.

What else will cause an FPJ to go AOG? We're aware of the DayJet birds, many of which had 'history' when they were flying and are unlikely to have 'improved' during (in some cases) almost a year of storage. Any PFD or MFD failures, especially on later AvioNG (IS&S displays) will certainly give an owner or pilot the jitters and leave them will little or no recourse. I'm reminded of the discussion, many moons ago now, of how the FPJ had been designed from the outset for heavy duty use. Pity they failed to design the company the same way...

The number of aircraft currently grounded, for a variety of reasons, is salient to our discussions. Clearly, the value (whatever remains) in the brand is lowered for each one that fails to fly. I'm aware of several that are 'hidden' away, sometimes in hangers but just as often on some out of the way field. It's a situation that's been building since before the Chapter 11 announcement on the 25th of November last. I'm confident that a number of these (excluding the DayJet birds) were not technically incapable of flight, but are those who's owners have decided to await upgrades. I think we should make a serious effort to a) identify those tails that have NOT flown for (just picking a number) 100 days and b) shift out those that are 'incapable' of flight.

This is not merely an academic exercise, but has real world value for any purchaser. After all, if 10 FPJ's are AOG, it's less than 5% of the fleet, and would not be worthy of further comment. But if its 50, 60 or even close to 100, then all this talk about '260 produced' rings very hollow, very fast.

Events (or lack thereof) have limited our supply of other news. Piper Aircraft is in new ownership, Adams Aircraft (version 2.0) has closed down. Cessna (and a number of others) have announced major cutbacks and/or program cancellations. Cash, for any type of investment, is very hard to source in almost any part of the world. Until we start to see some sort of economic lift it's unlikely we'll see a purchase of the assets of our very 'own' VLJ company in ABQ, New Mexico.

But I have been wrong before, and, unlike some others associated with this saga, I'm happy to admit my failings. Let's keep our fingers crossed that the Al Mann v Roel Peiper lawsuit is not a real spanner in the works, but merely a bit of local colour.

Shane

Eclipse Jet update

2009-04-26T08:15:00.000-07:00

ECLIPSE  

125 Fairchild St., Suite 100 

Charleston, SC 29492 

April 24, 2009

VIA: E MAIL TO CUSTOMERS

TO: ALL ECLIPSE 500 OWNERS AND DEPOSITORS
FROM: MIKE PRESS (S/N 4) AND MASON HOLLAND (S/N 473)

At the request of our fellow owners and depositors (Customers) we are pleased to provide the following update on our progress.

We continue to work towards our goal of acquiring the assets of Eclipse Aircraft Corporation (EAC) and immediately restarting service, modifications, and limited production of the Eclipse E500 aircraft.

In the past three weeks, both Mike Press and I have visited over 30 cities across the country and presented our plan directly to those aircraft owners and potential investors who have a sincere interest in our shared vision. To date, we have given our presentation “face to face” to over 300 aircraft owners and prior deposit holders. We have also given over 50 individual WebEx presentations for those we could not reach in person. We have adapted, and continue to adapt, our plan to meet the collective needs of our fellow customers and our investor group. Based on our meetings, we have well over 95% acceptance of our plan.

Why are we doing this? Well, it needs to be done. What we have is a situation where over 1.5 billion dollars was spent in developing a product, creating a company, building a manufacturing line, and most importantly; the successful production of 260 jet aircraft that are the most fuel efficient twin-engine jet aircraft in the world today! However, these 260 planes are not complete, someone needs to do this! The vision is not complete, this plane deserves to be produced, and someone needs to do this! We are going to do this!

Sometimes unfortunate turns in our economic cycles produce rare opportunities. Due to the lack of investment funding currently available in traditional forms and due to the current worldwide credit crisis there are few, if any, qualified bidders raising their hands to bid on the assets of EAC. Therefore, we believe there may be an opportunity to acquire these assets in a cost efficient way.

Why create a profit-making entity for this effort? Well, because without an incentive for profit, customers and investors have no one to hold accountable for their actions. It is a simple fact, if we do not produce a product of value for the customer (which includes fair pricing, timely service, and quality products), then the customers will not pay us and we will not have the opportunity to earn a profit. We then will be held accountable to our shareholders who trusted us and put their investment dollars at risk with us.

Our group is prepared to purchase the EAC assets for the right economic terms. However, if other bidders “price up” the assets past our value of the assets we will have to make a tough decision. It is simple economics. If we pay too much for the assets then we have a larger basis in cost that needs to be serviced by the ongoing entity in order to achieve a fair investment return. We will not purchase the assets at a price above the point in which we would have to charge what we believe would be above market rates for aircraft or services.

In our view, the big losers if we do not win the bid for the assets are the current plane owners. We are the only viable bidder raising our hand and offering our investment dollars at risk to immediately provide service, immediately begin modifications to complete the existing fleet, and prepare for the start of limited production when the markets allow for more product.

If you have not done so, please reach out to us and view our plan. We continue to offer individual interactive presentations either in person or via a WebEx presentation/phone call. In the mean time, in the pages attached to this letter, you will find more detail on the status of the asset bidding process and a series of FAQ’s and our replies as they relate to our plan and progress.

Our tag line is “Customer First” and we mean it! We will complete your product, we will increase its value in the market place, and we will continue to develop this fantastic aircraft and complete the vision of the world’s most fuel efficient jet!

Sincerely,

Mason Holland (S/N 473) Mike Press (S/N 4)

Thanks for that, Mike and Mason. As mentioned on the blog yesterday, your entire missive is a bit long for the blog (yes, it really is a thorough update) so herewith the highlights:-

Enclosures: Official Status Report as of April 24, 2009

DATE: APRIL 24, 2009
SUBJECT: STATUS REPORT RE: OUR BID TO BUY EAC’S ASSETS

THE BANKRUPTCY

EAC’s Ch. 7 Trustee has not announced a plan for the sale of the assets (the Assets) of Eclipse Aviation Corporation and its subsidiaries (collectively, EAC), and we are not aware of one.
EAC’s principal secured creditors effectively control EAC’s bankruptcy insofar as they must consent to waive their liens on the Assets in order for EAC’s Trustee to sell those Assets.
EAC’s principal secured creditors are the collection of hedge funds that own EAC’s secured senior debt (the Note Holders) and Al Mann (Mann), who is both a Note Holder and furnished EAC its debtor-in- possession (DIP) debt. The Note Holders hold almost $600M in EAC secured senior debt, and Mann (separate and apart from his interest EAC’s secured senior debt) holds approximately $10MM in EAC DIP debt.

EAC’s Ch. 7 Trustee can, among other things, choose to dismiss the bankruptcy and allow EAC’s principal secured creditors to foreclose on their liens, or he can sell all or substantially all of the Assets; provided that EAC’s principal secured creditors are willing to waive their liens on the Assets. We expect the Trustee to eventually do the latter.

OUR BID
In the last 30 days, we have travelled to more than 30 cities and visited with more than 300 Eclipse 500 (E500) owners, depositors, vendors and other potential investors. Further, we have spent hundreds of hours trying to reach some form of agreement with the Eclipse Owners Group (EOG) led by David Green and Kevin Padrick, among others, to ensure that the owners’ interests are properly reflected in our plan of operations (our Plan) and in an effort to win the EOG’s support for our bid. We have had good success in building a consensus for our Plan among the hundreds with whom we have visited. We have been unable to reach a consensus with the EOG on anything.

OTHER BIDS
Others are rumored to be interested in fielding a bid for the Assets. The EOG proposes an evolving plan that calls for a not-for-profit service cooperative and relationship with
Hawker-Beechcraft to provide service; however, we believe it will be very difficult for the EOG to assemble the capital required to win in an open bidding process. Based upon our current information, we believe EAC’s principal secured creditors are asking for a significant amount of cash (far in excess of the EOG’s expectations). Further, Daher-Socata, a French company and a Chinese company are interested in the Assets. We have met with both of them as has the EOG and other potential bidders. What we have been told, is that both Daher-Socata and the Chinese company want majority control of any partnership and could move the entire factory overseas. We do not believe giving control of the IP or the assets, to a foreign company is in
the best interest of the Eclipse customers; owners and/or deposit holders. Further, there is Phil Friedman (Friedman Plan) and Peter Reed. We are aware of the Friedman Plan update letter that went out to the owners on April 10th 2009. We believe that this letter was an attempt by Friedman to demonstrate to the owners that his plan was more favorable than the EOG not-for-profit plan.

While we agree that the Friedman plan is better than the EOG plan, we still believe that it contains fatal flaws and bad assumptions. For one, it still spreads the NRE burden over the current fleet of owners for the first two years instead of capitalizing the company initially with the vision of an earlier production ramp-up and spreading these NRE costs over future production.

OUR PLAN
Our Plan champions the interests of both the E500 owners and depositors. After we buy the Assets, we intend to promptly resume service and support for the fleet (S/N 1-260) and begin preparations to resume production (with S/N 261). We have spent hundreds of hours working with former EAC employees and consultants determining the most efficient methods to resume service, support AND production, and we believe our Plan reflects best practices. We cannot provide specific pricing for our goods and services until we determine the price we’ll be required to pay to buy the Assets and the cost to us for the materials and labor required for us to resume service, support and production. However, we have assembled a group of trained Eclipse personnel and are in the finishing stages of the development of the modification process documentation. As soon as we purchase the assets of EAC we will be able to perform the first upgrades and validate our pricing and labor estimates. We stand committed to pricing work for modifications with margins well below industry averages for comparable parts. More importantly, we will spread any additional engineering burden for those modifications over a much larger fleet number than the current fleet of 260. Our investors consider this an investment in the company to keep these prices as low as possible and spreading the engineering burden cost over the anticipated future fleet size.

OWNERS
Our Plan includes a series of priorities for E500 owners –
Service and support are our 1st priorities – We are prepared to promptly provide service and support related goods and services to the fleet through the existing Eclipse Service Network (ESN). Further, we are currently in discussions with veteran European service organizations who wish to join the ESN. Upgrades are our 2nd priority – We are prepared to promptly begin upgrading the current fleet, including the DayJet aircraft. ESN personnel are working today to complete the upgrade documentation (Service Bulletins) to perform ETT, AvioNG, FIKI, AvioNG 1.5 and EASA upgrades. The ESN is currently hiring some of the most experienced E500 technicians available in the market to position themselves to perform these upgrades at the lowest, reasonable material and labor costs to the owners. Production is our 3rd priority – Once service, support and upgrades are back online and well underway, we will turn to resumption of production. We intend to complete the E500 aircraft on the production line as our first step in validating the feasibility of resuming production. These aircraft will be completed to EAC’s current production specification and sold with a full factory warranty. We will offer these aircraft first to the Production Line Group members who contracted with EAC to buy them, and, if they do not determine to buy them, then to others. Actual full production of new aircraft will begin as soon as market conditions warrant; we anticipate sometime in the next 12 to 24 months. New production will expand the fleet and thereby (1) build the E500 brand and each owner’s market liquidity and value and (2) reduce his direct operating costs. The owners will enjoy material, immediate benefits from an expanding fleet. By contrast, in the absence of an expanding fleet, the owners will suffer as the E500 will be relegated to the status of a failed and discontinued aircraft, and its (1) brand, (2) market liquidity and value and (3) direct operating costs will move against owners.

DEPOSITORS
Our Plan includes a series of priorities for E500 depositors –
Coupon Program – We are prepared to offer each E500 depositor credit (a Coupon) toward the purchase of new E500 at our then-market price. We will have a certain number of Coupon-eligible aircraft in production at all times, and we will sell and deliver those aircraft to E500 depositors who wish to apply their (otherwise lost) deposits to the purchase of a new E500.
Factory Reconditioned Aircraft – Further, we are prepared to purchase aircraft from current owners, recondition those aircraft so they comply with EAC’s current production specification and then sell those aircraft with a full factory warranty. For example, we are prepared to process the DayJet aircraft in this manner. This program will (1) enable owners to reasonably exit their aircraft, if they would like to do so, and (2) provide E500 depositors and others an immediate opportunity to own an E500. Like new production aircraft, we will have a certain number of Coupon-eligible reconditioned aircraft for purchase by depositors from the “old Eclipse”.

FREQUENTLY ASKED QUESTIONS

Will you charge an “access” fees for service?
No.

Is Roel Pieper still your partner?
No.

Who are your partners?
There are three “founders,” although our family is growing daily, as we continue our diligence and structure our bid to buy the Assets. Our Founders are Mike Press, Mason Holland and John Cracken. Our friend Raul Segredo has returned to his day job as the owner and president of Avionica in Miami, FL. While he supports our efforts, he has elected not to continue as a partner.

Who will manage the new company?
We have retained the services of a highly respected aviation consulting firm who will aid in our transition process during the first year of our operations and with their help we have also sourced our lead candidate for the CEO position of our company. The timing is great. He is finishing up another venture and is excited about being a part of the continued vision of the EA500 VLJ. He is well respected in the aviation community and has deep experience in leading a large company responsible for the manufacturing, production, and service of jet aircraft. In addition, we have assembled a transition team of 15 highly respected aerospace industry professionals, many of whom will be placed in key management roles within our organization.

CONTACT INFO
Please feel free reach out to any of us at your convenience if you have questions or if you would like to schedule a presentation of our plan –
Mike Press – mpress@spjets.com
Mason Holland – mason.holland@benefitfocus.com
John Cracken – jcracken@croinc.com

Well, that's a pretty big post, and I've left out several pages, which went into forensic detail which I felt the blog would not be interested in. I wish these chaps the best of Irish (luck, of course) and hope that whoever ends up with the assets is able to rescue something from the ashes. Other bidders continue to promote their own plans, which I'm sure will get somewhere, eventually. The 'security detail' of 19 'ex Eclipsers' are still getting paid to keep an eye on the plant, which is good news, and the 'Nuclear Option' of forcing the note holders to release the IP to owners directly might even achieve an early end to the sale process.

All in all it's been an interesting week. My own feeling is that there is at most a month left before final dispositions are made for what remains of EAC, but I have been wrong before, in part due to my ignorance of bankruptcy practice in the U.S.

At that point I believe our blog naturally faces a crossroads. We all need to think about direction(s) 'we' might take. I would welcome suggestions to the usual address (eclipsecriticng@gmail.com) which will be included in a forthcoming headline post.

If, of course, I get any.....

Shane

Well well well...

2009-04-22T15:08:00.000-07:00

Normally I'd expect this sort of stuff to arrive on a 'Tuesday', but this time it's true. The legal actions around Eclipse Aviation were always going to be fascinating, but even I'm surprised at this. Read on, and, well, weep, with either tears of laughter or sorrow depending on your point of view.

Oh, and thanks to ColdWetMackeralofReality, who is the actual author of the piece.

Shane

The Nuclear Option

A Motion to Compel under Title 11, Chapter 3, Subchapter IV, Sec 365 of the bankruptcy law has been filed to force the Eclipse Bankruptcy Trustee to release all ground and airborne software related to Avio and other embedded software (essentially the most valuable intellectual property related to the TC) directly to the owners.

This move has been some time in the making and yes, yours truly played a small part. I have been working with several owners for the past several months examining real-world solutions to the various problems faced by the owner community and of all the things accomplished, this and a recent meeting of the minds are the highlights that I believe will soon have a profound impact on the future of this saga. Of course, I want to remind everyone I am not a lawyer, this is my understanding of the legal issue from having participated at arm’s length.

Several weeks ago a demand letter was sent to the Trustee quoting the above section of law and demanding that the Trustee release all IP related to Avio and the ACS as required under current BK law. Thanks to the rise of software and the ever increasing pervasive nature of ‘embedded’ software in the items we use every day, Congress has made significant changes to the BK law with respect to license rights and proprietary software.

Essentially, the Trustee failed to act on (or even acknowledge) the demand letter in a timely manner so the motion to compel has been filed directly with the BK court to compel release of what amounts to all software related to Avio and other embedded software, directly to the owners. According to the law, if the trustee fails to comply the owners will essentially be able to get the software by any means (from other owners or experienced service providers for example).

This motion, if granted, is the divorce I have been advocating for months now, that separates the owners from needing to compete in the cash incineration contest to purchase the IP and just as importantly, it frees capable third parties to actively engage in the development and certification of fixes for the known and suspected issues without being held hostage by a hostile IP owner. If it plays out as expected, the owners will no longer have to fear being a captive market, they will own the critical IP, and best of all they will not have had to fork over tens of millions to get it.

Background - When Eclipse sold the aircraft they issued a ‘a personal, non-exclusive, perpetual and non-transferable (except in connection with a permitted transfer or sale of the subject aircraft) license to use any computer software or other intellectual property incorporated in the aircraft that is not the subject of a separate license agreement between Eclipse and Purchasers or the owner of such intellectual property ("Aircraft Intellectual Property") – quoted from Aircraft Purchase Agreement. Eclipse further committed to release this and related IP with their IOU’s when delivering incomplete aircraft (Post Delivery Commitment).

The executed Purchase Agreements and Post Delivery Commitments, and the rights they convey upon the purchaser, are apparently not erased by the BK proceedings, therefore all current owners will have the same rights if the motion is upheld by the BK court.

To that end, I have been developing an updated proposal that retains the possibility of moving the PW-610’s to an alternate airframe (the Excel Jet SportJet-610 previously discussed), while also defining four regional specialist centers with extensive Eclipse specific experience, training and support equipment, spares, and AOG Tiger Teams. Current thinking based on fleet distribution is East Coast, Midwest, Southeast, and West.

This will be enhanced with an expanded network of existing facilities for North America (US, Canada and Mexico - likely 2 Heavy Mod facilities, and perhaps 2 dozen FBO/light maintenance facilities) as well as an existing network for outside North America (dozen or so facilities in Europe, Asia and the Middle East). I have also been in contact with a training provider that has FAA approval for all necessary training (initial type rating, recurrent, etc.), as well as insurers. This will also include working with the existing suppliers/vendors where possible but also in qualifying alternate vendors where PMA is not practical or possible given the original supplier/vendor.

Expect to see a focus on AOG and low-hanging fruit almost immediately (tires and brakes, actuators) – including an effort to end the interference with PMA activities that is currently ongoing from at least one of the bidding parties (we have heard from multiple sources that someone is actively working to prevent willing and interested vendors from seeking PMA to provide parts right now to customers who need them).

As I have mentioned on other occasions, my belief based on discussions with owners and maintainers is that many of the issues observed are more quality escapes than design issues, therefore the service and support entity I envision would take on the development and certification of comprehensive fixes, modifications and upgrades. This would tackle the design and certification efforts including development of what would in essence be a ‘delivery spec’ or ‘completion’ STC and the much needed Service Life Extension Program. This also allows for the development of an updated ‘hot-items’ inspection to identify known quality/assembly/rigging issues that can be issued as a Service Information Letter or other mechanism, to direct attention at known areas before they become widespread problems and potentially lead to FAA action.

At this point, the best outcome is for a bifurcated or two-party solution that allows one party to acquire the assets and retain rights to future production, with a second party taking on the support of the currently fielded fleet. If these two parties work together obviously prices for parts can come down over time but any potential bidder must know and understand that alternatives will exist for both quality of service as well as parts pricing for the current owners.

This approach allows the owner community to focus their attention and their dollars on completing, supporting , and most importantly safely enjoying their own aircraft without getting tied up in the old cliché about how to make a small fortune in aviation.

Of similar importance is that the recent high-level meeting of the minds I mentioned, combined with the development re: the IP may result in far more elegant fixes for many of the current series of band-aid fixes applied to the various aircraft. Assuming that the fixes developed in support of the currently flying planes are of interest, they can potentially be sold or licensed to the party seeking the TC allowing the owners to recover some of the costs related to the development and certification of any fixes.

My team and I have already identified several potential partners for the regional specialist centers and we are ready to begin serious talks with currently identified domestic and international service partners, current and potential vendors, as well as key former Eclipse employees and managers whom we have been in contact with if we receive the support of enough of the owner community.

As always, I can be reached at ColdWetMack@gmail.com.

Another offer on the table

2009-04-16T03:14:00.000-07:00

This clearly reached me just before the 'Birthday Post' from Stan, so is a little delayed. Other bidders are active, but the 'note holders' who are currently seeking bids are frustrated at the lack of a proper, cash offer. So far those who've announced their intentions, including Phil Friedman, have been very shy about making a definitive approach. I'm told that will change shortly, with at least one bidder shaping up. The clock is approaching midnight however, with the very real possibility that the whole saga will end with a break up auction on the 'Courthouse steps'. This would be a very undesirable outcome, especially for the owners, since the TC would be 'orphaned' and expertise necessary to support the current fleet would scatter to the four winds.

I'm also concerned that the inbox (eclipsecriticng@gmail.com) continues to be peppered with news of 'challenges' for anyone interested in the assets or supporting the aircraft. I'll handle some of this with my 'Snippets' which I'll again remind you are lower grade 'water cooler' chat, rather than established fact. What I'm finding is that a considerable proportion of these 'bytes' of data actually turn out to be pretty accurate. That's why I share them with you, but please don't take any action unless you satisfy yourself, to your own 'standard of proof' before you put time or money at risk.

We have had a pretty miserable few days here in Ireland, with rain, followed by rain, and then some more rain. Hopefully the sun will make an appearance for the weekend and all our skies will be blue. With luck our world wide economic meltdown has reached the bottom and we can all start to make positive plans, instead of trying to manage downsizing.

Anyway, enough with my blathering. Herewith Phil's (revised) plan...

Shane

New Eclipse Acquisition LLC

Open Letter to Eclipse Owners and Depositors

April 10, 2009

Dear Eclipse Aircraft Owners and Depositors,

The purpose of this letter is to ensure that all parties understand my plan for bringing Eclipse out of bankruptcy. We have made significant revisions to our plan based on discussions with the Eclipse Owners Group steering committee (“EOG”). We understand you have several plans to choose from, so our intent with this communication is to make sure our plan is clearly articulated.

It now appears that all alternatives are “for profit” plans. To our knowledge ours is the only plan that states the prices which owners will be paying. We are able to provide pricing because we have done considerable due diligence, including input from the Eclipse employees who have actually done the work. It is stating the obvious, but owners and depositors should demand a side-by-side comparison of all the plans, including the prices you will be charged. There should be no after-the-fact “price surprises”.

Objectives

Our objectives have always been and continue to be as follows:
• Purchase Eclipse assets and intellectual property out of Chapter 7 bankruptcy.
• Restore the brand with the objective of increasing the E500 resale price to $2.0 million.
• Upgrade the fleet to latest TC level over first 24 months.
• Resume production of new AC with upgraded avionics in the third fiscal year at 100 aircraft per annum with a price of $2.4 million.

Because this aircraft is so highly integrated, we believe ongoing production is needed to keep fleet support costs at a reasonable level per aircraft. Ongoing production will also result in a higher resale value for the aircraft and lower spares costs.

Details of our Plan
Key elements of the business plan are:
• Owners who invest at least $150,000 in New Eclipse will receive break-even pricing on their mods & upgrades.
Pricing for the key upgrades will be:
• Avio NG 1.5 + Garmin 400’s + FIKI $109,000
• Avio NG conversion (Avidyne to IS&S) $210,000

As discussed above, we did considerable due diligence on the costs to perform the mods & upgrades and believe them to be conservative. To protect the owners we are guaranteeing transparency on the mods & upgrades costs and will adjust our pricing up or down depending on the actual costs incurred versus our estimates.

• All mod work will be done by experienced ex-Eclipse personnel in the Albuquerque facilities. Over the next two years we will open 4-5 factory-owned service centers around the nation for ongoing service needs.
• Owners who do not invest in New Eclipse will pay a $100,000 per aircraft premium for their mods & upgrades.
• Depositors will also benefit from our plan. We will finish and sell the seven almost completed aircraft on the line for $1.765 million each. Depositors for these aircraft will be given priority to buy provided they invest an amount to be agreed upon. We also plan to finish and sell the next 12 aircraft on the line with depositors for these aircraft again being given first priority to buy provided they invest an amount to be agreed upon. We will use these profits and the mod profits from the non-investing owners to upgrade the aircraft avionics and reduce manufacturing costs for the restart of production in the third year.
• We will have an Aircraft Support Program (ASP) of $70,000 per year per aircraft for the first two years to cover the 60 engineering personnel we believe are necessary (a) to maintain the TC, (b) to support the fleet airworthiness, (c) to improve aircraft reliability, and (d) to support the mods & upgrades. The ASP price will decline to $25,000 per year in the third year when we restart production. All owners will have to be part of the ASP to receive support.
• Ongoing service will be provided at a 50% gross margin on a time and materials basis.
• The initial type rating will be priced at $14,000. Two day recurrent training will be $4,500.
• We will spend the next two years reducing the E500 manufacturing costs by working with the suppliers and reducing labor hours. We have studied the E500 production costs in the Eclipse data room and believe our cost targets are achievable. We have also had positive discussions with many of the key suppliers, including Pratt & Whitney Canada. These suppliers have agreed to work with us to support our effort to make future production of the aircraft profitable.
• We will not restart new production unless approved by the Board of Directors which will include at least one owner. Further, owner investors will have the option to sell their shares back to New Eclipse for $150,000 if they do not agree with the Board decision to restart production.
• We will place the aircraft IP in escrow to protect the Eclipse owners if the company fails prior to restarting production, subject to certain conditions including how much the owners actually invest.

Summary

In essence, our plan is a hybrid where we offer break-even pricing for the first two years as we bring the fleet up to the latest TC level. The plan then transitions to a “for profit” as we restart production.

We believe this hybrid plan is the best path forward for both owners and depositors. New Eclipse will consist of employees solely dedicated to the Eclipse program – their priorities will not be diffused by other products or programs. I have run aircraft manufacturing companies for 28 years and I assure you that New Eclipse will be run lean and efficiently.

Provided enough owners decide to support my plan, I am confident we will be able to raise the additional funds to purchase the Eclipse assets and IP and to provide our working capital needs. I have been contacted by many aircraft owners and outsiders that want to invest in a New Eclipse provided we have a plan to restart production and the support of the aircraft owners.

In summary, you are making a big decision on your aircraft and you deserve a side-by-side comparison of the plans, including hard data on the prices you will be charged and who will be running the organization. A decision should not be made on who puts out the best press release and there should be no after-the-fact surprises.

Regardless of which plan you choose to support, you need to do it quickly. We get daily reports of key engineers who have accepted jobs at other companies. Since this aircraft is highly integrated, it will be difficult to provide timely ongoing support if we lose these key people. Accordingly, time is of the essence.

Please feel free to contact me should you need additional information or have questions on our plan. If you believe my plan has merit, please contact the EOG to express your support for my plan.

Regards,

Phil Friedman CEO, New Eclipse Acquisition LLC
phil@harlowair.com
(702) 449-8312

A Birthday Post, by Stan Blankenship

2009-04-11T00:10:00.000-07:00

Looking Back,

Credit where credit is due, the Eclipse critic's blog wasn't the first to take exception to the outrageous claims made by the cocksure Vern Raburn and his minions. That honor goes to Richard Aboulafia from the Teal Group whose blog and interviews with the national media provided at least one voice of caution and sanity. When I started the blog three years ago it was intended as a technical extension to support Aboulafia's views.

After the first post went up, links were sent to Aboulafia, Mac McClellan, and the two main slobbering cheerleaders for Eclipse, Zoom and Rich Karlgaard. Aboulafia's response was that I "was doing God's work". Mac ignored my msg (after all, a lowly blogger hardly deserves recognition by mainstream media).

After a few e-mails, Zoom went ballistic, threatened to report me to the authorities for threats to he and his family...told my son he would own our company and eventually claimed I owed him tens of thousands of dollars for reproducing his copyrighted material. What a nut case!

Karlgaard concluded that I was "always looking for the dark side" and when I asked, "What advice will you have for your rich aunt when she calls and tells you she wants to invest your inheritance in the hot new Eclipse Aviation IPO?" His response:

"I always cheer for the bold entrpreneur (his spelling). Doesn't mean I'll buy their stock. But without bold players -- and Vern is one -- the industry stagnates. Maybe you're too skeptical."

Turns out, not skeptical enough.

While the original intent was to only write a single post, a second one soon emerged then a third and eventually nearly 200. Somewhere along the line, the blog gained a following and more important, reader participation by some well informed individuals, experts in their fields as well as others who just added a point here and there to help fill in the mosaic. Eventually, a few supporters weighed in which led to some lively discussions; but the supporters had their points and often made them.

The collective wisdom of the blog was really evident during the 2007 contest to predict the number of deliveries. The average of all the guesses nailed the actual number. The blogger coming the closest to predicting 2007 deliveries just happened to be the blog’s resident satirist, black tulip.

As a prize, I had pledged an Eclipse model which I could pick up on ebay. Instead, I was contacted by an Eclipse buyer who had cancelled his Eclipse and ordered a Phenom 100 in its place. So he offered his brand new Eclipse model still in the box which was sent directly to black tulip.

In turn, I sent the former buyer a brand new boxed gold-filled Cross pen and pencil set that Learjet used back in the 70's for formal signings when a customer took delivery of a new Model 35. The pen and pencil set went with a request that it be used to sign the acceptance when the former Eclipse buyer takes delivery of his new Phenom 100. Not to be outdone, the former Eclipse buyer sent me a lucite paperweight containing metal chips that were represented to be the first ones cut for the Eclipse program. Nice and thanks again. It is on display in a prominent place in my lobby.

Then I learned black tulip had a special occasion scheduled. So he too received a gold filled Cross pen and pencil with a request he use the pen at the appropriate time. Those were fun days on the blog.

Just as Shane has alluded to many times, there was and is a fair amount of activity that goes on behind the scene. Most of mine was just congenial e-mail traffic but some of the material sent was downright radioactive. At one point I contacted Gordon Kirsten, a lawyer specializing in intellectual property. When I told him my name he said, "I know who you are, I’ve read your blog." Seems his best bud is a Cessna test pilot. That was my first clue that the blog must be pretty well read.

Anyway, Gordon told me that the documents that I had received were proprietary and in no way could I publish any of the content in any form without risking legal action from Eclipse. In a subsequent meeting on some additional material, Gordon brought in a trial lawyer to discuss his six figure estimate on what it might cost to defend an Eclipse lawsuit.

If the truth be know, had I received as much as a demand letter from an Eclipse attorney, I would have shut down the blog in a New York minute. But I always felt that since blogs were a part of the computer age, Vern probably considered it a badge of honor to have he and his company a blog target. Often wondered how many man-hours were spent each day at Eclipse checking the blog. The numbers from Cessna would be interesting as well.

I always felt it fortuitous that Shane picked up the torch after I laid mine down. While subject to some of the same legal constraints as someone in the U.S., Shane’s Irish location would make it quite a bit more difficult for Eclipse to take legal action had they chosen to do so. And IMHO, Shane uses his offshore status to good advantage. He has been able to solicit information from all sources though he has used the information very judiciously.

When someone would send me incendiary information, I would simply tell them if they want the world to know that kind of information, they should post it on the blog anonymously. Few did. But even with two sources, there was no way for me to post that information with no other proof in hand.

Those of you who followed the original blog know that when Roel Pieper brought in the Russians, I decided plutonium laced tea was not for me so I brought down the curtain on the original blog. It did cause me some concern when Shane decided to soldier on. Ireland is a whole lot closer to Russia and 500 euros paid to an ex-KGB thug could lead to a bad thing. My sense of paranoia increased when Putin’s picture appeared with the Eclipse and then there was that goon Pieper put on the Eclipse board.

The Russian connection was actually only one of three reasons why I wanted to escape the burden of tending a blog. A second reason was the ever growing difficulty in writing new posts. What I could contribute paled in comparison to some of the expert commentary that was being provided by some on a regular basis.

The third and perhaps most important reason for bowing out is that in late’07, my wife and I (then ages 65 & 67 respectively) took up scuba diving. Ever since, we have been on a 10 week schedule to leave the mainland to explore new places. I was able to manage the blog from Hawaii and Cozumel, but when one gets to these places, there are better things to do then moderate a blog. We’re still on the 10 week schedule. Was in Fiji in February, this time next month will be in Belize and mid-July diving the Red Sea off the Sinai Peninsula (Egypt). We’ve penciled in our dance card for Indonesia and Tahiti this fall.

The reason I bring this up is that Vern, AlexA and mirageOO (the idiot who was always so "amused" and was oh so confident that he would be serving me crow on a silver platter at Oshkosh), anyway the three of them liked to claim that the bloggers (mostly me) did not have a life, have never accomplished anything, got left at the station when the Eclipse train pulled out, that I was bitter because we could not cut it as an Eclipse supplier, blah, blah, blah, they sure liked to dish it out.

For the record, I would like those three to know that during the time they were spouting off, my company was helping Gulfstream sort out pre-design issues on the 650. While we were never told that our work related to a new airplane, after a 10 minute look at the first electronic file they sent, I replied with an e-mail that I had been in the business for 45 years and could read the tea leaves. While I have never asked, the first chips cut on the 650 were probably cut in our shop. Should have bottled some up and cast them in lucite.

In some respects, the blog succeeded way beyond my expectations. My biggest regret is that the blog was not able to convince more people sooner to be more cautious of the program. A document from the bankruptcy court shows 10,851 creditors from all over the world. The largest creditor being of course Al Mann. It’s just a pity that somebody could not reach Mann and his fellow board members to put a stop to this madness at a much earlier date..

Everybody lost in this program, even those who purchased and took delivery of a sub-million dollar jet and are now faced with an uncertain future. It’s been a Ponzi scheme from day two if not day one. Insiders have told us component costing was done on a "make the numbers work basis" to keep the projected cost below a million. Vern himself told us the rest of his plan...take orders for a few thousand...get the airplane certified...start deliveries...issue the IPO...then walk away and you know the rest. Unfortunately, as predicted by the blog, the cost to build far exceeded the selling price.

Vern’s problem was that he knew about as much about what it would take to float an IPO as he did starting an airplane company, getting a TC or the PC. Even while the blog’s resident securities expert whytech carefully explained to all of us why an IPO was not remotely possible for Eclipse, the company was still using stock options as the incentive for recruiting new employees and motivating staff. Can’t figure out if Vern was blind, stupid or criminal?

Speaking of criminal. Bernie Madoff sits in and 8' x 8' jail cell for committing a Ponzi scheme. That is using new money to deliver a product (high interest payments) to early customers (investors). Any familiarities to our friend who is probably at home tying flies in preparation for his next excursion to fish the Middle Fork of the Salmon River.

Again Vern, 10,851 creditors and you have shown less remorse than Bernie. Thanks to your efforts, thousands of lives have taken significant financial hits, dreams shattered and in some cases lives ruined. While you may claim your motives were altruistic, perhaps they were for a short time but you should have been able to draw the conclusion much earlier that the situation was hopeless. You let the Ponzi scheme run, hoping for a miracle, all the while people and companies were getting deeper and deeper in the hole. I will ask again, were you blind, stupid or criminal?

What’s next?

Some on the blog are hopeful and suggest we wait to see who ends up with the company (note the reluctance to call them a winner).

Others on the blog with experience in these matters have detailed specific difficulties the new owner will face in providing support for the fleet, specific difficulties the new owner will face restarting production.

I will go with the view of the "experienced" and that the difficulties will outweigh the hopes and dreams.

Movement, at last...

2009-04-07T15:25:00.001-07:00

Thanks to all of you who sent me this. I think it deserves a headline, as it's the first credible sign that a reputable aviation business has an interest in the FPJ. Clearly the note holders still retain control of the assets, including the TC, until such time as they decide to sell. But this is the first solid sign of light for the owners. Lets just hope there is more good news in the next few weeks.

Shane

PRESS RELEASE   FOR IMMEDIATE RELEASE: April 7, 2009

Hawker Beechcraft and Eclipse Owners Group Enter into Letter of Intent

Westlake Village, CA (April 7, 2009)—David Green, Chairman of the Steering Committee for the Eclipse Owners Group (EOG) announced today that the EOG has signed a nonbinding Letter of Intent with Hawker Beechcraft Corporation (HBC). The parties will now begin negotiations for a definitive binding agreement under which HBC would provide maintenance upgrades and other aircraft services to EOG members, consisting of individual Eclipse 500 owners.

“Eclipse owners will benefit greatly by having Hawker Beechcraft as our service provider,” Green said. “HBC’s reputation across the industry and especially among its customers and suppliers is unsurpassed. This relationship is sure to create tremendous confidence in Eclipse owners that their planes will be flying for many years to come.”

In the search for a solution for Eclipse owners, the EOG will negotiate with HBC to provide the needed maintenance and support services to keep the Eclipse 500s flying in the event the EOG purchases the assets of the Eclipse Aviation Corporation (EAC).

HBC will provide services to EOG members through its Global Customer Service and Support operations, which is driven by HBC’s commitment to quality and performance excellence. HBC supports its aircraft with the largest network of trained professionals and the largest factory owned service network in the industry.

“Hawker Beechcraft is pleased to offer Eclipse 500 owners the highest quality service and support in general aviation,” said Bill Brown, HBC President, Global Customer Service and Support. “We look forward to this new relationship and keeping the Eclipse 500s in the air.”
The EOG will own the Type Certificate and be responsible to the FAA and other regulatory agencies for the reporting and compliance required to maintain the Type Certificate. HBC will provide services and support to the EOG so that the EOG can perform its regulatory obligations and keep the Eclipse 500s compliant with FAA and other regulatory rules. In order to support service for the Eclipse 500s, HBC would provide service in designated HBC service centers.

The EOG also hopes that at some future time it will be possible to restart production of the Eclipse 500.

EAC entered Chapter 11 bankruptcy on November 24, 2008 and converted to Chapter 7 on February 24th, 2009. The Chapter 7 Trustee plans to liquidate the EAC assets through an auction to be held in the near future. Several parties have come forward with potential proposals to acquire the EAC assets.

The EOG was formed to protect the assets of EAC necessary for the support, upgrades, and continued airworthiness of the Eclipse fleet on the best economic terms possible for current owners of the Eclipse 500; to evaluate the possibility of, and if appropriate implement, the purchase of EAC’s assets by the EOG or its designee; and to take actions necessary or appropriate in connection with purchasing assets of Eclipse, including forming an entity and negotiating with maintenance and support providers.

The EOG was also formed to evaluate any proposals for the purchase of EAC’s assets by other parties and, if appropriate, support such proposals if they are in the owner’s interests. The EOG will continue to evaluate proposals presented by third parties for the purchase of the EAC assets. The EOG has entered into negotiations with HBC in order to provide a viable and very attractive alternative if the best purchaser for the EAC assets is the EOG, itself.

Eclipse 500 owners who have not yet become members of the EOG should contact the EOG at their earliest convenience at eclipseownersgroup@gmail.com.

For further information, contact Nanette Metz or Randall Sanada at info@JetAlliance.com, or call (805) 409-0426.

###

Current affairs, future outcomes?

2009-04-02T02:25:00.000-07:00

It's been a month since Eclipse Aviation Corporation joined the ranks of 'ex companies' in Chapter 7 bankruptcy. At that time it was anticipated (mostly by owners of the aircraft) that there would be a queue of willing, cash rich bidders, who would make quick and decisive offers, allowing all their problems to vanish, post haste.

Oh, how the scales have fallen from their eyes. Instead of a rapid sale and the normal 'business as usual' messages, all they are hearing from the various groups that form, dissolve and reform is waffle. What must be really disturbing for the senior note holders (who do, after all, own the assets) is the quixotic nature of some of these bidders. So far, not one 'real' company has stood up and said they WANT to buy the assets, with REAL money.

A few 'straws in the wind' for your consideration:-

1. Controller lists over 30 Cessna Mustang aircraft (or positions) all of them in or about the published 'asking' price. 27 Embraer Phenom 100 positions are on offer, several of which use the word 'sacrifice' in their offer and yet the FPJ manages only 11 ads, ALL of which are for existing aircraft and NONE even approaching the last 'list' price of $2.15 million. An earlier 'snippet' which noted several FPJ's changing hands in the $600k range has since been reinforced by reports of similar exchanges. This tells me the market for FPJ's has tanked.

2. The 28 DayJet aircraft (which most people seem to have forgotten) are about to hit the market as the finance company which owns them seeks some recovery. Word is that these aircraft are valued well below a million dollars each, and will be sold promptly. This is bad news for anyone thinking of 'restarting' production, since the DayJet birds represented a potential source of revenue, as well as providing potential customers with a cheaper alternative.

3. Once they were 'free' of EAC, numbers of people have contacted me with interesting historical details. It seems the real cost of building the FPJ never dropped below $2.3 million dollars, even during the 'volume' days last summer. Current best estimates are that the bird will cost something like $2.5 million to build in low (1 per week) numbers, possibly dropping a little if the rate rises. The killer appears to have been the totally unrealistic number of build hours being spent on each one. Consensus is about 4,000 hours per aircraft, without fixing squawks. No matter which way you try to do this, you need to sell FPJ's at something north of $2.5 million to make a profit, and closer to $3 million to offer an ROI to the moneymen. I submit that this will be very hard work, even for ex Chairman/CEO of EAC, Roel Pieper, who's joined in Mike Press's mini owners group.

4. Current press coverage of the 'revival efforts' are overwhelmingly negative, even from former supporters, some of whom ended up as (unpaid) creditors. Most find it hard to make the numbers add up or feel the much hyped market for the VLJ's has now evaporated. This has to influence prospective investors, who are also readers our discussion. One thing is clear. The fantasy of volume production and sale of a 'cheap' twin engine jet is truly a busted flush.

5. The only 'good news' concerns the 19 'caretakers' employed in ABQ, who are still getting paid.

To conclude, it appears to me that some people (especially FPJ owners) are still not getting the message. I'm reliably informed that the note holders will sell, by whatever means, very soon. It could even get to an auction on the steps of the Courthouse. I hope that's not the final outcome, but whatever happens I'm very reluctant to promote the idea that FPJ 'production' can restart in Albuquerque, New Mexico. Whatever chance there is of this it will have to be at a) a much reduced labour cost and b) without the endless cycle of trying to fit together parts that simply don't.

Spring has arrive here in our Emerald Isle. My thoughts naturally turn to exploring the many secret places dotted around, especially those where one can retire of an evening to a convivial local pub for a pint (or three...) of our very own Guinness. Remember that you can always contact me on the blog email, eclipsecriticng@gmail.com, with any view, opinions or information relevant to our discussions.

Shane

And the winner is?

2009-03-24T00:18:00.000-07:00

Wouldn't we all like to know the answer to that question! Clearly there are those amongst us who think that any such 'winner' is really a short to medium term loser, but for owners, suppliers and whatever limited number of staff get rehired, right now they need SOMEONE to step up to the plate. The trouble is, almost three whole weeks after the Chapter 7 ruling, nobody actually has. I therefore feel compelled to ask the obvious question.

Why?

It's interesting that a company which raised (and spent) a BILLION dollars before earning a cent, and then blew another billion (or more) in a few years of 'producing' the FPJ cannot now find a willing buyer. Clearly there are offers, but the value being placed on the assets (in the $10 million range) is below what the 'senior note holders' feel they'd get in a simple break up of the the facilities. This means they think that the existing owners are prepared to pay significant sums for maintenance, upgrades and repairs in the future OR that the tools, facilities and odds and ends will sell at a 'court steps' auction for more than what they've been offered for the entire thing.

Here we get to one of the key difficulties any prospect buyer of the entire faces. There are several conflicting sets of interests that need, somehow, to be reconciled for a 'Version 2' company to have half a chance. Existing owners want cheap (by jet standards) upgrades, maintenance and repair in 'local' facilities. Suppliers want some payback for the pain they've been through with EAC and (at a minimum) a premium price for the parts they hold currently. The various other creditors (landlords, government and state institutions etc) will need a plausible business plan showing a something back on a) what's owed already and b) a return on the money they will have to forgo while Version 2 gets up and running.

And then there is the FAA and EASA. The Production Certificate has lapsed and will clearly have to be re applied for. In the meantime there will be considerable cost in doing any upgrade work (aeromods, FIKI, AvioNG 1.5 etc) or getting the aircraft on sale outside North America. Training, both for Type Rating and recurring (to keep insurers happy) is a big question mark. The simulators were excluded from the original Chapter 11 proceedings, as the supplier proved to the Court they had not been paid for in the first place. I'm not even sure if they remain in ABQ...

These are significant hurdles for any purchaser but there is another, much more serious one which any attempt to restart will have to overcome.

Staff.

I'm aware that most of the original 'executive team' have aligned themselves with one or the other of the prospective bidders, but these people were part of the problem and are unlikely to prove adept at providing a solution. All they really offer is knowledge of the 'grunts' who actually did the real work. The A&P's who wielded tools to keep the birds flying, the software 'propellor heads' (a term of endearment between programmers, btw) that provide the glue between the various bits of Avio. The line works who are needed to finish the 28 or so unfinished hulls that represent the easiest way to generate revenue for Version 2. Even the sales and marketing people who did the deals and know who's most committed to this bird. Where are they now, and will they come back to ABQ?

I don't know the answers to these questions. I can make an informed guess about critical staff who've taken other work, many of whom were lured to ABQ in the first place by the higher benefits (stock options, pay etc) and are now very skeptical of this whole program. The good guys will have found work with the 'branded' companies and will probably keep their heads down for a while, for sure.

So now we move to consider the owners and depositors. I'm sad to say that I detect signs of a civil war between factions which have supported one or the other of the prospective purchasers. I'm sure that a contributing cause was the re emergence of people like Roel Peiper and Mike McConnell, whom many hold directly responsible for the demise of EAC in the first place. It's also clear that anyone who mentions realistic service and support costs gets dismissed by some of the owners, who are still holding onto their dream of an inexpensive twin jet. Sadly, it's abundantly clear to the entire world that there's no such thing. Depositors, who represent the best short term hope for new sales have been ignored by everyone, and that seems plain stupid to me.

But what would I know? I'm only a verbose Irish businessman, who saw EAC as a scam and said so. Not many believed me when I did, but few would argue with me now. And that's another, possibly fatal, anchor which attempts to revive this company faces. The name 'Eclipse' is now associated with the smell of something rotten, which will persist for a considerable time and require plenty of hard work and more than a share of good luck to negate.

Enough with the negative vibes, I have some good news for you all. The blooming month of April approaches when I'm sure you will see 'interesting' headline posts, from some of our favorite contributors. Prepare to be surprised, amused and possibly even informed. Consider yourselves warned!

Shane

CWMoR Comprehensive Options and Alternatives for Eclipse 500 Owner/Operators

2009-03-17T12:33:00.000-07:00

Well, he is one of 'us' (which makes a refreshing change) and it's a more mature plan that any of the other's I've seen. It's interesting, and makes a very wide sweep in an effort to meet with almost all 'stakeholders'. So here it is, fresh from his own laptop, and written by our very own member of the Honor Roll, ColdWetMackarelofReality

I'm sure it will generate some comment....

Shane

The normal warnings and cautions apply. This is not an offer to sell or solicit securities and is very forwarding looking – no guarantees are being made, explicit, implicit or otherwise. This is an overview only.

Philosophy
– Provide the closest thing to win-win for majority of owners
– Realistic, achievable and practical way-forward
– Flexible approach to meet needs/desires of most owners

Situation Summary
– There are ~260 aircraft with varying configurations and states of completion – all with a 10 calendar year fatigue life
– There is presently no source for parts, Instructions for Continued Airworthiness, or Means of Compliance for AD’s or upgrades/repairs
– EAC Assets are in Chapter 7
– Development of new support concepts by 3rd party following Chapter 7 will likely take months to get operational, potentially leaving aircraft AOG into the summer
– Many current plans for support from third parties are focused on restarting production on the backs of the long suffering owners
– The owners are likely divided into several camps with competing interests
• Those who just want ‘out’
• Those who want to continue operating the plane
• Those who want to see the plane re-enter production
• Those who want/need safe effective transportation but are not dedicated to specific airframe/form factor
– The only way the owners community can act as a cohesive group is to address the needs of all owners, not subsidize the needs of a few

Identified Needs
– What is needed is a clearinghouse for the various capabilities needed
• a central management point for the various support activities
• a reliable source of objective information and guidance for the owners
• experienced technical and management leadership
• strategic understanding of the complex big picture
– Efficient exit strategy for those who want out
– Cost effective parts availability for those who want to continue operating the EA-500 (both individually and commercially)
– Experienced support for continued airworthiness
– Development of immediate, short, mid and long term objectives
– Identification of alternatives and risk management
– What is needed is a comprehensive set of overlapping options and alternatives that collectively serve the needs of the majority of owners
• This means realistic and honest evaluation of the situation
• A focus on mutually beneficial approaches to meet the needs of the majority of owners

CWMoR team are willing to fill this central clearinghouse role
• Bring 60 years collective experience in aerospace and defense
• Have existing relationships and experience with FAA
• Have existing connections to the needed skillsets from the former Eclipse
– Excel-Jet brings an alternate airframe possibility and significant design and systems integration experience

Options and Alternatives

– Those who just want ‘out’
• Need an option for assisting in sales or outright purchase for spares
– Those who want to continue operating the plane (individually or commercially)
• Need reliable source of known pedigree parts
• Need source for documentation/means of compliance
• Need experienced strategic management for PMA/STC and other options
– Those who want/need safe effective transportation but are not dedicated to specific airframe/form factor
• Need an alternate airframe that can re-use the PW610’s while placing bulk of airframe and system parts into circulation for spares use
• This frees up the most valuable and portable components on any delivered airframe for re-use and makes purchase of near complete airframes for spare reasonable
– Those who want to see the plane re-enter production
• Need insight into challenges for start-up and certification efforts

Proposal
– Our recommendation is to NOT seek the assets from CH-7
– Intent is to provide sufficient alternatives to keep any other players honest in their dealings with the owner community
– Excel -Jet Ltd. has offered to produce a modified experimental Sport-Jet 610 design to accommodate the PW610’s based on the airframe of the JT-15D powered Sport-Jet II
– The new Sport-Jet 610 provides speed and range profiles equivalent to or better than the EA-500 Spec but does so at FL250-280 (more easily and inexpensively insured)
– Estimate that there is a need for 5-10 current owners who are interested in alternate airframe to make this a reasonable possibility
– Examining alternatives re: Avio hardware and software
– Excel Jet estimates 12 months from receipt of funds to flying demonstrator aircraft
• Modular design of Sport-Jet II supports development of a new aft-section for PW610’s and associated equipment without requiring redesign of wing, gear, or cabin (all originally sized for single 2,100 lb thrust P&W JT-15D turbofan)
– These owners can then sell their Eclipse airframes (sans engines) into a fleet support spares pool
• Could get the new airframe nearly for free after selling EA-500
– The spares pool provides the time necessary to identify willing vendors, qualify replacement vendors where needed, and lay the foundation for PMA/STC and other options
– CWMoR Team will assist owners to establish a business to manage fleet spares pool and continued airworthiness issues
– Focus immediately on AOG situations
– Prioritize analysis and support needs for A, B. C and D Check, Phased Inspections as well as other inspection requirements and life-limited parts
– Identify vendors interested in upgrading known weak parts (already identified for tires and brakes)
– Identify qualified MRO providers and A&P’s to support the fleet
– Eventually work to remove 10 calendar year airframe life limit and expand to 20,000 hrs
– Excel-Jet Ltd. has offered to honor up to $80,000 in lost Eclipse deposits towards purchase of Sport-Jet II kit

Sport-Jet 610 Preliminary Specifications

– Dimensions
• Length - 34 ft.
• Wingspan - 35.2 ft.
• Height - 9.6 ft.
• Performance
• Maximum Speed - 380 kts
• Normal Cruise - 350 kts
• Economy Cruise - 320 kts
• Rate of Climb - 2,500 ft./min.
• Operational Ceiling - 28,000 ft.
• Stall Speed - 70 kts
• Landing Speed - 85 kts
• Range w/IFR reserve - 1,000 m
• Take-off Distance - 2,300 ft.
• Landing Distance - 1,800 ft.

– Weights / Capacities
• Empty Weight - 3,060 lbs.
• MTOW Weight - 5,500 lbs.
• Payload w/full fuel - 800 lbs.
• Wing Area - 150 sq.ft.
• Fuel Capacity - 260 gal.

– Engines
• (2) PWC 610F 950l b thrust turbofans (1900 lbs total thrust)

– Cabin
• Seating - 4+1
• Cabin Size - 62”w x 49”h x 105”l
• Baggage Area - 27.5 cu.ft.

Initial and ongoing Costs
• Sport-Jet 610 design, tooling and demonstrator aircraft estimated at ~$1.75-2.0M
• PW610 powered Sport-Jet 610 Kit is estimated at ~$700K for the aircraft, options and build assist
• Purchase of 8-12 airframes for spares ~$6-8M
• CWMoR initial management consulting establishing an Owner’s Group business entity ~$250K
• Needed whether or not owners bid for or win CH-7 assets to provide control over maintenance destiny
• Prioritize engineering focus for AOG, scheduled maintenance, and life limited components
• Target for maintenance costs and TC support is in the $400-500/hr range + fuel
• Final cost to be determined based on results of analysis of maintenance concept and risks
• Intended to restore balance of JetComplete concept
• Operations Budget for Owner’s Group Business Entity are estimated at $12-16M/yr funded from per-hour cost above or on a quarterly subscription basis
• Includes Mgmt consulting
• Spares and repair parts
• Most Scheduled/Unscheduled Maintenance
• Continued Airworthiness/Means of Compliance
• Engineering Development (e.g., AMP/SLEP, PMA and STC)

• Harlow plan will result in ~$1.78M costs over 9 years, not including upgrades, fuel or unscheduled maintenance (@150 hrs/yr)
• $300,000 initial investment, $800/hr for maintenance and support
• Approximately $198,300 per year in lifecycle costs incl. insurance w/o fuel

• Owners Group plan will result in ~$1.24M costs over 9 years, not including upgrades fuel or unscheduled maintenance (@150 hrs/yr)
• $200,000 initial investment
• $70,000/yr for TC support ($467/hr)
• ~$300/hr in maintenance and insurance
• Approximately $137,200 per year in lifecycle costs w/o fuel
• Neither plan provides for immediate or near-immediate spares
• Neither plan provides for immediate engineering support
• Neither plan provides relief for current AOG aircraft
• Neither plan hits the ground running with specific plans for maintenance significant parts and inspections

Savings for CWMoR plan compared to Harlow Plan
• Save $1,060,000 over 9 years
• Equivalent to 250,000 gallons of fuel (5,000 plus hours of flight time)
• Roughly 2-3 times the cost of needed upgrades
• Approximately $100,000 per year savings in lifecycle costs incl. insurance

Savings for CWMoR plan compared to Owners Plan
• Save $510,000 over 9 years
• Equivalent to 127,500 gallons of fuel (2,500 plus hours of flight time)
• Roughly 2 times the cost of needed upgrades
• Approximately $60,000 per year savings in lifecycle costs incl. insurance
• Savings for Sport-Jet 610 compared to EA-500 under Harlow Plan
• $1,350,000 over 9 years (and can operate beyond 9 years out of the box)
• Equivalent to another plane or 337,500 gallons of fuel (6750 hours of flight time)
• DOC estimated at $450-500/hr incl. fuel and insurance

Principals
• CWMoR, Logistics Management Consultant
• 18 years in industry, 23 years as a pilot
• 12 turbine aircraft programs, 6,000 – 70,000 lb MTOW
• Bob Bornhofen, CEO Excel-Jet Ltd.
• 30 years in design, manufacturing, TRW and Hughes
• Designed original Maverick TwinJet aircraft in mid-90’s
• Currently finishing detail design and prototype construction on JT-15D powered Sport-Jet II

Summary
• This is the only plan to recognize and address the needs of the owner community as a whole as well as individually thus providing real leverage in dealing with any potential entity for service or support
• This plan does not require universal adoption, only needs $10-12M and 5-10 willing owners looking for an alternative for the engines
• This plan does not result in the owners investing $20-40M initially, and a further $100-200M over 9 years supporting a restart of production
• This plan takes advantage of existing regulations and existing, experienced and capable service providers while providing realistic and honest guidance for owner community
• This plan allows the owners to control their destiny without burning an unnecessary additional $100-210M over the next 9 years by providing reasonable alternatives to help keep 3rd parties honest
• The principals of this plan are willing to speak with the owner community directly via telecon, e-mail, or perhaps even a customer summit to answer your questions

The 'Owners Plan'

2009-03-12T11:39:00.000-07:00

The following hit the inbox in the past hour, and I thought it important to bring it to your attention in a prompt manner. The 'translation' from the supplied document format to this blog may have generated some unintended consequences, for which I apologize in advance. Needless to say, I'll correct any that are drawn to my attention as quickly as I can.

Anyway, with that small 'health warning' I'm happy to provide you all with the following, which was dated March 10th:-

THIS DOCUMENT IS INTENDED TO PROVIDE BACKGROUND REGARDING THEFORMATION OF A COOPERATIVE ASSOCIATION OF OWNERS OF ECLIPSE AIRCRAFT AND IS FOR INFORMATIONAL PURPOSES ONLY. THIS DOES NOTCONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUYSECURITIES. THE STATEMENTS CONTAINED HEREIN, INCLUDING POSSIBLEFUTURE COURSES OF ACTION TO BE TAKEN, ARE FORWARD LOOKING BASED ON CURRENT EXPECTATIONS AND BELIEFS AND ARE SUBJECT TO A NUMBER OFFACTORS AND UNCERTAINTIES. YOU ARE ENCOURAGED TO CONSULT YOUR ATTORNEY TO DETERMINE WHAT ACTIONS, INCLUDING THOSE DISCUSSED HEREIN, ARE IN YOUR BEST INTERESTS.

Dear Eclipse 500 Owner:
Most of you have received communications over the past month on the state of the Eclipse bankruptcy process. This memo is intended to both summarize what has been previously communicated and to apprise you of the most recent developments.

We believe that the current situation requires a concerted and organized action on the part of all Eclipse owners to guarantee the continued support and airworthiness of your airplanes at a reasonable cost. The pace of the Chapter 7 liquidation process requires that we prepare immediately for this eventuality. If we wait to see what alternatives emerge, it will be too late to take any of the actions that could improve the outcome for all owners.

Objectives of the Owner’s Group

We’re going to present quite a bit of information on today’s call, but it is important to start with a clear understanding of our mission, as well as our relationship to other groups who may be working to buy the Eclipse assets.

I. Our top priority is to protect the key assets of Eclipse Aviation Corporation, and ensure that they are available to enable the support, upgrades, and continued airworthiness of the Eclipse fleet on as attractive an economic basis as possible.
II. We plan to evaluate all proposed plans on behalf of the owners, and would be delighted to find an organization that plans to purchase the assets and provide owners with support and upgrades on attractive terms.
III. The only thing worse than high priced support would be no support. Since no plan that we are aware of has yet raised the capital likely required to buy the Eclipse assets and commence operations, we believe that it is essential to provide a backstop to all of the proposed plans.
IV. Finally, none of the members of this committee has any economic interest in any plan, other than the desire for access to ongoing service and support for our aircraft.

Bankruptcy Procedure

On Wednesday March 4, the bankruptcy court agreed to convert the Eclipse Chapter 11 case to a Chapter 7 liquidation case. A trustee will be appointed to supervise the liquidation. Most likely the trustee will sell the assets of Eclipse. The note holders will be in a decision making role with respect to whether an auction occurs and its timing. In cases of this type, auctions would typically occur within 7 30 days. We believe all of the assets will most likely be sold to a single buyer.
There is no way to specifically estimate what the noteholders will accept, and it is possible that they might simply hold the assets themselves if the bidding comes in too low. Some of the money a buyer pays for the assets will go to reimburse Al Mann for his $10 million DIP (debtor in possession) loan. We believe ETIRC will likely be forced to forfeit their $10 million DIP loan based upon their failure to close the Chapter 11 reorganization.

Importance of the Eclipse Intellectual Property

We anticipate that all of the assets of Eclipse Aircraft Corporation will be offered at the auction. Among these assets are the Type Certificate and all of the intellectual property required to maintain and upgrade the airplane over time. While some have questioned whether it might be possible to support the aircraft without control of these assets, the Ad Hoc Committee (and other experts whom we have consulted) strongly believes that whoever controls these assets will have a virtual monopoly on the support of the fleet. For this reason, and also from seeing various proposals from groups who propose to bid on the Eclipse assets, the committee is very concerned about the possibility of a group acquiring the assets and charging exorbitant fees for access to service and upgrades.

Some Economic Assumptions

The painful reality of the Eclipse bankruptcy is that everyone involved has been damaged financially. While in some sense the owners are fortunate to have a “hard asset”, many of the things we expect support of the Type Certificate ed from Eclipse, such as upgrades and ongoing, must now be paid for by somebody else, most likely us owners. We are working to minimize those costs because they are substantial.

As part of our work, the committee has investigated what the ongoing requirements are likely to be for any organization that intends to keep the Type Certificate in force. A substantial sustaining engineering organization is needed to respond to technical issues, to source components, to deal with the FAA, and to make ongoing reliability improvements. Our best estimate is that the requirement is approximately 50 engineers, and that the total overhead for such an organization is in the $12M $14M/year range. That assumption appears consistent with some of the projections we have seen from other prospective bidders.

If an existing manufacturer were to purchase the assets, they might well be able to use excess capacity within their own organization to perform these tasks, but we do not believe that any established manufacturer intends to bid. We have had discussions with at least one credible organization that could absorb a major portion of this overhead if they elect to partner with us. Those discussions are ongoing, but certainly not concluded at this point.

Any plan must account for the baseline burden of maintaining the type certificate. These costs must be recaptured in annual fees or through markups on service or other fees. Typical aircraft manufacturers spread these costs over all of their products so that such costs are buried in the price of the aircraft and in the price of parts and service.

Potential Scenarios

Some of the plans we have seen contemplate varying levels of continued manufacturing, ranging from completing the 10 or so aircraft that are well along in the production process to more ambitious plans of ultimately producing up to 100 aircraft per year. A bidder who sees manufacturing as its primary strategy would be incented to keep maintenance and support costs moderate for the existing fleet in order to establish credibility with future potential customers. However the ability of a new entrant to raise the capital required to manufacture new aircraft, and to engage in the level of production engineering required to produce those aircraft at a competitive cost is viewed skeptically by some members of the committee.

More plausible plans involve the purchase of the assets primarily to create a profitable service and support business. The risk in undertaking such a business high return on their it requires will likely dictate that the investors command a very and the capital that investment. Some of the plans that we have seen have contemplated charging on the order of $100,000/year just for access to the service. They also contemplate charging a six figure premium over cost for the upgrades. While these rates look very predatory to an owner, they may well feel like good business to an investor in such an enterprise.

It is worth noting that every additional dollar of upgrade cost likely reduces the current value of your pre upgrade aircraft by a dollar. Similarly, increased ongoing maintenance costs require that the market value of the aircraft be reduced by an amount that makes the total cost of ownership competitive with other alternatives.

Seizing the Initiative

Although some committee members believe that it may still be possible to find investors who will back a production/support plan that would not be considered predatory, time is running out.

The surest way for the Eclipse Owners Group to avoid one of these “predatory” scenarios (or worse yet, no viable scenario of any kind) is to organize as a group and successfully acquire the Eclipse intellectual property in the liquidation. We would do this under the auspices of a non profit corporation (“NEWCO”) set up for this purpose. We are in discussions with a number of existing maintenance and support organizations from which we can choose a partner to undertake the actual engineering and support tasks. NEWCO would employ an executive director and minimal staff to oversee the performance of our service partner. That partner organization could expect to make customary profits on its service and support activities, as opposed to the monopoly level profits that could be demanded by an organization that has gained control of the Eclipse Intellectual Property.

Again, we would be very happy to see a plan emerge that does not require owners to actually put up capital to secure and maintain the type certificate . We are in contact with every potential entrant we are aware of, and will provide you with our evaluation of each of those plans once we have access to them.

However having our own highly visible program in place is the best way to protect owners’ interests and influence the plans of other providers. Sitting back passively will leave us captive to whoever prevails at the auction – a scenario that is unlikely to produce a satisfactory outcome.

Structure and Mechanics

It is difficult to say exactly what bid will be required to prevail at the auction. If we have not endorsed any of the competitive plans prior to the auction, we will likely have made it more difficult for some of those plans to raise the capital needed to bid. This could potentially lower the required bid. For now, let’s assume that the bid range is $10M $20M. In addition, unless we find a partner who can perform the sustaining engineering by using their own idle capacity, we feel that it is prudent to raise the first year’s overhead of$12M $14M as well. This implies a total requirement of up to $35M. It is possible that $10M of this could be supplied by convincing Al Mann to roll his $10M in DIP financing into our bid, in which case we would need to pay him over time. That is not a “done deal” however.

We would like each owner to invest $150,000 per aircraft in the non profit corporation organized to purchase the Eclipse Assets. While this is a significant sum of money, you would likely save more than this just in the cost of the Garmin/FIKIupgrade of your aircraft. Additionally, your ongoing costs are likely to be considerably lower than any proposal we have seen to date.

For owners that are unable to contribute $150,000, we have set $100,000 as the minimum level. To offset any such under contributions, we will offer (and encourage) other owners to purchase interest bearing notes in amounts of $50,000 and up in addition to their base $150,000 contribution. These notes will be secured by the assets of the corporation, and will offer an attractive interest rate. We have not pegged this rate yet, but it will likely be in the 15% 20% range. Those who have contributed less than $150,000 will pay that interest rate on the difference between their contribution and $150,000. Those who have contributed more through the note purchase will receive that interest.

To summarize, the $150,000 contribution will buy you ownership in the Eclipse IP, and support and upgrades at prices that we negotiate on your behalf with our service partner. We will still need to collectively support the annual sustaining engineering(Type Certificate maintenance) costs. The cost per aircraft for that support could be as high as $60,000 $70,000 per year if we have to shoulder the entire burden, or as low as 15 20% of that amount if we can cement a partnership with the right support partner. Upgrades will be performed with parts supplied at cost plus a modest handling charge, and labor for the upgrades will be charged at traditional shop rates. Owners who have contributed less than $150,000 will also likely be required to bring their contribution up to $150,000 at upgrade time, which will enable us to pay off note holders.

We are asking all owners who are capable of doing so to commit $200,000 to the effort, with our commitment that we will develop a fair method, as described above, of compensating you for your increased commitment. You will have the opportunity of reviewing and agreeing to our proposal before your money is released from escrow, so we are not asking you to commit without complete disclosure. However, the larger our “war chest” the more strength we will have in our group.

To summarize the anticipated economics for a $150,000 contributor:
1. $150,000 investment before the Chapter 7 auction. This buys ownership in NewCo, as well as access to the service and support program.

2. Maintenance performed at typical labor rates.

3. Parts supplied at the cost paid to suppliers plus handling charge.

4. Upgrades under similar terms to maintenance.

5. Additional annual expense per aircraft to support the sustaining engineering and type certificate. This could range from $15,000 per aircraft per year in the most favorable assumptions to $70,000 per year under less favorable assumptions.

6. Should you elect to sell your airplane at any point, the ownership would transfer to the new owner of your aircraft, who would enjoy the same status. This should increase the value and salability of your aircraft.

This leaves the question of what to do about owners who choose not to participate at even the $100,000 level. Our guiding principle here is fairness to those owners who do participate. One of the biggest risks this plan faces is securing adequate participation of the owner group, and any owner who does not participate raises the required initial investment and per airplane overhead costs of those who do. For that reason, any owner who declines to participate will need to invest prior to receiving access to the program, and will pay a higher price than those who participated prior to the auction.

The board of directors of NEWCO will ultimately determine that premium, with input from the participating owners. We don’t know today what that group will decide, but least some owners have already expressed the view that late entrants should pay a 2 3x multiple of the pre auction price. Other owners express the view that the premium should be more moderate. Late owners will also be responsible for interest on the $150,000 “par” investment amount, since their non participation likely generates the need for us to raise that amount through the issuance of notes.

One final point on structure is that the $150,000 outlay is an investment rather than a fee. That investment buys pro rata ownership in the Eclipse assets, which have ongoing value. If a profit making venture were to purchase those assets, it would need to build in incremental charges to generate a significant return on that investment. If the owners buy those assets, the return we receive is the absence of those incremental charges as well as the guarantee of ongoing support.

Interim Expenses

All of us understand the value (and cost) of quality professional help. In today’s environment, that help is extremely expensive. The committee has done all of its work on a volunteer basis, but we anticipate the need to spend at least $200,000 between now and the auction for outside legal and financial advice, including forming the non profit corporation, complying with securities regulations, negotiating with partners, etc. We ask that $2,500 of your contribution be used for that purpose. All other monies will be held in escrow as outlined below. There is potentially a need for a second expense tranche, but this will not occur until you have approved the final investment documents and fully committed your contribution.

It is also important t recognize those of you who contributed $4,500 to the original ad hoc committee. The work of that committee formed the foundation for the efforts of the owners group, and those who contributed will be credited with $5,000 toward your full investment amount.

Escrow

Because of the very short timeline on which all of this must occur, we are creating an escrow account with very investor friendly provisions. We ask that you decide on a contribution level and then send 10% of that amount to the escrow agent. The escrow agreement, as well as the formation agreement for the entity, will be emailed to you within the next 24 48 hours. Any money in that escrow account (less $2,500 for interim expenses) must be returned to you unless you approve and sign the detailed final investment documents. The 10% deposit is simply a good faith gesture on your part so that we can gauge the level of funding that we have committed from the group at large. We will need the full amount deposited, (and the final documents signed) before we can bid at the auction. Since this auction is likely to occur in the next 7 30 days, we are on an extremely tight timeline.

Conclusion

We would like to leave you with these key messages:
I. This plan is intended to insure that a funded, viable, customer-friendly bidder shows up at the Eclipse Chapter 7 auction. We do not consider any of the plans we are aware of to have demonstrated all of those characteristics yet.
II. While the initial financial commitment is significant, your $150,000-$200,000 investment may well make the difference between your airplane being worth $1M+ or being nearly worthless.
III. The annual expenses are also significant, primarily because the fleet size is modest. However any plan must deal with that reality. Promises to significantly grow the fleet though new manufacturing are tempting but much more challenging to fund and execute than the creation of a service and support program for the current fleet.
IV. We continue to seek information on alternative plans, and would happily throw our support behind any plan that we believe would be beneficial to the owners.
V. The owners committee does not claim to be qualified to run a service and support company, but will partner with highly qualified and experienced providers.
VI. By controlling the Eclipse intellectual property, we maximize our options not just today, but well into the future. For example, if we were to later learn of a plan or organization that we think could do this better than we can, but which was unable to succeed in the auction, our Board of Directors would still have the flexibility to work with that group. They could even sell some or all of the assets to that group, and distribute the proceeds back to our members, as long as that is consistent with the our mission of maximizing the value of our aircraft and the availability of service and support.

We would like to offer each of you an opportunity to speak one on one with a member of the Ad Hoc committee to address any questions or concerns that you may have with this plan. If you have not sent your contact info to eclipseownersgroup@gmail.com please do so, and we will contact you and arrange a time for a call.

Sincerely yours,

Randall Sanada, David Green, Ron Lebel, Ken Meyer, Mike Boich for the Eclipse Owners Group

Finally, Eclipse Aviation Corporation is no more

2009-03-04T10:22:00.000-08:00

This post will evolve (like the last one did) rapidly over the next 24 hours.

Basically, the Judge in Delaware granted the Senior Note Holders 'Motion to Convert' today, Wednesday 4th March 2009. 19 employees are retained to Friday 20th March as caretakers. In due course I expect to get full details of the court 'action' which I will of course pass on.

Phil Friedman has already contacted me to say he is preparing a 'detailed proposal' for the current owners, which he will communicate in due course. I expect that any other bidders, including the 'owners group' will also be outlining their plans shortly.

It is in many ways, for many people, a very sad day. The end of a genuine attempt to change almost every aspect of how a small jet is designed, built, sold and maintained or a failed business plan that became a scam. Either way, I'm sure we'll be debating many aspects of EAC for a long time to come.

However, today I ask you to think of those affected, who've lost time, money and resources. Remember the suppliers, depositors and owners who've been through ups and downs which must have put great pressures on people over an extended period. And finally the staff, those who held on, hoping against hope that Roel would come good at the last minute.

The upside is that the new owners, whoever they are, have a totally clean sheet, unencumbered by debt or obligation. They will employ several hundred of those already familiar with this aircraft and, when times improve, may well be able to hire more people with "Eclipse Aviation Corporation" on their CV's.

Best wishes to all.

Shane

Light(s) at the end of the tunnel?

2009-02-26T16:11:00.000-08:00

UPDATED Sunday 1st March 2009

URGENT, FAA issues a "Special Airworthiness Information Bulletin" for Eclipse owners.

Check out the official notice from the FAA. They've clearly been fielding questions about the current 'issues' affecting the FPJ. Read it, fully, and act accordingly. Anyone operating one of these aircraft may find themselves in more hot water if they choose to ignore the advice. In particular I'd draw your attention to the issue affecting those with IS&S displays (AvioNG), which cut on on s/n 105 and may have been retrofitted to a few of the earlier aircraft.

Original Post

I've been watching, in my quiet way, a few of those who were interested in the original Chapter 11 sale for the assets of EAC. I did so in the firm belief that the pre cooked sale by Roel, to Roel, would end in tears. I'm aware of several entities who may, or may not, be able to make Eclipse V 2.0 happen, some of whom will make a go of it, and others who will not. As often happens in these matters, those who 'come out' early on get an advantage, if only by being brave enough to explain what they are about.

Herewith two of those efforts. Make of them what you will, and understand that I provide this space in a sincere effort to find a way forward for staff, suppliers and owners seeking some solace in difficult circumstances. Others, with similar intentions, are of course welcome to contact me. In the meantime, the best of 'Irish Luck' to Phil, his team and now the 'owners group', who join the fray below. I should add that this has been sent to me by the official representative of the the owners, who is know to me for some time.

So, now there are two. May the best 'entity' win....

Shane, updated 27th February 2009, 16.30 GMT

Dear Eclipse 500 Owner,

As you must be aware, Eclipse Aircraft Corporation has been in Chapter 11 bankruptcy for the last two months. In the last few days events have unfolded that will take the company into Chapter 7 liquidation.

The future utility and value of our aircraft is now in serious jeopardy. If we as owners do not take control of these events, we risk having our planes grounded, become unserviceable, and ultimately become worthless. We can no longer rely on someone else.

The only way the owners can be assured of the continued use of their aircraft is to come together as a group and as a group participate in the creation of a successor organization that will have full control of the serviceability, modification, and long term reliability of our airplanes.

Today there are a number of outside entities that are “looking” at the owners as an income stream that they can fully exploit like a monopoly. These entities believe if they control the assets of Eclipse, they can charge the owners hundreds of thousands of dollars just to get their plane upgraded and serviced. One of these plans wants to charge owners a $300,000 surcharge for any modification plus the marked-up cost of parts and labor. Another plan wants to charge owner a yearly fee of up to $90,000 just to access service. This would add $500 an hour to the average cost of operating your aircraft significantly reducing its value.

We as owners can either sit by and watch others take control of our airplanes or we can take that control ourselves. This will not be easy or without cost. But it will be far better than the alternative.

The Ad Hoc Committee of Eclipse Customers has recommended that Eclipse Owners join together and form their own group, taking charge of their destiny. We, the owners on the steering committee of the Ad Hoc Committee of Eclipse Customers, will be holding conference calls in the next few days so that we can reach out to all owners and discuss next steps in this process. We ask that you join us on one of these conference calls.

Just email your name, street address, telephone number and Eclipse serial number to EclipseOwnersGroup@gmail.com and we will send you the access number, dates and time so that you can be part of one of these conference calls. If you cannot attend one of these calls, we will send you full information on how we can all join together.

We are on a very fast timetable. The liquidation sale will take place very quickly. We don’t have a great deal of time to protect our future. Let’s all unite, and as a solid unified group we will be able take control of our Eclipse future and be able to fully utilize our aircraft without being held hostage by others.

Mike Press, Randall Sanada, Ron Lebel, David Green, Ken Meyer

P.S. As we mentioned there are a number of “plans” being developed by others. Please make sure that if you have to sign an NDA to view those plans that you are not limiting your ability to join all the owners in a common effort.

ALBUQUERQUE, NM — February 26, 2009 — Today Phil Friedman announced the formation of New Eclipse Acquisition LLC (“New Eclipse”) which intends to bid for the assets of Eclipse Aviation Corporation in the Chapter 7 bankruptcy proceedings.

Mr. Friedman is an experienced aerospace executive who has turned around several companies over his 28 year career. He is currently CEO of Harlow Aerostructures LLC in Wichita, KS which manufactures electro mechanical and structural assemblies for many OEM’s in the aircraft industry. Peter Reed, former CFO of Eclipse for seven years, is part of Friedman’s team and has actively participated in developing the New Eclipse business plan over the past
several months.

“I have been studying the Eclipse situation for over a year,” said Friedman. “It is sad that the company has ended up in bankruptcy, but I believe there is an excellent business opportunity going forward if managed correctly. Our plan is to take the first 24 months to stabilize the fleet of 259 aircraft and restore the brand. All aircraft will be brought up to the current type certification level so that ongoing service and support is as efficient as possible. We will also retain a significant number of engineers to improve aircraft reliability, upgrade the avionics suite, and focus on reducing manufacturing costs to industry benchmark levels. We will open several smaller service centers around the country to provide more convenient access to service the fleet and will also provide pilot training here in Albuquerque.”

“We will be charging customers to bring their aircraft up to the latest certification level. Our business plan assumes some of the customers will not be able to afford the upgrade. Our sales representatives will work with these customers at no charge to find new buyers who will have the means to pay for the upgrades. In providing this service, and with a business plan that translates into the New Eclipse becoming a company with a profitable long term future, we will be supporting the investment that the existing owners have made in their aircraft. Our objective is to bring the aftermarket price of the Eclipse up to the $2 million range, thereby providing a valuable service to all existing owners. We also plan to finish and sell seven new aircraft on the production line that are about 95% complete. In addition there are 28 DayJet aircraft that will need to be upgraded and refurbished and new owners found.”

“Employment levels over the next 24 months should be about 400 people as we upgrade and service the fleet,” said Friedman. “After the engineers have upgraded the avionics to the latest functionality, reduced manufacturing costs, and we have re-established relationships with the supplier base, we plan to restart new aircraft production in 2011 at modest levels, approximately 100 aircraft per year with pricing in the $2.4 million range. At that point employment will increase to approximately 600 people.”

“We certainly recognize that bringing Eclipse out of bankruptcy will be challenging. There are many parties that have been badly hurt and bridges will have to be rebuilt and relationships restored to execute on our plan. We understand that the employees who have been laid off need to feed their families and pay their mortgages. We are actively exploring ways to hold the key talent together during the Chapter 7 process so we can re-employ them with the new company.”

Mr. Friedman may be reached at (702) 449-8312 or email at phil@harlowair.com.

The 'final aria' is sung

2009-02-24T12:41:00.000-08:00

We Critics knew this day would come. The only real question was when, not if. From Stan's first post in April 2006, and mine just over a year ago, the details were unclear but the outcome was predictable. After almost 10 years, and at least $2 billion of profligate waste, this chapter in GA is now closed. At least we can take away the thought that we tried our very best to warn the gullible and illuminate the dark corners, but we must also remember the men and women who put their heart and soul into this project, be they the staff, the suppliers, the depositors and investors who've all lost something. Even those very few unlucky enough to have become owners, deserve consideration and yes a bit of human kindness at this time.

Earlier today, the 'senior note holders' filed a Motion to Convert to Chapter 7, which will give them effective control of the assets of Eclipse Aviation Corporation. This was accompanied by a Motion to Shorten, which leads one to believe that these note holders do not anticipate opposition from ETIRC. This ends the Chapter 11/Section 363 process, which began on the 25th of November last.

There will clearly be ongoing coverage of this, both here and in the wider media. I'll update the headline and provide ongoing information as soon as it reaches me here in Ireland.

Finally, for now, let's remind ourselves of the debt we all to to Stan and Rich, the former for starting the ball rolling and the latter for defending us in our hour of need.

Shane

UPDATED Wednesday 25th 14.25 GMT

Dear Eclipsers:

We are very sad to report unexpected news today. Despite the efforts of many people at EclipseJet Aviation and ETIRC to obtain necessary funding to close the purchase of the assets of Eclipse Aviation, the closing of the sale transaction has stalled and our company is out of time and money. Given the dire circumstances in today’s global marketplace and the lack of additional debtor-in-possession funding, the senior secured creditors of the Company filed a motion today in US Bankruptcy Court in Delaware to convert the Chapter 11 case to a Chapter 7 liquidation. This action, under the circumstances, is being supported by the directors of Eclipse.

What does this mean for each employee? The furlough converted to a layoff effective Thursday, February 19, 2009. Most regrettably, you will not be paid the paycheck due on Thursday, March 5, 2009 nor is any vacation pay available. You may have certain rights to seek payment in the bankruptcy proceeding; you may receive additional information about that from the bankruptcy court.

As it stands today, all benefits coverage will end at midnight on February 28, 2009. COBRA benefits will be available for the month of March if you wish to sign up for medical, dental and/or vision coverage. Later this week you will receive a termination package in the mail which will have information regarding all of your benefits.

The Bankruptcy Court will likely appoint a Chapter 7 trustee in our case within 30 days, at which time the trustee will control all assets of Eclipse and will seek to sell them. We cannot comment at this early stage on any liquidation path that might be pursued or possible interest from potential buyers.

We have times set aside on Wednesday and Thursday for each department to come in and collect their personal belongings in their cubes.

Building Schedule for Employee Access

Ø HQ Wednesday 10 to noon

Ø SP 2 Wednesday 1pm to 3pm

Ø SP 3 Wednesday 3pm to 5pm

Ø SP 4 Thursday 9am to 11am

Ø SP 9 Thursday 9am to 11am

Ø SP 10 Thursday 1pm to 3pm

Ø DEII Thursday 1pm to 3pm

Ø SP 11 Thursday 3pm to 5pm

Ø Gainesville Wednesday 10am to noon

Ø Albany Wednesday 10am to noon

All of the executive management team at Eclipse gives you our most sincere and heartfelt thanks for your tenacity and perseverance in trying to deliver this dream we know as the Eclipse 500. We gave it one heck of a try. We are sorry that it came to this today.

Mark Borseth

Michael McConnell

Eclipse Aviation furloughs employees

2009-02-18T11:52:00.000-08:00

UPDATED 21.00hrs GMT

This from the inbox, giving us the 'official' text:-

Wednesday February 18, 2009

Eclipsers,
We are sure that you have noticed that the sale of Eclipse Aviation is taking longer than
expected. The efforts of many people to finalize the sale of Eclipse to EclipseJet is still
on course but slower than we all had hoped for. Even with the difficult financial markets
around the world, all actions to date allow us to believe that the sale and closing of the
overall process is well within reach. In spite of this optimism, we now find it prudent to
take action to provide us the best possible chance of assuring a sale closing occurs.

To make the company’s remaining cash last as long as possible and give us the most time
to complete the sale, the Board of Directors directed management to furlough essentially
all of the company’s employees effective today. This means you can go home and unless
you are asked, you should not report to work starting tomorrow, Thursday February 19,
2009, until further notice.

You will receive Thursday’s paycheck as normally distributed for work through Saturday,
February 14, 2009. It is our intention that all benefit coverage will remain in full effect.
We regret the need to take this action but we ask that you see the necessity given the
circumstances. You will be contacted at your home address and/or by home phone to
notify you when to return to your job or to provide any additional updates.

While this is unpleasant and hopefully short lived, we are very thankful for all of the
ongoing support you are giving to Eclipse Aviation. We hope to have good news to
report to you in the coming days.

Roel Pieper
Mark Borseth
Michael McConnell

A sudden 'bloom' on the inbox always means big news out of ABQ. So it proved when I checked in this evening. At a meeting this morning, and via email for some, the staff were told of an immediate closure of the factory. Pay will be honored, but not for the past few days. As I get more detail I'll post it here, or as 'notice' on the blog.

The signs (behind the scenes) have been getting steadily worse for the past 10 days or so, with a number of missed deadlines in the Chapter 11 sales process. In the past few days, Roel has also gone 'walkabout', despite the crisis at the company. Various financial types have been deeply involved, trying to plot a way forward. I'd love to say more but I won't because today we need to think about the staff, their families and the supplier community.

I think I can speak for all of us 'critics' that this event, although long predicted, is not one that gives anyone a feeling of joy. My heart goes out to the breadwinner heading home to tell loved ones of hard times and disrupted lives and to the homemaker already struggling to stay upbeat in trying times.

One of the 'Honor Roll' has already offered help with those seeking jobs. I post his 'special purpose' address here, and will be happy to do so for others who's bona fides I'm happy with.

ColdWetMack@gmail.com

Coldwet (well known to all of 'us') is a solid professional, who will do all he can in the situation.

Every cloud has a silver lining, even if it seems bleak at present. Some suppliers are also in a very bad place, but can now at least move forward with other projects. Finally, it's almost inevitable that the next step will see the remaining stakeholders (owners, depositors and investors/lenders) left with little to feel cheerful about.

At least the speculation is coming to an end. One way or the other, this matter draws to a close.

Shane

Love it, loath it.

2009-02-12T06:30:00.000-08:00

We've been so tied up waiting for news from Moscow that I've been slow to update the headline post, but I've also been working with a number of owners and/or pilots to provide a 'warts and all' review of the FPJ in the real world. It's fair to summarize my findings with the headline above, as it's clear to me that the aircraft is like the mythical 'little girl'. You all know the story, which goes like this:-

"When she is good, she is very, very good. But when she is bad, she is horrid"

So, with that in mind, herewith a mixture of quotations (in red) and my own contributions which remain in good old fashioned black. It's a very underrated colour in my humble opinion, but I digress.

The basics

Most of us have never flown an FPJ, and it's probably fair to say that few of us critics would embrace the opportunity were it ever to present itself. Across the range of replies I've had, the common theme is that the bird flies very well, and meets (or exceeds) it's performance numbers. A typical comment:-

"Aerodynamicly they got the airframe design and engines right, they are a well blended match producing the performance numbers that were advertised. So Eclipse actually did meet that promise. The jet is very simple to fly, and the Avio NG system, although full of bugs, has a great display presentation and very logical interface to all of the aircrafts' systems."

Avio, both versions

It has some fans. Pilots like the presentation of everything in one style and they like the Crew Alerting System (CAS) popping up in plain view. They like the fact that you select one 'TO Configuration' and pretty much avoid the simpler ways to kill yourself on takeoff.

"The Avio NG system, although full of bugs, has a great display presentation and very logical interface to all the aircraft systems. For most this will be their first exposure to a crew alerting system. The CAS really reduces the workload and keeps you well informed on the health and status of the jet."

What drives everyone mad is due to the level of integration which tends to alert you a lot. Most pilots report that the audibles are too loud, to the point where they can interfere with ATC. The problem here is that there is no way to 'save' your preferred volume so that each time you fly you end up adjusting it again.

Startup, taxi and takeoff

A common thread with the FPJ is the GPU 'requirement'. It seems that any sort of hot weather at all makes the cockpit too uncomfortable to work in, so a number of pilots insist on starting the aircon first, which naturally ties you to the GPU. After doing the normal checklist, which is straightforward enough for a twin jet, it's time to taxi away. The size of the tires is blamed by several for what's claimed to be a rough ride, and the turning circle means you need to stay on top of your game out to the runway.

"Acceleration is fairly quick, inside is amazingly quiet. There is a nuisance alarm that can occur at warm ambient temps giving the occassional engine Warning message but other then that its APR armed, Airspeed alive, and at VR hands off the thottles and pull back on the stick. I wasn't sure if I would like the side stick, but after using it, I love the fact that you're wide open in front of you, perfect if you want to use your laptop or read something. At 400 feet flaps up, set max continuous thrust, and yaw damp on, 1000 feet auto pilot on, heading select, and the next check is 10k for recognition lights off and look for a delta P on the pressuization. To date all delivered E500'a are raw data, VOR DME aircraft. Autopilot is only good for pitch and roll. I have yet to fly an Eclipse that doesn't roll left and right 3 to 5 degrees when in heading mode."

So far, so good. The bird starts, taxi's and takes off without huge drama and in commendably short order. The takeoff distances are praised and the 'feel' of the aircraft also gets high marks.

Climb, cruise and descent

The Autopilot has its' limits, which many pilots have observed. While good in calm air, it tends to bug out in anything other than light turbulence. Range and payload are better than you would think, in large part due to the very low specific fuel consumption. This is clearly a tribute to the basic design, as well as the job P&W did on a 'clean sheet' engine. But there are 'real world' issues that you don't expect.

"Another downside to the autopilot is when commanding pitch changes in an NG aircraft. It sometimes takes up to 20 seconds or so before the input gets processed by the computers. My technique is to dial in 4 to 5 clicks of the wheel and resist the temptation to dial more if there is no initial response. Wait it out, eventually it will happen. In pitch mode the autopilot does a terrible job of maintaining a steady rate of descent, and it requires constant attention. I actuallly think it would be less work load to hand fly the descents."

ATC still don't quite know what to make of the FPJ. Over time this will probably go away, but only if the FPJ stays alive long enough, in numbers, so that the slower speed becomes more familiar to the controllers. To mix it with the jets at higher FL's also requires range limiting 'max thrust' settings, and there are issues with static interference on the radios cause by ice crystals. So, the comfortable range flight of about 850nm is coming to a end. What happens next?

Final approach and landing

Distractions from the 'high volume' audibles during final are a pain, as are the speed expectations from ATC. Our old friend of tyre wear makes a welcome reappearance on the blog. Remember when all we really talked about were simple things like that? Anyway, a concluding quote from an owner/pilot.

"Descents and landings are straight forward, although you will soon find that the slow speeds on approach used in the Sims create road blocks in the real world. Because a lot of ATC controllers aren't familiar with the Eclipse, they know you are a jet and sequence you into traffic accordingly and are expecting jet speeds. I usually fly the approach around 120 to 115, and slow as I approach 200 feet AGL. The jet lands easy, and as long as you touch down close to VTD, braking or tire blowouts should not be a problem. The tires do not wear well at all, and it is not the landings that take the toll. Any time the jet rolls on the ground, you can see black marks on the pavement, proof that the tires are leaving behind lots of rubber. And they wear on the outside near the sidewalls, not in the center."

So thats a pretty nice summary of the general performance of the aircraft, with details supplied by those who fly it. Naturally, there is more.

Living with the 'issues'

Naturally people are reluctant to be identified when there is still a remaining chance the original service centers will be around. They don't want to be scapegoated for drawing attention to the problems they've experienced so I'll have to be a bit vague in collating this section and avoid direct quotations.

The CAS system does exactly that. It keeps the crew alert by streaming plenty of false messages into the cockpit. All pilots who've contacted me report the same 'heading disagree', 'attitude disagree' and 'stick pusher fail' messages which come and go at a whim. The general experience with the earlier birds is worse, but even the Avio NG craft deliver master cautions and warnings of a spurious nature about one flight in four.

Mechanical failures abound, sadly, with door seals, air conditioning, rudder and elevator trim 'issues' very common. All owners report difficulties with water getting into places it shouldn't, which is bound to happen when you're away from your home base with it's nice dry hanger. Most people also report interior trim falling off or not being fitted properly in the first place. There is a thread running through most of the report I have about difficulty communicating problems to the service centers. The staff themselves generally perform trojan work, but parts can take a long time to arrive from suppliers (I wonder why...) and often take several attempts to fix the underlying problem. At least one of my correspondents thinks this is due to the high level of integration within the aircraft, which means software problems with Avio are confusing the mechanics and (to some extent) vice versa.

So, there you have it. An up to date report, complied from many sources, on the current state of the FPJ, as an aircraft. As mentioned on the top of this post, we await news on the Chapter 11 outcome for the company, both from Moscow/ETIRC and the Bankruptcy Court in Delaware, where an appeal was lodged yesterday.

Spring approaches, as does the anniversary of the NG version of this blog. I'm just beginning to wonder if company (any version) will survive to help us celebrate the event, which takes place on Monday!

Shane

Eclipse is dead, long live Eclipski

2009-02-06T01:22:00.000-08:00

According to the Governor of Ulyanovsk, Vladimir Putin has interceded on behalf of Eclipse Aviation. The Russian government has increased capitalization of the Vnesheconcom Bank by one hundred billion rubles, almost three billion dollars. Some of this is earmarked for ETIRC.

Asked for comment, a longtime Eclipse supporter said, “I’m just hoping they spend all of it on Eclipse… it would be a wise investment. Heck, for three billion dollars the Russians could annex the whole state of New Mexico. It would offset the bad deal they got on Alaska. I’m going to introduce the Governor of Ulyanovsk to Bill Richardson.”

Asked about the plane being built in Russia he added, “You know the Russians build great farm implements and heavy equipment. Right now the Eclipse 500 could use the robustness of a reliable farm tractor. I’m starting to study the Cyrillic alphabet so I can read the instrument panel. I can’t wait to take Putin for a ride in my jet.”

So we turn to another chapter in the Eclipse saga. Three billion down and three billion to go.

The company as we knew it will recede in the rearview mirror and we have unfinished business. Having had minor supporting roles in the investigations of PanAm 103 and TWA 800, I know survivors of aviation disasters need ‘closure’. Perhaps the blog can assist with this.

I propose an Eclipse Requiem Mass be held at Our Lady of Guadalupe Catholic Church in Albuquerque, New Mexico. We need a mournful but uplifting piece of music, composed for the occasion. I suggest something along the lines of Adagio for Strings by Samuel Barber, or perhaps Requiem by Giuseppe Verdi. With the broad array of talents represented here, there must be a composer in the house.

Several have written here on integrity and ethics but none more eloquently than Gadfly. He is a professed man of faith and is best suited among us to deliver the eulogy. We can expect a thought provoking speech on the mortal temptations of the flesh, tempered with hope for better days. He may wish to call on the members of congregation for their recollections of the departed so start mentally rehearsing your piece. The program will be printed in English, Dutch and Russian with tasteful Eclipse colors.

We need to consider the Eclipse Survivors Memorial. This should be located near the rim of the Meteor Crater in Winslow, Arizona. The soaring aluminum sculpture will of course be fashioned of friction stir welded aluminum. On the front will be the engraved names of all 260 initial owners. An epitaph at the bottom will read, “A small smoking crater beside a giant formerly-smoking crater.”

Smaller text on the back of the monument will list 10% depositors, 60% depositors, investors, employees, politicians, parts suppliers, motel operators and taqueria owners. Affixed to the top of the memorial will be a life-size stature of Vern Raburn, reaching plaintively for the sky. He will be flanked by bronze replicas of the Collier Trophy and Cabot Award. The DayJet monument, complete with a working ant farm, will be located discretely nearby. We need a design competition for these memorials, to be judged by a team selected by Shane.

The dedication ceremony will draw cognoscenti from around the world. Sam Williams will be in back wearing dark glasses and a baseball cap. Bill Richardson will break into inconsolable tears. The service will end by spectators throwing rose petals, Eclipse apparel and memorabilia into the Meteor Crater (with the approval of the National Park Service, of course.) The crowd will retire for refreshments to a large Eclipse tent, preserved and replicating the vast presence and former glory at Oshkosh in year 2000.

Finally the Eclipse Fly-in at Sunriver, Oregon in September needs to be carefully orchestrated. It should be modeled after last year’s Legends aviation meet - billed as the last great roundup of P-51 Mustangs and the men who flew them during World War Two. It should culminate in an Eclipse flyby in the missing man formation. There won’t be a dry eye in the crowd.

We need volunteers. Can we count on the blog to assist Eclipse survivors in their one great hour of need?

As always, our very own Black Tulip blends truth (yes, Roel IS getting VEB support) with fiction in a delightful way. The remaining details have to be worked out, and I think it's very significant that the signing event is due to take place in Moscow on TUESDAY next week. Who says the Russians don't read the blog, or have a sense of humor?

Thanks again BT, and long may you continue to provide a 'sideways view' of our favorite American, sorry, Russian "Very Costly (sorry again, Delayed) Jet".

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

Économie de bouts de chandelles

2009-01-29T06:00:00.000-08:00

This phrase solved a real 'writers block' for me, so thanks Fred (and Julius) for your inspiration!

What I want to draw everyone's attention to now is the future of our favorite Very Costly Jet, and this lovely French 'truism' (roughly translated as 'saving the end of the candle') is apt in this context. The question I've been asked most in the past few weeks is 'What should depositors do?', and I've tried my best to illuminate what MIGHT happen, for those who've contacted me.

A BIT OF BACKGROUND

It's easy to forget, sitting here on wearing our critic's uniform, that there are something like 450 '10%' and 230 '60%' people out there. A lot of them will have had a very nasty shock on the 25th of October, and really don't know where to turn to. A considerable number joined the 'E5C' group, which remained under the control of the 'faithful' throughout this process, some did their own thing (the 'Production Line Group' and those stuck in the ConJet) and a surprising number seem to have been kept in the dark. Many seem to have sent the money, sat back and blissfully ignored what they'd been suckered into.

'We' need to be aware that people reading the blog find it difficult to understand that we're not doing this for the fun of it (alone) but in a sincere effort to prevent further losses by the unwary. So, let's all try to cut the new reader or poster a little slack and make sure to reference the home page for the 'historical' stuff, as well as our little 'Glossary' of common terms.

THE CURRENT POSITION

I should issue a health warning, as in 'this is what we UNDERSTAND' is the current position. Sometime in the next few days the sale of the assets of EAC will complete. At that time, s/n 260 will (finally) be delivered to its owners and will become the LAST ever FPJ shipped by the original company. Thereafter EclipseJet Aviation International (EAI) is the beneficial owner, free of all contracts and liabilities, of the factory and all associated with it. The current fleet loses all warranty or contracted services (JetComplete) and has to pay whatever EAI decides for parts and labor. Under a Court sanctioned deal, the 27 aircraft on the production line will be finished and delivered to their purchasers upon payment of a further $1.375 million. This money is IN ADDITION to all payments made to EAC in the past.

However...

The Production Certificate for the FPJ 'died' with EAC. This means a number of months will pass (average guess is 6) before a new PC issues to EAI. I'm taking from this that it will take at least this long to get the last of these birds out the door and I suspect it will take longer. We know that critical suppliers have abandoned the FPJ, so new ones will need to be integrated, and others will likely be very reluctant to ship without cleared funds.

EASA certification requires full FIKI and AvioNG 1.6 and both of these need full FAA approval. In the revised circumstances, I pretty confident both agencies will be going over the aircraft with a fine toothed comb....

FUTURE PROSPECTS, IF ANY

Basically, those 10% and 60% people are in a real bind. In my opinion, EAI will seek more money, probably quite a lot more money, from this pool. They are already invested in the aircraft and will be under pressure to get something (anything) rather than walk away. So, I expect an offer will go out to these unfortunate depositors which says 'your deposit on s/n xxx has been converted to a coupon with a value of $yyy,000 which can be used to purchase a fully equipped FPJ at $2.5 million'. After some flowery words about a brave new outlook (or similar marketing fluff) the kicker will be something like:- 'In order to secure your position in the new order book, please remit $1.5 million to our bank account by March 1, 2009. The balance of $zzz,000 will be due on delivery. This limited time offer will not be repeated' etc etc.

Now, I'm probably wrong about the numbers, but then I don't work for EAI and I'm not a mind reader. But I know that as soon as these offers reach the depositors, I'll be sent a copy. In fact, I'm promised LOTS of them, which I'll be comparing to make sure they are broadly similar.

Why are depositors going to do this? Well, it might be a surprise, but not all of them trust the sales department at Eclipse anymore....

MY BROAD ADVICE TO DEPOSITORS

When this offer issues, which I'm promised it will be in the next few days, do nothing without taking professional advice. Talk to your lawyers, your accountants and others who've also been involved with this sorry saga. Consider alternatives like the Phenom 100 or the Cessna Mustang, both of which are now in serial production and are from companies with extensive service networks and a credible business plan going forward. Above all don't send any more money to EAI (or anyone else) until you've had a chance to reflect on the angles.

You are welcome to join my 'depositor mailing list', where I'll be contrasting the various offers made around the globe. You name and identity will be protected, as all who've dealt with me will attest, and you may learn enough to save yourselves a small fortune. Just email me at

eclipsecriticng@gmail.com

and include 'Depositor' in the subject line. I'll do my best to get back to you promptly with any information I have to hand.

So, we're back to the 'candle' phrase we started with. The French have a fantastic world view, based on a genuine openness to change and a real thirst for adventure. Many of the things we admire in good food, classic wines and creative design flair comes to us with a Gallic flavor and is presented with a superb zest and 'joie de vivre'. As a people, they correctly despise those who regard money as an end in itself. So, I say, don't waste time trying to squeeze something out of this mess. If you have lost in EAC, think very, VERY carefully before adding to you woes....

Shane

SOLD!

2009-01-20T13:18:00.001-08:00

Yes folks, Roel and his merry band are the new owners of the assets of Eclipse Aviation. They've chosen 'Eclipsejet Aviation International' as the name for their 'new' enterprise so, let the celebrations begin, pop the champagne and shower the homecoming champions with ticker tape. Payroll will be made this week down ABQ way, and all bar the fine print is ready for signing in court tomorrow, Wednesday the 21st of January 2009. Those who paid deposits/progress payments on the aircraft currently on the production line (last one is S/N 296) will be offered a 'fixed price' deal at $1.375 million extra for a 'final spec' aircraft, but some of you may need to act, so follow my instructions below.

But....

Shortly after the ink dries, all depositors (other than the ConJet/E400 group, also see details below) will be formally told their contracts are worthless. The new cost price of the aircraft will rise, and no refunds will be paid. The price for the base aircraft will rise, probably to $2.5 million. Suppliers have been offered cents on the dollar and a small share in the company, if they agree to new vendor contracts. The City of Albuquerque will also want to discuss what Roel intends, as there are a number of reporters asking searching questions following the revelations in the bankruptcy court.

The E400 group have managed to get the judge to escrow $3.2 million of the cash due from the sale until the outcome of their claim hearing. At least this will give them time to dig up the audio/video records of Wedges speech at Oshkosh last year, when he stated the $100k deposits would be in escrow.

Al Mann continues to support the company and will at the very least raise the moral tone in the boardroom. He's well known in business for his ethical approach, especially towards staff. It was Al who made sure the payroll 'hiccup' last November was corrected as quickly as possible. It's just a pity that in this turkey, he was surrounded by sharp operators and dodgy computer salesmen.

So, if you are one of those who's serial number is lower than 296, and you have paid your deposit/progress payments, but have NOT been represented by a lawyer, contact me promptly and I'll email you the appropriate details. But be QUICK. You have until 12 noon ET tomorrow to agree to the 'deal' and get included in this part of the Court documents. The usual address will get me

eclipsecriticng@gmail.com

I'm sure this headline will be updated, by events if nothing else. Stay tuned to your favorite Very Cheap Jet, sorry that should read Very Costly Jet, blog.

Shane

Where now?

2009-01-13T08:11:00.000-08:00

This week the Bankruptcy Court in Delaware will rule on the Chapter 11 process. As there is only one 'credible' bid in play as I write, from Roel Peiper, it looks as if we can predict the future ownership based on what we already know. With that in mind, I decide to review some court documents that came my way. They are (or were) available to the general public and contain the facts and figures available to the company and it's officers, suppliers, customers and staff at then end of November 2008. Nothing in the files is therefore secret, but some people may find it hard to accept their dirty linen being washed in public, so I'll try to avoid naming too many names. If I've put you in the spotlight unfairly, drop me a line at eclipsecriticng@gmail.com and we'll see what we can do.

The FACTS

1. Total deliveries. 259 aircraft since the 31st of December 2006, although not all are currently in the hands of customers. Some have been retained in companies associated with EAC, or 'loaned' to ex CEO's. S/N 260 was in process of being delivered to a company who had paid EAC not less that $1,288,000 when the aircraft was 'seized' by the bankruptcy process. It's the subject of it's own legal action and I'm sure we will hear more.

2. 'Operations' income, per the 'Statement of Affairs' was $318,000 in 2006, $102,694,000 in 2007 and $210,185,000 (to the date of filing) in 2008. Interest earned (presumably from depositor funds) was $1,659,000 in 2006 and $4,047,000 in 2007. As a historical footnote, DayJet paid $20,000 in 2007, for something....

3. Current spending. In the calendar year prior to filing, EAC had paid $61,606,000 to creditors, and $85,443,000 was listed as the amount still owing. There was $81,455,000 (September 2008) of inventory in stock. There were 28 (give or take one, see s/n 260 above) FPJ's in production at the end.

4. Refunds. Something called "Olympus Aviation Corporation" looks like it was the last one to succeed in recovering a deposit ($175,000) which it did on or before 24th October 2008. That left 22 'pending' lawsuits seeking deposit refunds at time of filing. It's not clear how many aircraft these suits involve.

5. Property held for another person. There was $85,787,857 (and 64 cent) held by EAC, the vast majority of which is for 'City of Albuquerque' or 'Wesco Tools'. The items from Wesco I understand (tools etc) but the City seems to have provided all sorts of stuff, including computer servers and things like a 'Teletronics-Data acquisition unit -Exp AC 106' (listed at $53,523.79). The list is varied, and goes on for a long time.

6. Receivable balances. EAC list $20,720,225 as owing, mainly from customers.

7. Deposits. EAC list 'Creditors Holding Unsecured Nonpriority Claims' (and this is truly AWESOME) of $568,143,152.55. A chunk of this is money claimed by suppliers, but I gave up counting the number of 10% and 60% listed, after I got to 300. In another document, ETIRC were shown as having paid $8,900,650 (and 39 cent) as deposits for FPJ's. At least they had the sense to avoid the Con Jet, which tells its' own story...

Speculation, short term

Roel will buy the assets, probably with input from Al Mann. There will be a round of cuts, including staff reductions. Suppliers will be offered some small amount of cash (cents on the dollar) and be promised the earth to stay on board. Depositors well get some sort of 'coupon' to salve their wounds, but the price of the FPJ will be increased by a similar amount, so they will still have lost everything. Customers will be told that parts are more expensive and that all repairs must be paid in cash before return of the aircraft.

Speculation, medium term

Within a short period, probably less than 6 months, Roel will be facing further cash problems with suppliers and will end up having little or no choice on Chapter 7. Sales of aircraft were already tailing off, which is one of the reasons EAC ran out of cash in the first place. New victims will be hard to find, once the remaining Faithful (and there are very few left of them) have paid up for the aircraft he can build in that time.

Speculation, long term

Much more difficult, post Chapter 7. I wonder how the avionics can be supported, given the very high order of integration within the FPJ. AvioNG is touted as a major strength of the package, whereas most people see it as a liability. P&W can be relied upon to support the engines, but will be able to 'think of a price and double it'. The airframe will present special challenges when repairs to the FSW joints are required. Further AD's will present problems, and the whole area of 'upgrades' to keep EASA happy presents it's own pitfalls.

My opinion

The facts presented in the Bankruptcy documents prove that the numbers don't add up now, and have never added up at any time. A whole range of people were sold a concept which had never any chance of becoming a reality. The City of Albuquerque, depositors, suppliers, banks and shareholders are all left nursing wounds they won't forget in a hurry.

I wish the new owners all the best of Irish luck. This 'business' is a crock, was always a crock and has no chance whatsoever of being anything other than a crock.

But I am biased.....

Shane

Reviews are fashionable, unlike EAC

2009-01-03T04:18:00.000-08:00

I thought it timely (and, lets be honest, fashionable) to carry out a 'review' of our year. Ok, ok, it's not a full year for Eclipse Aviation Critic NG just yet, but you get my drift.

As most of you will recall, Stan called it a day at the end of January 2008, whilst allowing 'us' time to find an alternative home. After various forays', a large number expressed dissatisfaction and I decided to copy the style, location and name on the 16th of February 2008. Gadfly made the second 'comment', which really set the tone in those early days:-

"Put on the kettle, and this will seem like home in no time."

The record will show that this was one of the very few one line comments from Gadfly, who later had the courage to stand up for the defense of our 'home' in a very practical way. Thanks again, Gadfly, in case you didn't hear me the first time.

During those first 6 weeks, we managed to have a variety of interesting and wide ranging discussions on the price of oil, the first bank collapse, the Russian factory and the possibility of EAC raising funds at Oshkosh by selling T shirt 'positions'. A series of valuable contributions came to the blog via the blog email address (eclipsecriticng@gmail.com) from suppliers, customers, depositors and, in particular, staff. We also got the first signs of trouble with the FAA.

April was a huge month, beginning with the confirmation that Avio NG would be 'completed' by the Garmin G400's and gathered pace with the announcement of yet another 'special offer' to raise funds. But the action of the Wedge that truly raised the stakes was his attempted SLAPP suit against 29 named bloggers. Turns out this was a really serious mistake by Wedge, who suddenly found himself in the media spotlight for all the wrong reasons. If he was right, and the Honor Roll really did work at EAC, then he was attempting to hide wrongdoings by his company. As it happens, he was wrong and had simply been trying to prevent free speech. Or at least the words he didn't like, as his own actions with Brian Skupa at the same time were rather extreme by any standards.

The month of May included the scaling back at DayJet, increased press coverage of the blog, words from suppliers and staff that all was not right at EAC and various legal actions funded by Rich Lucibella (a.k.a Gunner) who had undertaken the formal defense of the Honor Roll. In the background various attempts were made by EAC lawyers to reach a 'settlement' but Rich was having none of it. He knew that Wedge was on the roasting spit and wanted to turn it a few times. The month closed with the formal announcement of the Con Jet and a price increase for the FPJ.

June contained a few real gems, one of which sticks out, from Shadow:-

"Oh, how I love to watch a cash arsonist at work."

The best definition yet of the Wedge, and a reminder of how some of the best comments are the one liners. The month also saw healthy discussion on the 'Stuck Throttles' including an excellent headline post by Karen Di Piazza and a stellar parody from Black Tulip on the little known crew monitoring systems, FOQA. Read it and weep.

July began with my 'Tales of woe' headline, and the first indications that refunds due after the price increase had not been paid. It ended with the Wedge's departure, which he was forced to announce his own firing at one of the early Oshkosh press briefings. What a way to go. Other highlights included the increased participation by suppliers and staff, and a much higher visibility for the blog on Google, in the aviation media and through the mainstream press. It was a busy month all round.

August and September were varied. We started with the end of the EAC action against the Honor Roll, moved through the DoT IG investigation of the TC and PC awards, had the 'operational excellence' program (fire almost half the staff) from Roel Peiper and had that surprise visit from our old friend Ken Meyer. In the background, suppliers in particular were wailing at me about not getting paid, and the usual roll of legal actions against EAC seemed to gather pace. The 'die hards' were also having real issues with how they were being treated and I started to listen to the various conference calls that took place between EAC management, customers and suppliers. Mike McConnell in particular came across as a self serving twerp of the worst sort. My only regret is that he works in aviation and not in my field of activity, for one of my competitors.

October and November began with another AD for the FPJ, continued with the closure of DayJet, saw our 50th headline post and our 10,000th comment and had the 'Nuclear Winter' speech from the Wedge at the VLJ conference in Florida. It continued with more word from depositors issuing proceedings, a flood of negative press comments on the future viability of EAC, saw the staff unpaid for a short period and finished with the Chapter 11 action by the management. Phew, they were busy months....

December was much quieter, where I seem to have been appointed (by customers and depositors) as the official clearing house for the various groups formed after the Chapter 11 proceedings. We finished with Black Tulip, who was kind enough to see the funny side of a group of lawyers inviting the Wedge to speak at an upcoming event on bankruptcy. Who would have thought American lawyers saw the funny side of things?

So, there you have it. 2008 has left us and the New Year opens on a positive note. We are all still (more or less) in one piece, EAC struggles on and the next two weeks will determine what the short to medium term holds for suppliers, customers, staff and depositors. Shareholders know they are last in the queue, unless of course, you name happens to be Roel Peiper. The remaining banks are very reluctant to fund anything, a new and untested American President has enough problems to test Superman and every company in aviation is shedding workers and/or scaling back product development. The auction results from the 'bidding process' for EAC will make interesting reading on the 14th.

Oh, and a Happy New Year to one and all.

Shane

A bit of Holiday Cheer....

2008-12-26T09:29:00.000-08:00

Vern spoke at the VLJ Forum in November and dispensed the Raburn brand of wisdom to an attentive audience. In this holiday season, the world is troubled in so many ways. If only we could sit at the feet of the master to receive more revealed truth. Civilization is blessed in that Raburn is the gift that keeps on giving.

Vern is speaking in February at a seminar held by the Journal of Air Law and Commerce. The Journal is the oldest scholarly periodical in the English language devoted primarily to the legal and economic problems affecting aviation and space; it has a worldwide circulation with more than 2,300 subscribers in 54 countries.

We are lucky to have received an advance copy of Vern’s prepared remarks:

“Good morning, ladies and gentlemen, dudes and dudettes. My name is Vern Raburn. Some have called me the Father of the Very Light Jet – I’m not sure about that but I would certainly be named in any paternity suit. Others have identified me as the Grand Panjandrum or Exalted Vizier of the VLJ Revolution. I accept this with my characteristic modesty and note that I received the Collier Trophy and Cabot Award.

The name of the Journal contains the words Air, Law and Commerce and I’d like to address each of these topics. I’ve had a lot of experience with air, especially heating it to temperatures well above ambient. I have considerable involvement with the law… in fact my legacy is keeping a whole herd of lawyers busy in Delaware and elsewhere.

It is commerce that I would like to address in detail. Some have questioned our success during my tenure at Eclipse Aviation. We did spend quite a bit of money. In fact our spending would exceed the gross domestic product of some small countries. But these funds were invested wisely. The list of technical advances incorporated in the Eclipse 500 is awesome: cutting-edge avionics, brakes, tires, windows, pitot tubes, trim tabs, throttle quadrants, digital engine controls, bleed air systems, environmental controls and novel metal welding techniques.

However in spite of brilliant design and execution, our company was laid low by the global economic crisis. It is clear now that Eclipse Aviation was the miner’s canary in the worldwide financial meltdown. We were the recession’s earliest victim and the skies would be darkened with VLJs had we not encountered these impossible conditions. I expect that MBAs for generations to come will study our business case.

I am heartened by the financial bailout package just announced for two of the big three automobile makers. I have an appointment with President Obama about Eclipse Aviation – the company may not be too big to fail, but it is too important to let slide. I have soap in my hole; er no, no. I have hope in my soul that Barrack Obama will listen to my appeal. After all the Eclipse 500 is the greenest jet out there and the only one able to sequester carbon as it flies.

Thank you, and now I will take a few questions."

As usual, I'll remind our readers Black Tulip is our resident satirist, and that the tulip mania peaked in the Netherlands during the 1630s. The black tulip was the most sought after, until found to be biologically impossible.

A call to arms

2008-12-20T10:05:00.000-08:00

I got this two days ago, from within the group formed to represent the '10%' depositors, who had requested refunds. Since it's hard to get any good news out of EAC these days, I thought the following deserved greater visibility, and requested permission to make a headline out of it. For those of you to whom it is addressed, I can only recommend you follow the advice given, as there seems little alternative at this stage. However, you are all adults, so must make your own decisions. I provide this platform willingly, in a sincere effort to help, not hinder, the E5C efforts to coordinate the response by owners and others affected by the EAC Chapter 11.

Shane

Fellow Eclipse Deposit Refund Seekers

During a conference call which occurred last Friday, December 12, 2008, legal options were discussed as how to proceed with the Eclipse Aviation Bankruptcy. A firm with experience advanced a "Constructive Trust" theory. For the group's benefit we sought out opinions with three additional law firms. The three law firms were presented with the facts, contracts, refund information and associated emails. The three law firms firmly believed that the Constructive Trust theory had no legal basis and no chance of success. The phrase bandied around was "throwing good money after bad money."

The other legal option would be to become an unsecured creditor. With the amount of liabilities versus expected assets the likelihood is the unsecured creditors would not see a single cent from the sale of the assets.

This leads to the question to what is the best option available for those seeking refunds. After much consultation it appears that the least financially damaging option would be to seek reinstatement to a depositor status (withdrawing the refund request). This would allow the depositor seeking refund to join the ranks of the depositors not seeking refunds, 60% depositors and aircraft owners, which would be most likely considered executory contract holders. The Newco would then have the option of denying the executor contracts, accepting them as is or accepting them with new terms.

Being treated as a depositor would allow you to have more options to realize value if ETIRC or another asset purchaser is successful. The recent EASA certification may also create value for position holders.

The E5C board has been working diligently to pre-negotiate the status of those contracts which are likely to be considered executory contracts. E5C has created an Ad-Hoc committee which has representation of those individuals seeking refunds.

If you have not joined the E5C you should do so immediately: www.eclipse500club.org. The individuals that have 60% deposits and aircrafts have much more to lose financially than those with 10% deposits. The 60% depositors and aircraft owners have been asked to contribute $4500 to the group for legal/financial representation. This new group is called the Ad Hoc Customers Committee. Those of us that have 10% deposits (both seeking refunds and not seeking refunds) have been asked to contribute $2250 towards the fund. Since this would appear to be the best legal option you are urged to join the club and contribute towards the legal fund. The Ad Hoc Customers Committee is committed to protecting all our interests.

Sincerely,

Alex Amor

Light at the end of the tunnel?

2008-12-10T23:39:00.000-08:00

UPDATE ONE

I got this from a 'reliable source' during today (Thursday 11th) and pass it on. As always, it's nice to have a first hand account of these events, in a timely manner.

Shane

Thursday 11th 18.15 GMT

Formation of the Unsecured Creditors Committee
A very interesting day, with a few unexpected surprises.

Per procedure, on Monday December 8th the US Trustee sponsored the formation of the "Official Committee of Unsecured Creditors". There were about 50 people in the conference room when I slipped among those standing in the back. The group was probably 25% creditors or proxies, 50% attorneys and accountants looking to get hired by the committee, and 25% interested gawkers.

The Debtors Team (saying Debtor is so much more apt that saying Eclipse) and the Trial Attorney and Analyst from the US Trustee's office took their place at head table. The Trial Attorney provided a brief introduction on process, and then the Debtors were asked to provide a statement.

To set the scene, Mark Borseth (Debtor CEO) and Bruce Castle (Debtor "In"-House Counsel) were flanked by their hired guns from Allen & Overy ("Out"-House counsel from NYC) and Young Conaway (local counsel). Borseth looked like it was an imposition that he had to be there, and slouched in his seat like my 6th grader. Castle had that deer in the headlights look as he surveyed the standing room crowd. Such a struggle to fly first class from Albuquerque and stay at the Four Seasons with your $700 per hour lawyers.

The Debtors' attorneys feigned having a stack of briefs but in reality had nothing prepared. They spoke maybe 75-100 words TOTAL, lasting maybe 30-45 seconds. The only question pertained the Debtors' requested deadline for objections to their proposed Sale Procedures. Trying to appear magnanimous, the Debtors' Council agreed to another day or day and a half. But in reality he came off as even more arrogant.

At that point, the Debtors Team was asked to leave the room, and the Trial Attorney set out to form the committee. Present were a few big creditors (Hampson, Precision Aerostructures, Pratt & Whitney) and maybe one or two smaller ones. Represented by lawyers/proxy were a few more big creditors (DayJet, LeBarge, etc.) and possibly a few owners.

Notably absent were any actual owners or depositors of any denomination. More notably absent was any significant response to the questionnaire sent to the 20 largest creditors, but available to all. The guys who have made noise for years, and are clammoring to get what is owed them couldn't be bothered to make a day trip to Wilmington.

The Trial Attorney spent a little over 2 hours interviewing the creditors that showed up in person, and calling those that responded to the questionnaire. The Trial Attorney and Debtors Team returned around 2:00 pm, Borseth resumed his slump, and the committee members were announced.

The rest of us were kicked out of the room while the committee had a chance to ask questions of the Debtors. Must have been really grueling, as the Debtors were coming out the door after maybe 3 minutes.

At that point, the committee set about interviewing the law firms and accountancy firms that came in search of work. Kind of like ambulance chasers for the bankruptcy crowd. We all waited in the hallway while each of seven or eight firms made their pitch. In the end, and at around 4:30 pm, the committee chose Morrison-Foerester (attorneys) and Chanin Capital (accountants).

The discussion in the hallway was quite spirited and informative. Remember that except for us few lurkers, they were all lawyers, CPAs, etc.

>> Why didn't any owners or depositors show up? Possibly they felt that Tuesday's hearing on forming separate committees for owners, depositors, etc. would be successful. In the end, the Trustee selected three owners and/or depositors, but none of them were present, much less active in the fight for standing and ultimate recovery. The opinion was that the vocal owners and depositors could have had BOTH three seats on the basic committee AND the opportunity for successful motions the next day.

>> Did everyone see that the Debtors' filings completely ignored the Unsecured Creditors Committee? How could they do that? The UCC is standard, especially in this type of case. Arrogance pure and simple! The Debtors spent pages detailing how warrantee claimants, depositors, JetComplete subscribers, and even recent employees were now considered unsecured creditors, but didn't even mention that group in the filings.

>> What is with the Debtors' proposed timeline? They want to close the sale in 26 business days from the filing, a period that includes three federal holidays and two extended religious holidays. They also claim to be aggressively marketing the company. Yeah right. Every lawyer in the hallway had a stack of objections in hand. All vowed to make that farce get a serious shake up.

>> Who really believes that Pieper and Mann are disassociated, arms length, buyers? While most didn't have the depth of knowledge yet, they all knew about Roel and his son at ETIRC, Roel and his partner on the Eclipse BoD, the play of Al Mann over the years, the Russians, the supposed Spaniards, the basketball team, etc. The discussions of his forcing the company into bankruptcy just to get the assets at the firs sale were rampant. They all knew of the recent EASA certification, and its greater value in Europe than in the US.

>> Who devised the financing schemes used over the years? Looks like Al Mann put money in, and then took lots of money out over the years. Looks like Roel Pieper had convertible debt, which converted again, and again. Maybe the secured creditors are not so secure. If there were note conversions for some, should it have applied to all? Plus, the supposed $28M offered by EclipseJet was felt to be funny money. Debtors expect to get the $20M in DIP returned, along with $1M in expenses, a $4M break-up fee, and $3M+ in other shenanigans. Offer $28M in cash and list $28M in refunds in the same filing, now that is arrogant and stupid.

>> Who was the "other bidder" that everyone has heard exists? It supposedly is lead by a former Eclipse executive.

In the end, the opinion among the lawyers and accountants waiting in the hallway was that for anyone to get anything, the company must be sold and reorganized, and not allowed to drift into liquidation. There is money in the mix, likely money to recover from the coffers of Al Mann and other Board members, the Russian money, the ETIRC resources, etc.

The only thing needed to unravel the whole mess is time. The Debtors know that and are trying to ram the process through and get out of town (aka the USA) before the law comes a calling. The creditors know that and are trying to slow down the train so that sunshine may prevail.

Best legal opinion we overheard was to petition the Court for a Post Hoc valuation and settlement. Allow the sale to go through, escrow the cash purchase amount (so it isn't useable to immediately pay RP's moving trucks), value the company after the "substantial outside investment" closes, and pay off all of the creditors and owners.

It just might work.

That was from yet another 'friend of the blog', which I'm sure you all will join me in expressing our thanks.

The (now second) item reached me during the 'night' of Wednesday 10th December. I'm not in a position to recommend any course of action, especially to those of you who've hired a lawyer, but this chap seems to offer hope. He's also had contact from several of you, especially readers of the blog, who may have struggled to find a US based firm to take on your case.

And he says nice things about me!

A small note for those of you tempted to rely on email. In this spam filled era, it might be an idea to send a fax or make a phone call, as this process is very time critical and you don't want to get lost in the crowd.

So, if you are a '10% depositor who requested a refund', give Tim a whirl. After all, you've nothing to lose at this stage....

Now, if there are other groups out there who are representing suppliers, staff or anyone else with an interest in EAC, feel free to contact the blog.

eclipsecriticng@gmail.com

I'll be happy to help, if I can. Just remember I live in Ireland (in the GMT zone), and I travel a fair bit....

Shane

07.45 GMT Thursday 11th December 2008

Eclipse 10 Percent Deposit Holders Have the Opportunity to Recoup Funds

We would like to thank Shane Price for posting our prior message and giving the motion to appoint a refund creditor's committee the best chance of success possible. The size of this blog's readership was plainly apparent from the many email responses to that message, a number of which spanned the globe. We hope Shane will post this further message.

As most of you know, the Judge was unwilling to appoint a committee of refund deposit holders at the expense of the bankruptcy estate. However, the Judge appeared receptive to our argument that Eclipse held the refunded deposits in trust for the 10% deposit holders. Simply put, our legal theory is that once the deposit holder timely elected a refund of his or her money in response to the June 2008 letter from Eclipse, that money no longer belonged to Eclipse and Eclipse could not spend it. We argue that those funds should not have been spent on operating expenses and should have been segregated and returned. We believe the theory to be a sound one and therefore, we have decided to proceed and see if there is suitable interest on the part of the 10% deposit holders to collectively pool their resources to file a complaint against Eclipse based upon our constructive trust theory and various other claims. At this juncture, we have indications of interest from about 40 refund deposit holders. Further support would be extremely helpful. If you are an individual that made a timely election for a refund of your deposit in response to the June 6, 2008 letter from Vern Raburn, which provided you with that option, yet you did not receive those funds, we would like to present an avenue for you to recoup those funds. Please email me at tmcculloch@gordonrees.com for further information as soon as possible.

Once again, we thank Shane Price for allowing us a voice on his widely read forum.

Sincerely,

Timothy McCulloch/ Senior Counsel
Gordon & Rees LLP
111 W. Monroe Street, Suite 1111
Phoenix, AZ 85003
email: tmcculloch@gordonrees.com
info: my vCard
Main Phone: (602) 794-2460
Direct Phone: (602) 794-2467
Mobile: (602) 568-5291
Fax: (602) 265-4716

Time to reflect

2008-12-04T05:14:00.000-08:00

UPDATED SUNDAY 7th December 00.23 GMT

Eclipse Refunds: For The Ten-Percent Deposit Holders

To anyone who placed a 10 percent deposit on an Eclipse 500, and timely elected to receive a refund in response to Eclipse Aviation Corp.’s June 6, 2008 letter, yet never received a refund before the company declared bankruptcy on Nov. 25, 2008: On Tuesday, Dec. 9, 2008, the court overseeing Eclipse’s bankruptcy will consider motions to appoint an “Official Committee of Refund Deposit Holders.” Deposit holders Bill Hewitt, Bradley Investments Inc. and Don Buttrum, all of whom timely elected but never received refunds, with assistance from the law firm Gordon & Rees LLP, will seek the appointment of a committee to represent those individuals/entities that placed a 10 percent deposit.

It’s the ad hoc committee's opinion: individuals or entities that placed a 10 percent deposit on an Eclipse 500 have different legal rights and remedies, separately from the other creditors and deposit holders. An independent committee made up of representatives from those who placed a 10 percent deposit should be created to ensure that those interests are protected. If you're an individual or an entity that placed a 10 percent deposit but didn’t receive the requested refund, e-mail Timothy McCulloch tmcculloch@gordonrees.com for additional information.

December 2008 will be a pivotal month in the history of Eclipse Aviation. The recent past has seen a radical decline in deliveries, with only two FPJ's finding victims, sorry, customers in November. Clearly the Chapter 11 declaration at the end of last month was a long predicted outcome and is clearly designed by the BoD to shed the onerous parts of the business at the lowest possible cost. Another Airworthiness Directive comes into effect on the fourth of this month and a string of suppliers are in serious trouble having relied on now worthless promises of payment. The good people of New Mexico are down $19 million, and the rest of the original investors have been fleeced for in excess of (self confessed) one BILLION dollars. Owners are on record as having paid almost $300 million for product that can only be worth a third of that. Depositors are in the hole for sums between $150,000 and $1,000,000 each and former employees have been cut off with no recourse. The list goes on, but life is too short....

So let's tally the 'good vibes'

It's possible that Roel Peipers' plan might work, leading to a restart of production in ABQ in the early part of 2009. But only IF his plans get past the bankruptcy judge AND the key suppliers stay on board. He also needs to prove there are enough orders at what will clearly need to be an even higher list price and finally, he has to avoid someone else putting in a spoiler bid. It's possible that one of the existing vendors might do a 'Beech Starship' and simply close the whole show down in an effort to avoid future liabilities. And don't forget, Wedge is lurking. If he won the bidding auction in January this would surely destroy whatever remains of the 'goodwill' stakeholders still have in the project.

There are still a group of depositors who are 'pot committed' and will hang in for anything that they can get. Remember, some of these guys have been waiting for up to 8 years, so what's another couple of months? Likewise the owners who've already got one (or more) and know that the possibility of selling on is negligible until the situation is clearer. These two groups have slightly different agenda's but are likely to continue passive support, as long as it's not costing them more money.

Speaking of money, those of you owners who've not paid your CPI or Jet Complete yet are in for a rude shock. While Chapter 11's principle purpose is to protect a company from it's creditors, those who owe it money are in for the cattle prod treatment until they stump up what's been invoiced. Better hire good lawyers, boys and girls. OK, so this is not 'good news' for those owners affected, but it's positive for the company.

First, an appeal

It appears that there is a willingness to support the depositor/owner group from within the blog. While I laud this sentiment, I would remind ALL of you that one man stood up for this blog when we were threatened by EAC in April of this year. I should also remind you that an EAC employee who's only failing was to speak the truth was also picked on by Wedge at the same time. I speak of course of Brian Skupa. If anyone wishes to make a contribution to any of the above causes, please route it though Gunner

a.k.a.

Rich Lucibella

Publisher
SWAT Magazine
5011 N. Ocean Blvd
Suite 5
Ocean Ridge, FL 33435
Tel: 800.665.7928 Ext 704
Tel/Fax: 561.337.1551

This gentleman has demonstrated with his own hard earned cash, an excellent lawyer (thanks again, Norman) and the belief in doing the right thing, that he can be trusted to distribute any monies in an appropriate manner.

Update for creditors

Second is the unsecured creditors meeting but you better get a move on. It's on Monday next, December 8, 2008 @ 11:00 a.m. in Room 5209 of the J. Caleb Boggs Federal Building on 844 King Street, Wilmington, Delaware 19801. Remember, if you're not in, you can't win, so get yourself represented if you can't make it in person. I'm quite sure that comments posted will keep us up to date with 'progress'.

The latest AD

We know the AD for the 'carbon build up' issue (effective 4th December 2008) limits the FPJ to FL370, even with both engines running. What people should really be aware of is the limits imposed by the AFM for 'One Engine Inoperative - Service Ceiling'. Since the problem which the AD is addressing is exactly that situation, I thought it valid to share with you the relevant data from the FPJ's AFM. At ISA -20C, with 5, 760lbs on board, the service ceiling is 23,250' on one engine. Better be carful in warmer spots, as at ISA +20C you're only good to 7,750'. At those sort of FL's you're in traffic and lots of weather. Where's the fun in that?

Ex employees of the company

There are a number of ex employees who've been left as unsecured creditors, a few of whom have contacted the blog email seeking like minded people. If you are in this position and want to make contact with others, one of those affected has set up the following email address, execlipser@gmail.com as a 'rally point'. Please use it to get together, as we know from our experiences here that acting in unison works better than individual responses. Ask the Wedge, who must still be regretting suing the blog.

An eBay auction

FPJ owners are trying anything to raise a few dollars on the back of their purchase. How about bidding for a ride in a FPJ.? Be careful about this, you might win...

The 'mythical' s/n 266

On the 26th of July 2008, an 'Experimental CoA' was issued to EAC for this aircraft. This was well out of sequence. For example, the 'last' FPJ (delivered on the 21st of November) was s/n 259 and that only appeared on the FAA database for the first time on the 18th of August. The importance attached to '266' is twofold. First, it's been used by EAC to show off the 'final' configuration to customers and suppliers in a effort to drum up support. Second, as the self declared first 'completed' aircraft it was going to be the benchmark for all upgrades as well as the reference configuration for all future production. What will happen to this orphan now? Will it be dumbed down to lower people's expectations, or simply vanish in the fog of war created by Chapter 11? I suspect we will be 'surprised' by it's departure to 'Russia' in the near future...

A personal observation

Clearly, I could go on. And on, and on. But I won't. Last week we saw reaction from suppliers, customers, staff and the owner/depositor to the main event, and the subsequent debate on the blog. As predicted, once cash ran out, the merry go round came to a screeching halt. Smaller suppliers are in a bad way, staff are in a no win position, depositors have been formally notified of their losses and owners have a aircraft worth a lot less than they thought, with an uncertain future looming for all. Events this month will determine if the proposed bail out stands up to scrutiny. I hope that everyone 'escapes' from this mess with the best outcome possible.

And finally (for this post)

On Tuesday 11th April 2006, Stan Blankenship started this off with a comprehensive post detailing the obvious flaws in the 'story' being sold by EAC. You can review it here, but for me, one key line stands out:-

"The obvious conclusion is that this program can only pay off with delivery rates unprecedented in the industry."

How true that statement turned out to be. Indeed it will still apply to EAC V 2.0, if that gets going next year. One thing is pretty certain though. Whatever happens, this blog will continue to keep a close eye on things, and will probably be accurate in predicting the final outcome.

Shane

The 11th Chapter

2008-11-25T08:19:00.000-08:00

HAPPY THANKSGIVING!

It's a fine bright day here in Ireland, and I thought it appropriate to post this little greeting on the blog. I know things have been somewhat gloomy recently, so enjoy this uniquely American holiday with your friends and family.

Best wishes to one and all.

Shane

UPDATED Wednesday 26th
Just so everyone is clear that customers, suppliers, depositors and yes, staff, are indeed 'skewered' by Chapter 11, herewith the email circulated by Mike McConnell yesterday:-

"Today, Eclipse Aviation started a new era in its relatively (feels like forever, ed) short existence. Eclipse filed for protection in a Delaware court under Chapter 11 of the U. S. Bankruptcy Code. The company is using Section 363 of the U.S. code to sell its assets and a lead bidder, an affiliate of ETIRC Aviation, has filed an offer to purchase the business out of reorganization. As part of this filing, there is sufficient debtor-in-possession (DIP) financing to allow the company to operate until the sale is finalized in January 2009. The process allows for the current company operating under protection to continue the manufacture and support of the Eclipse 500.
While this is an extraordinarily difficult thing to face, (NOT if you've planned it for a long time, ed) it was the best possible choice before the Board of Directors, the senior lenders and the executive management team.
The implications of this action are many and certainly complicated for everyone involved. While we have modeled many different scenarios, at this time, until the sale is finalized, the old company cannot disclose the final plans for things like production, suppliers and deliveries in 2008 and 2009.
This letter will attempt to outline the immediate scenarios for each constituency amongst the customer groups.

Customers who have taken delivery of their aircraft:
During the sale process, the new company intends to operate as a going concern to support the Continued Airworthiness of the fleet. However, there is a different path of interaction between customers and the company operating in reorganization.
Warranty - Warranties are no longer covered by the new company, post petition. Any and all maintenance work performed on aircraft will be on a time and materials basis during debtor-in-possession operations. The new company must decide if it will honor any part of past warranties. Any outstanding warranty claims submitted pre-petition will not be honored by Eclipse or the new company.
If your aircraft is currently in an Eclipse service center for maintenance, the new company will continue to work on it and return it to service, on a time and materials payment basis.
JetComplete® - JetComplete contract obligations are no longer being honored in this phase. It is too early to tell if a new aftermarket product will be offered by the new company. This means that Jeppessen and XM services (for the Garmin 496) will no longer be offered and paid by Eclipse on your behalf once your current subscriptions expire. Iridium services will be maintained by the new company for DSU purposes. Customers will be able to go directly to Jeppesen for service coverage so they are not grounded by out of date databases.
Pratt & Whitney Canada - Those with engine coverage as part of JetComplete will no longer have coverage through JetComplete or PWC under JetComplete. Please contact PWC for coverage in the Eagle Service Plan (ESP).
Spare parts - Debtor-in-possession financing will allow for spare parts to be supplied for continued airworthiness, providing the supplier is willing to continue providing parts to Eclipse while in reorganization. In the event a supplier is not willing to supply parts, the new company will be forced to find an alternate source.
Eclipse service centers - All Eclipse service centers will continue to operate while in debtor-in-possession for service, maintenance events and continued airworthiness.
Authorized service centers - At this time, Eclipse Aviation does not have any authorized service centers although a new service model could be implemented by the new company.
Post Delivery Commitments including modifications - Modification plans at the expense of Eclipse will not be honored in this phase of operations. Eclipse intends to sell services and/or the parts kits to all customers who request to have the final configuration installed on their aircraft. The new company will determine how to provide these mod services to the customer base after the sale.
The third party service centers that were intended to perform these mods will be given every chance to fulfill that opportunity for the new company and the Eclipse 500 customers.
Flight Training and maintenance training - Flight training will continue as planned including recurrency training but while in the debtor-in-possession phase, it is no longer part of the purchase price of the aircraft. The new company must determine what type of structure and inclusion in the delivered price can be maintained. Because JetComplete contracts are no longer valid, those requiring and scheduling recurrent training will pay the retail price of that service. Maintenance training classes will continue as required or requested.

TRANSLATION = You're shafted

Customers who have paid any deposit including the 60% deposit:
Those customers who have paid a deposit for an Eclipse 500 are unsecured creditors of Eclipse Aviation. If there is a way to offer consideration to those affected depositors, it will be reviewed for consideration but it is not known at this time if it will be assumed by the new company.

TRANSLATION = You're in bottom corner

Customer who have asked for a refund:
Customers who have asked for a refund are now an unsecured creditor of Eclipse Aviation.

TRANSLATION = You're toast

Eclipse 400 customers:
Customers who have asked for a refund are now an unsecured creditor of Eclipse Aviation.
Those customers that have not asked for a 400 refund are an unsecured creditor of Eclipse Aviation and must wait until the new company decides whether to honor those deposits. The new company will determine if the Single Engine Jet Concept is a viable aircraft for today’s market.

TRANLATION = You're were mugged, get over it

We truly understand that these are tremendously difficult times for you and for our employees. However, please be aware that there is not anything we are holding back from this communication so additional facts or answers will not be available from the teams staffing the phones.
The new company will continue the customer call events to update all customers on status and progress. The next one will be scheduled by the Customer care team.
Michael McConnell
Eclipse Aviation Corporation
President & General Manager
Customer Division

Filing details, thanks to Dave:-

Eclipse Aviation Corporation

and

Pronto Aircraft Corporation

2503 Clark Carr Loop, SE

Albuquerque, NM

a Corporation (including LLC and LLP)

Petition for Chapter 11

Estimated number of creditors, between 5,001 and 10,000

Estimated Assets, between $100,000,001 and $500 million

Estimated Liabilities (consolidated, book value), more than $1 billion

The petition is signed by Roel Peiper as CEO and dated today, 25th November 2008

Other details from the form include:-

1. There is a bankruptcy case concerning debtor's affiliate, general partner, or partnership pending in the District (Delaware)

2. The lawyers are Young Conaway Stargett & Taylor LLP of Wilmington DE.

3. The largest creditor, listed at $92.3 million, is Kings Road Investments Ltd. of Madision Ave. New York.

4. The total amount owed to bond holders (including Kings Road) is listed at $494.9 million.

5. The total amount owed to larger trade creditors ($2 million plus) is listed at $164.8 million.

6. The total amount owed to customers ($2 million plus) is listed at $29.7 million.

That's the 'topline' information, which I post to advise the widest possible audience.

Peg has left, and ETRIC have made the first bid to purchase the assets. The sale will need to complete in January of 2009, subject to other, higher bids. I'm sure we'll find out what ETRIC have offered, and where the funds are coming from to support the bid.

Al Mann and ETRIC have provided DIP (Debtor in Possession) financing of $12 million, with a facility up to $20 million.

The 'top three' for bond holders, trade creditors and customers (expressed in millions) are as follows:-

Bond holders

1. Kings Road Investments of Madison Ave New York for $92.3

2. KBK Master Fund of Crescent Court, Dallas for $84.9

3. Citadel Horizons of South Dearborn, Chicago for $53.4

Trade Creditors

1. Fuji Heavy Industries, Tochigi-ken, Japan for $31.8

2. Hampson Aerospace, Grand Prairie, Texas for $31.3, although we know the history here.

3. Pratt & Whitney Canada, Quebec, for $30.1

Customers

1. DayJet, Boca Raton, for $6.2, even though we'll never get to the bottom of this...

2. ATASAY-MyJet Aviation, Turkey, for $5.0

3. Triac, Nicosia, Cyprus for $4.3

Sundry amounts (above $2 million)

1. UT Finance, East Hart, CT, for $13.5 million, which is linked to DayJet

2. Irell & Manella LLP, Avenue of the Stars, Los Angeles, for $3.2 million of 'legal services'

Grand total

$706.1 million, and counting. Clearly there is a lot more to uncover. But it's a start.

Press Releases issued by EAC today

Eclipse Aviation Seeks Court Approval for Restructuring under 363 Sale
Procedures and Debtor in Possession Financing

Affiliate of ETIRC Aviation, VLJ maker's largest shareholder, announces
offer to purchase Eclipse

ALBUQUERQUE, NM - November 25, 2008 - Eclipse Aviation(r), manufacturer
of the world's first very light jet (VLJ), announced today that it is
seeking court approval for debtor-in-possession (DIP) financing and
procedures for the sale of substantially all of its assets under Section
363 of the U.S. Bankruptcy Code. The proposed sale will enable the
business to continue as an industry leader in the manufacture and sale
of VLJs with lower costs and reduced debt liabilities.

Eclipse filed for Chapter 11 protection in U.S. Bankruptcy Court in
Delaware this morning, simultaneously announcing an agreement for the
sale of its assets for a combination of cash, equity and debt to an
affiliate of ETIRC Aviation S.a.r.l., Luxembourg, subject to higher and
better offers. ETIRC Aviation, a principal driver of the VLJ industry
in Europe, is currently Eclipse's largest shareholder. ETIRC Aviation's
Chairman Roel Pieper has been the acting CEO of Eclipse since July 2008
and has served as Eclipse's Chairman since January 2008. The proposed
sale is subject to competitive bidding through a public auction, which
is expected to be completed and a sale finalized in January 2009.

"In the face of unprecedented economic challenges, it is clear that the
sale of the Eclipse business through the Chapter 11 process is the right
course of action to maximize the value of the business, secure its
future and protect the best interests of Eclipse's stakeholders,
including customers, suppliers, employees and creditors," said Roel
Pieper, CEO of Eclipse Aviation. "The successful sale will position the
business for aggressive global expansion, allowing the company to
fulfill its promise and solidify its position as the world's leading
manufacturer of VLJs."

Also announced today, a group of existing Eclipse shareholders and note
holders will provide Eclipse with post-petition, debtor-in-possession
(DIP) financing. This financing will provide Eclipse with sufficient
resources to continue normal business operations through the closing of
the sale. Eclipse has filed a motion with the Court to approve the
financing with a request for an expedited hearing to avoid business
interruption. Once approved, this financing along with other relief
requested from the Court, will position Eclipse to pay wages and
salaries, honor employee benefits, service customer aircraft and
continue manufacturing operations throughout the sale period.

New York-based Greenhill & Co., Inc., a leading independent investment
bank with proven expertise in mergers, acquisitions and restructurings,
has been retained as financial advisor to Eclipse Aviation. Inquiries
into the Eclipse Aviation sale process can be directed to Brad Robins,
Greenhill & Co., Inc. at 212-389-1567 or brobins@greenhill.com.

and

Eclipse Aviation Announces Departure of Peg Billson

VLJ leader activates search for new head of manufacturing

ALBUQUERQUE, NM - November 25, 2008 - Eclipse Aviation, manufacturer of
the world's first very light jet (VLJ), today announced that Peg Billson
has voluntarily left her position as president and general manager of
the company's Manufacturing Division to pursue other career
opportunities.

"We thank Peg for her contributions to Eclipse, and wish her the best as
she takes on new challenges," said Roel Pieper, CEO of Eclipse Aviation.

Ms. Billson's position will be replaced with interim manufacturing
oversight provided by Eclipse's senior supply chain, engineering,
production and flight operations leaders.

Clearly, this is going to be expanded as more information reaches the blog.

Shane

A nuclear winter looms

2008-11-20T02:01:00.000-08:00

The Wedge was at the VLJ Forum in West Palm Beach, FL, on Tuesday 11th November. He provided the ‘closing comments’ that day, and I’m happy to share with you a fuller transcript than has heretofore appeared in the media. Originally I had intended to run with the entire, but some of what he said was so indistinct it didn’t make the recording and parts were also rambling, to put it politely. I’m sure you will all find it most ‘amusing’.

“I’m surprised you’re all here. I had heard the VLJ revolution was over. I’m happy to be here.”

“A couple weeks ago, 10 days ago, I was in Amelia Island. I flew an Eclipse there. I was invited to Edsel Ford’s 60th birthday. Edsel said to me “This is the challenge. Our business depends on one thing--scale. It’s not about the car we build, it’s that we build it on a large enough scale. We have to get to that level that we break even. We know we’re making the right trucks. We know we got a great product in Europe. But for us to bring one of those cars to the States, we can’t just shut a factory down and start making Fiestas. It would be multi-billion dollar investment. Overnight we saw attitudes in America change. We've sold pickups for 60 years, and now we think we've lost all the customers who don’t use pickups for a living.”

He then moved onto what the transcript describes as being the ‘key discussion’ during the day.

“This is a business of scale and capital formation. I’m really good at that. I'm probably the only person in this room who has raised $1 billion in capital. Don’t know if that’s good or bad, but it’s a fact. How do you do this? Not a lot of ways right now. There's a lot of discussion about organic growth--that's a fancy way of saying you fund it yourself. I don’t want to take a drug from a drug company that used organic growth to develop that drug. This industry is time intensive, it's regulatory intensive, it's capital intensive. And it can’t be done by raising a million from family and friends. Piper said they can build a jet for $150 million. At Eclipse, we had to build the whole infrastructure from scratch. About half a billion was spent getting the aircraft through cert. Half of that, $250 million, was because we had to start over a couple times. There was the failure of the Williams engine. I praise P&W. I’ve been criticized in the media for saying the problems were due to vendors. I’ve never said that. If one vendor--in a chain--fails, that’s a big problem. Ask Boeing (about the 787).”

There you have it. He’s actually boasting about blowing a BILLION dollars of other people’s money, and now tries to rub their noses in it by saying he had to ‘start over’ several times. There were several remarks about Williams, and P&W. Needless to say, they were self serving and no longer relevant. The Wedge then moved back to his core premise:-

“This is a business of scale. If you say we’re going to produce 30 a year, that’s going to drive capability, cost. The thesis here that I’d like to explore is that it's time to change the definition of VLJ: Value Light Jet. That's the real theme. Now were finally talking about facts, not database speculation. We have real facts. "We have seen the dogs eat the dog food." Ed proved it this morning. Bill [Herp] talked about it. It is happening. The underlining theme is one thing: it’s about value. Most of their customers are not coming out of NetJets or the airlines. They're coming off the highways. How do you get these people off the highway? Offer them a better value. Offer a different set of values: time, convenience, safety. It will be different for every consumer. Truly on demand and customized.”

The only thing that Ed proved was how to go bankrupt in under a year. Mind you, he did have help from his ‘friends’ at EAC, so it was not a solo effort. Despite the visible proof that there is no ‘air taxi’ market of sufficient size to drive real volume, The Wedge refuses to drop the shovel he’s using to dig the hole he’s in and continues.

“I’d like to see VLJs and air taxis---VLJs are an enabler. Any one of a number of airplanes will work. VLJs bring a new dimension. Here’s a little secret the Eclispe 500 is the airplane I wanted. A ‘turbofan’ Duke. What I wanted was a jet that was like a Duke. That’s what the Eclipse started out as. The ultimate owner pilot aircraft. It is still the core of who Eclipse is selling to, especially since the demise of DayJet. Don’t associate air taxi and VLJs. Air taxi can thrive and succeed without VLJ, and VLJs can survive without air taxis.”

Drivel, pure drivel. I can’t make sense of what he’s saying, and I don’t think he can either. Is it that DayJet shows you can’t run a small scale taxi operation, or that the whole idea is a distraction and the real market is the ‘owner pilot’? And then, for no reason I can fathom, he is recorded as saying next:-

“I was involved in early stages of development of PowerPoint: I have made 2 promises to myself: I quit shaving. I don’t use PowerPoint anymore.”

I don’t know why he said this, or the link between facial hair and presenting ideas, but he said it. As usual, he can’t avoid a direct lie. PowerPoint was bought by Microsoft from a Macintosh developer in 1987. The Wedge left Microsoft in 1982…

“We were convinced (old partner, college roommate) we could sell computers to people just like Pacific Stereos sells to people. Thought it would take 6 months. It took 10 years. That industry is 12 times faster than aviation industry. I look at the VLJ industry and say it’s not going as fast as I would have liked. I want things to happen 10 faster than physics says it can. We’ve got 400 airplanes 260 Eclipse. Cessna 250. The safety record is phenomenal. People said, “It’s going to be the next doctor killer, the next Bonanza.” They say to the owner-pilot, “You’re a good pilot, except you’re not professional. Screw you asshole.” Cirrus killed lots of people. After 2 years Eclipse has 2 accidents, both runway overruns. Cessna and Eclipse take a different attitude toward training. I think we’re doing pretty good. People out there don’t want us to succeed. This is an industry that eats its young. Capital formation very difficult. It’s difficult because it requires a lot. It can’t be done in your garage. It requires lots of capital, lots of patience. It’s fraught with people whose comment to anything new is “It can’t be done. It hasn’t been done, so it shouldn’t be done” or “Well if it could have been done, we would have used King Airs.” Bullshit. The airplane doesn’t make a flip bit of difference.”

Now now, lets keep the language clean around here. The Wedge gets back into paranoid mode:-

“It’s a willingness to take risks. Entrepreneurship. This industry has lost its spirit of entrepreneurship, and it’s phenomenally sad. This is an industry, if it doesn’t change attitude, its approach to innovation, disruption [is in real trouble] Early 2001, Russ Meyer--who I admire, he made Cessna what it is---Russ is a great man. Russ sought out two off my largest investors to tell them it was stupid of them to invest. “It won’t work” It didn’t help my cause, someone of his magnitude, credibility, stature, to seek out investors and board members to say don’t do this. That’s what I’m talking about.”

See, everyone was out to ‘get’ him, all them dinosaurs from the existing aviation community. There are evil men everywhere, bent on browbeating a saint who never lifted a feather to any of his competitors. Shame on them. The problem with his views on these matters is very simple, and may indeed indicate a deeper psychosis. Everyone else is wrong, because The Wedge is always right. There are a range of medical conditions and personality disorders which we could consider, but this is an aviation blog, not a medical one.

“What am I going to do next? I don’t know. I’m an entrepreneur. I know how to take risks and I’m proud of that. It’s not the first failure in my life, and probably won’t be the last. But we need capital, and the future of capital is pretty bleak. I think we’re in for a tough period. We’ve been drunk on credit for a decade. But that’s a free economy. This isn’t new news.”

Probably the most sensible thing he said for a long time. Are you listening Roel? This chap claims to know more about the market than anyone else, and he says the future is bleak.

“We have never had financial global systems so completely interwoven. It’s really scary. Problem is that we have an increasingly uneducated electorate. I still think the best comment: Warren Buffet---time to be fearful when everyone’s greedy, be greedy when everyone else is fearful. Intense fear right now. I’m very concerned about attitudes. I don’t share Ed’s pessimistic view. We’ll emerge differently, but not necessarily right away.”

Ed was clearly better informed than The Wedge. If anything the short term outlook is getting worse.

“Where will I end up? Where the capital takes me. Green tech is very hot right now. Am I going to start a nuclear power company? That has it’s own set of regulatory complications. I don’t know. When I do, I’ll let you know.”

There you go. Watch out fellas, he is thinking of going nuclear. Clear out those old bomb shelters and lay in a stock of food. The Wedge wants to go out in a real blaze of glory.

“People have asked me if I’m going to be the next Secretary of Transportation. No way in all of God’s green earth. If I were to go to DC, I only wonder how long it would be before I blew up and went postal. No. I’m not politically connected enough. I didn’t vote for Obama. One article said I was a member of Obama’s aviation staff. No. I feel like Sarah Plain. No I’m not going to be the Secretary of Transportation or the next FAA administrator. I’m not going to be involved in government. I’ve watched that town suck the life out of [people]. Not a good place. It is a profoundly and decidedly negative place to exist.”

As far as I remember, the only one promoting The Wedge for Washington was Black Tulip! Does he not have one nice thing to say of your national capital? I think the monuments are quite nice, and I understand some of the food can be very pleasant. But no, he’s feeling negative about it. I wonder if it’s because of the FAA? Ah, here we go, a fully fledged rant:-

“We are in for a tough haul with the FAA. We’re going into the dark ages. It is all politically motivated. 100 percent political. The Congressional hearings on Eclipse had to do with unions. I am the only one who has the courage to stand up and say this. They’ve had it out [in - ed?] for Hickey and Sabatini. Their cronies, led by Oberstar, sucked up to them. They planted stories with USA Today. It’s all politics. The FAA is unfortunately subject to this. One way to describe it, there are people in government that think the government is the only one capable of doing what’s right and correct. They believe that from a regulatory standpoint, the only people who can truly enforce are government.”

Really? So, EAC were correct and the FAA were wrong? Does that mean that the TC and PC were delivered after political pressure was applied? Lets see how he squares that one.

“We did face challenges with certification. We chose to do a lot of things differently. Eclipse 500 never had an electrical failure. People said we couldn’t build digital electrical system, and now Bombardier is duplicating that system for the Lear 85. John Hickey --who I have more respect for---his comment was to me, “Look Vern, our guys in the field are not the best engineers. We have those people, but you have to remember, the safest word for bureaucrat is no. They’re only good at approving things they’ve seen before.”

So the FAA people in the field have no idea what they are doing. Therefore, they were not qualified to issue the certifications. So the FAA HQ people did it for them. But the FAA are not political. Hang on, The Wedge said they were. I’m confused…

“80 percent of Eclipses are not in air taxi. One of the good things about my departure from the company [I got an Eclipse]. I flew on average 25 hours in the last three months. I just go. Put as much gas in as I can, go as long as I can. The airplane has 300 hours. It just runs. Just get in, start and go. Part of the problem is that I know too much about the airplane. Every time I land somewhere—I was at AOPA talking to Ed Bolen and Phil Boyer--two owners came up to me and thanked me for the airplane. One of the schizophrenic problems that Eclipse has. There is the 5 percent asshole quotient, but owners love them. It does exactly what it says. We screwed up on some things, and some vendors screwed up. There were some problems. But it’s an exceptional airplane. With a good tailwind, you can get 10 miles per gallon. At one airport, an old B17 pilot came up to me and said how the great airplane was. He didn’t know who I was. When I hear things like that, it makes all this worth it.”

This is called MBWA. Steve Jobs did it at Apple before John Scully fired him. It’s short for Management By Walking Around. As far as The Wedge is concerned, everything in the garden is rosy because people he bumps into tell him it is.

(Asked from the floor about the future of Eclipse) “I don’t know. I have zero association with the company today. That is partially their choice, partially my choice. I made decision, some on the board wanted me to stay, I knew it would be like going from captain of the ship to third officer or worse. When I’m not happy, I’m destructive. With my personality, I couldn’t handle that. I’m not good at being Number 2.”

Ask anyone Wedge. You were crap at being ‘Number 1’…

“Why have I been vilified? That’s a tough question. I watched it happen to one of my best friends: Bill Gates. We were playing golf one day, when he was going through all that shit with DOJ. People were saying, “This is a bad, evil person” Bill said to me, “All I thought I was doing was making life easier for people.” I talked to him recently about what happened it to me. The reason I got fired was simple, I pissed off the investors. I stood up to them, didn’t want to do what they wanted to do. When you’re CEO, your job is to lead, to decide. Board approves or disapproves. If they don’t like it, they have one choice: accept it or fire you. I didn’t leave, I got fired. I was going in a direction that the investors didn’t want to go. So they fired me. When it isn’t working, you fire the coach. Why I was vilified? I don’t know. It’s because I’m such a warm, fuzzy person.”

Name dropping was always one of his minor sins, so we’ll let that one go. But false modesty never looks pretty on the Curriculum Vitae.

“I’ve been scoured in the blogosphere, all by people who are “idiots and cowards.” (to quote Sarah Palin) They do it through anonymity. I’ve never shied away from saying “You’re an idiot.” You look at these postings, and they’re all by people who are anonymous. They’re cockroaches trying to hide under rocks.”

Hello, Mr. Wedge, your favorite cockroach here. Are you ‘name calling’ for a reason? Is it because Rich Lucibella stood up to your SLAPP suit and put you back in your box? Do you think, like I do, that the exposure you provided this blog was one of the bad decisions that got you fired? What exactly is your problem with the First Amendment to the Constitution of the United States anyway? I’ve a load of questions, as do a considerable number of reporters I know. Care to answer any of them? Or have you crawled under a rock, grown a beard (it doesn’t suit you, by the way) and hope people forget how you burned a self-confessed ‘billion dollars’ of other peoples’ money? You know where to find me if you want to unburden your tortured soul.

“Eclipse is a FOQA-approved agency. We used that data to identify problems. The Midway throttle problem: massively misreported. It was a failure mode we did not anticipate. When you really slam on the throttles-it took 45 lbs of push. One of the problems Eclipse foisted on itself, engineers happier than a pig in mud that they have so much precision. In the case of the Eclipse, that fault condition--not a failure--latched in 200 milliseconds. We did research turns out on Cessnas FADEC 2 seconds-6 seconds. They latch 50X slower than Eclipse. So the Eclipse did what it was designed to do. Turns into a big deal with NTSB. Emergency press release. By the time it was released--by the way, we had already done that. Sturgell asked Mark R. (NTSB) --WTF?? Mark said, “You know that’s how the game is played.” That’s a direct quote. But when I say it’s all politics, people say I’m a jerk. Personal vilification: something needs to be changed.”

Yes Mr. Wedge, it’s clearly everyone else’s fault. You had no personal responsibility for any of it. People in aviation will be happy to work with you again, I’m sure. As I will, the next time you start to rip people off. And the time after that. And after that. I know you fancy dabbling with nuclear power, but remember that most scientist agree with the following. After you trigger your ‘nuclear winter’ the first life to reappear will be the cockroach.

I’ll be waiting for you.

Shane Price
Proud custodian of Stan’s legacy.
November 2008

Sadly, it looks like the end.

2008-11-13T10:37:00.000-08:00

This is not a post I was looking forward to. I've experienced grief myself recently and know at first hand the pain and loss the staff at EAC, along with suppliers and customers, must feel at this time. My thoughts and best wishes go out to all those affected by todays' events.

First confirmed reports were from KBO-TV reproduced below.

Eclipse employees unpaid for last two weeks
The employees of Eclipse Aviation learned this morning that they won’t be receiving their paychecks for the last two weeks of labor. Employees at the Albuquerque manufacturing facility say that they were called into a meeting early this morning and told they would not be receiving paychecks. They were handed a sheet of paper with a toll-free phone number to call to see if they would be paid. No reason, apparently, was given for the action.

Employees leaving the early morning meeting expressed anger, frustration and uncertainty before speeding out of the facility's parking lot. Among the concerns they voiced: What would become of their vacation and what would become of their retirement investments.
Employees were told that they could come and go from the workplace throughout the day but many immediately emptied their desks and left. Some employees attending the meeting say that company officials told them that they stayed up into the early morning hours trying to find a way to assure the workers would be paid but were unable to do so.

A critical vendor to EAC has also confirmed to me they are 'pulling the plug'. The knock on effect of this could lead to an early grounding of the remaining FPJ's, and serious efforts will be required to get them flying again. This is a direct consequence of the high level of integration in the design.

A few interesting reactions to the news over the past few hours.:-

1. Peg is clearly relieved that the end has come. The following hit the inbox from a 'reliable source' today:-

"My partner works at a coffee outlet close to the EAC campus. He knows Peg, who was there this morning laughing up a storm, apparently without a care in the world. She was with a guy, but they were acting like teenagers. Public displays of affection and all that. Really weird for a 'professional' woman in her 40s..."

2. Several reputable journalists would like to talk to those of you affected by these events. If you are prepared to go on the record, send your name, a phone number and what relationship you had with EAC to eclipsecriticng@gmail.com

3. I've been asked the question, several times today, so I want to state that suppliers and customers are welcome to post to the blog or contact me at the above address should you want to establish contact with each other. I've already preformed this service a number of times in the past....

4. All is not lost. I suspect that we will see several operations opening up which will offer services, in a number of ways. The following quote, from William Feather and provided by an 'ex Eclipser' is worth remembering at this time.

"Something that has always puzzled me all my life is why, when I am in special need of help, the good deed is usually done by somebody on whom I have no claim."

Clearly the situation will evolve rapidly. I'll do my best to keep up with events over the next few days.

UPDATED Friday 14th 21.00hrs GMT

From: Scott Dannenberg
Sent: Friday, November 14, 2008 12:21PM
To: _All Enterprise
Subject: Payroll status update

Fellow Eclipsers,

We are extremely happy to report that funding has been obtained that will allow all past due payroll to be in your bank account no later than Tuesday, November 18, 2008. Money may be deposited in your account on Monday. Please continue to check your bank accounts.

For those that get physical checks, please call the payroll department on Monday to arrange to get your check.

We look forward to all of us returning to work on Monday, November 17.

Employee benefits including health and dental remain intact and available.

Management continues to work diligently on a longer term financial solution for our business.

We sincerely apologize for the distress this has caused you. Thank you for your continued support and loyalty.

Executive Management Team

This was forwarded to my in the past hour. Lets hope that it is genuine and the start of a 'good news' story. As I noted yesterday, I expect this situation to change, rapidly, over the next few days. Stay tuned.....

Shane

Circling the wagons

2008-11-11T03:05:00.000-08:00

First I'm glad to report that Black Tulip has been active again. You can enjoy the latest missive below.

Second a general statement on the 'state of the nation' at EAC. Needless to say I've had multiple inputs, from within and without the company over the past couple of weeks. It's now time to reduce these to a form with we can all discuss.

Finally, I commend those who've stood up for the company on this blog. It's hard to defend the indefensible at the best of times, but with the rather bleak economic outlook right now it must be causing sleepless nights. I sincerely hope that the outcome meets some of your needs, even if I doubt that the structures currently in place will continue.

Current position at EAC

1. Training activity has tailed off. Recently a group were sent home during a course, without convincing explanations being offered. We also know from the Eclipse Flyer that owners are being encouraged to pay for extra pilots.

2. While AvioNG 1.5 has been certified, for all practical purposes it's not available to current owners as it's installation can require extensive works. The 28 ex DayJet aircraft seem to be getting priority in this regard.

3. Significant numbers of senior staff are in the job market, looking for alternative employment. Stop leaving those updated resumes on the printers, please, its' demoralizing the troops. And stop passing your personal cell phone number around 'just in case'. You know who you are, and if you're not sure, contact me and I'll let you know....

4. Last post I mentioned the 'FOQA' software that hides inside Avio and feeds data back to the spooks in EAC. Seems some pilots have been very naughty (acrobatics, anyone...) and have been getting nasty letters from ABQ, which is all in the name of safety you understand. Oh, and stop running into reserve fuel, it's bound to get you a ticking off. Or flying overweight. Or ruining your tires or.... Remember, you are not paranoid, Big Brother IS watching you.

5. I mentioned the following on the last thread, but no one seemed to pay much attention. It's significant in that it's the first time I'm aware of that a customer has sued having already flogged off his FPJ and realized a true loss. Clearly this suit joins those seeking return of their deposit, which also grind their way through the courts.

Atlantic Marina Holdings LLC v. Eclipse Aviation Corporation 11/3/2008
"Unfair Trade Practices. Defendant was negligent in its sale and manufacture of a $1.8 million jet aircraft that was delivered to the plaintiff with several deficiencies that were never adequately resolved. After pouring an additional $128,000 in the aircraft, the plaintiff sold it at a substantial loss."

We move, on a lighter note, to the latest from Black Tulip.

OBAMA FOCUSSED ON ECLIPSE AVIATION

Albuquerque, NM - November 11, 2008 – President-elect Barack Obama met with employees and reporters today at Eclipse Aviation headquarters. In a surprise visit Obama announced, “Eclipse Aviation will be the poster child of my new administration. In the past you may have heard the phrase ‘too big to fail’. From now on that is obsolete. The byword of my Presidency will be ‘too good to fail’.”

“I know a winning business strategy when I see one, and Eclipse has it. If the company had not been unfairly treated and betrayed, it would a powerhouse in New Mexico, providing thousands of good-paying union jobs. I reject the idea that Darwinism has brought Eclipse down. Survival of the fittest is going to be replaced by hope and change for the next four years.”

Obama continued, “It is the robber barons of Wall Street that have denied the wrench twisters of Main Street their well-deserved success. The former will see their assets reallocated, so the latter can succeed. My first act as President will be the creation of the Corporate Restoration Action Program.”

“I intend to spread the Corporate Restoration Action Program far and wide. I will create a new government cabinet to dispense the funds. Note that cabinet heads, formerly called Secretaries, will now be referred to as Ministers. I haven’t picked the Minister of Transportation yet but I know she will have a particular affinity to Eclipse Aviation.”

Obama concluded, “Well, it is time to get back on Air Force Zero Point Nine and head back up North. I want you all to keep the faith. Several hundred million dollars each for Eclipse, DayJet and Pogo should not be a problem.”

As usual, I'll remind our readers that the tulip mania peaked in the Netherlands during the 1630s. The black tulip was the most sought after, until found to be biologically impossible.

Shane

It could all be over by Tuesday!

2008-11-01T16:00:00.000-07:00

It's not been a good week for VLJ companies. Adam (Mk II) and Grob are both flatlined, the promised EASA certificate failed to materialize and another forecaster joined the Teal Group in predicting the end for EAC. 'President' Mike continues to fill the ether with the nonsense they call The Eclipse Flyer. Except they can't afford to print it now, so they will only email a PDF in future.

Speaking of that august publication, it has a few interesting titbits in the latest issue. Normally only available to owners or position holders, several public spirited individuals have shared their copies with me. Thanks to one and all...

The first page carries an 'ad'. Since hardly any new owners are taking delivery, the flight simulators are empty. Why not take them up on their offer, as it's probably the last chance you'll get. As a by product, FPJ Inc will collect some cash. Well, if I'm honest, I'm told it's the ONLY source of cash left...

We currently have excess simulator training capacity. If you have a second or third pilot associated with your aircraft who has been unable to attend training due to past training constraints, we can now address these needs through the end of 2008.

The 'spy in the cab' industry-leading Flight Operational Quality Assurance (FOQA) program which was such a hit with owners has now been formally released. It seems that people continue to abuse the FPJ, especially while landing. Read the EAC spin of their 'discoveries' yourself...

We evaluated 13,770 flights from October 2007 to September 2008. Approximately 1,075 events, or only 7.8%, were highlighted during this time. Unstable approaches constitute the largest number of operational risk events, followed by excessive bank angle at low altitude and exceeding maximum ramp weight.

Must be reassuring to know that your every move is being recorded for later download and analysis by those crack people at EAC. No wonder the owners are praying for bankruptcy, to clear the records of how badly they've landed.

Or how overweight their wives are...

But there's more good news! Those "Random Transponder Code changes" and the ever popular "Random Autopilot pre-select changes" join the "Random Comm/Nav Surveillance (CNS) switching" on the 'eliminated' list. Phew, that's a relief, so as soon as the AvioNG 1.5 software/hardware updates are approved, you will all rest easier. Hang on, you need to get these done by EAC. Which will be in an order dictated by the way the wind blows on Saturn in a month with 'z' in it.

Or something like that.

So, keep a careful watch on your transponder, autopilot and all those other 'random' bits that keep your life interesting while aloft in your FPJ.

Finally (from the Flyer, anyway) the following advice, which confirms what several here already knew:-

Static Port Moisture - If you park your plane in rain or high humidity environments, cover your static ports to prevent moisture from accumulating in the static lines. Custom static port covers are on order and will be available at the Company Store in the coming month. Until covers are available, you can use low-adhesive painter’s masking tape to cover the ports. Be sure to remove the tape or covers prior to your next flight.

This statement surely begs the question, why did they locate the ports so badly, in the first place?

Meanwhile, word reaches me that several of the 'senior leadership' continue to hunt for new jobs, which will be hard with EAC on their CV's. The looming cash crisis is made worse by strict bank limits, which could be breached early next week. What this means is that the company has agreements with it's banks, stipulating certain targets. Once, for instance, the minimum cash at the bank is reached, the bank reserves the right to refuse payments. I've got some advice for those of you who's EAC expenses cheques bounced in August. Expect similar treatment next week.

Several owners have contacted me with concerns for the immediate future. A number are in the middle of preparing to file suit (under various headings) in an effort to either a) get their aircraft upgraded or b) their money back. These efforts may lead to something, as I'm aware that Frankenjet depositors have been able to extract cash. However, the long suffering FPJ position holders are being told that nothing will change unless the promised 'UBS funding round' is successful.

Something which seems highly unlikely at this stage.

Keep your eyes open for events at our very own FPJ 'enterprise'. Once your election is out of the way I expect events to move rapidly. I hope, for the sake of the workers, that these 'moves' are positive. Sadly, I think not.

Shane

Sometimes, it pays to be unpopular

2008-10-23T11:40:00.000-07:00

Karen Di Piazza has a long history covering EAC. As a matter of routine, EAC refuse to answer questions from her, and Vern (it is said) would swim across a river full of alligators to avoid talking to her.

Myself, I feel the alligators would have crossed a busy highway to avoid Vern, but I digress.

Earlier this week Karen published the following on CharterX. As usual she has hit the central point in her own piece.

The key is safety. If I have to extract one sentence it would be this one.

"All I know is that every time I've had to fly the Eclipse, I'm truly scared."

I would also draw your particular attention to the Teal Group report on EAC. It makes grim reading, especially for any potential investor in the project.

Teal Group's Richard Aboulafia's First Eclipse Aviation Report
By Karen Di Piazza

Before we address the Teal Group's first report on Eclipse Aviation Corp.'s business plan, authored by Richard Aboulafia, vice president of analysis, aviation insiders have said that because Eclipse, manufacturer of the six-place Eclipse 500 very light jet has halted production for 2008 (last aircraft to be produced is serial no. 267, with no. 266 produced a long time ago), awaits funding, they feel it's a no-brainer that the company is doomed to declare bankruptcy.

During recent conference calls with its customers in September and October, Eclipse admitted that unless it gets "funding in October or November," it wouldn't have the funds to refund customer deposits made on the EA500 or its four-place EA400. During conference calls with its customers, Eclipse downplayed numerous lawsuits filed by customers. As of this writing, new lawsuits have been filed against Eclipse. Industry Headline News has requested of Eclipse numerous times to respond to allegations; however, the company refuses to do so.

Cash-strapped Eclipse doesn't have the money for parts needed to fix customers' aircraft, it tells customers during conference calls. Linear Air's CEO William Herp confirmed to Industry Headline News that of the four EA500s managed by Linear Air, "We're operating two Eclipses; we didn't include the EA500s in our recent profits, so we're OK. Yes, we had to let 15 employees go, which is very unfortunate. We wouldn't be surprised if Eclipse filed for bankruptcy." Linear Air ordered 30 EA500s. Herp said that his company is not dependent on the Eclipse 500 for future financial success.

Recently, a corporate pilot who is typed rated in several FAR Part 121 and 135 aircraft as captain, with extensive flight hours, said, "When I have to fly the Eclipse, I am on the edge of my seat waiting for the next disaster to take place. For instance, I've been flying for over 30 years and have never had to go on emergency oxygen, except during routine training. Since flying the Eclipse, I've had to go on emergency oxygen twice now due to fumes in the cockpit and in the cabin. Eclipse seemingly has no idea how to fix these aircraft problems. Flying at 41,000 feet, you don't have much time to deal with these continuous, on-going, very serious issues. All I know is that every time I've had to fly the Eclipse, I'm truly scared."

This is the typical story we hear we hear from experienced, professional pilots.

And then there's DayJet, Eclipse's former star, the largest air taxi operator in the world, which we reported on May 2 had ordered 1,400 Eclipse 500 jets. DayJet has since gone out of business. On Oct. 20, Eclipse sent emails to its customers stating that it was acting as "DayJet's broker," to sell DayJet's fleet of 28 abandoned planes. But the best part of this report is really about Richard Aboulafia's report on Eclipse.

Thanks Karen, a well thought out piece. You may contact Karen Di Piazza at Karen@bizandaviationpub.com for any feedback you'd like to send her about her article.

Read the Teal Group report carefully. It's a PDF file, which you can 'save as' and digest in your own time. Here are two snippets for those who need encouragement to make the effort:-

First, commenting on the DOT IG investigation.

The IG stated: “This isn’t about a certification process riddled with flaws…What this case is about is an accommodative approach to a new manufacturer using new technology and a new business model to put a high-speed, high-altitude jet in the hands of relatively inexperienced private pilots.”

Second, the difficulty in predicting what might happen to the company.

Keeping up with this program has become a surreal experience. Irrational investors make forecasting difficult, but socialist governments make it even tougher. The latest post-Soviet five-year plan calls for the Russian government to fund an Eclipse line in Russia. This is not a business decision made by the private sector, and therefore we can’t predict whether it will be provided. We also don’t know when the money will be provided. With numerous lawsuits from suppliers and customers, Eclipse faces the prospect of involuntary or voluntary bankruptcy.

From the 'inbox', which you all know as eclipsecriticng@gmail.com

We all saw the Teal report here. Richard missed the round of financing that happened in summer of 2007 which was another $275M of debt financing. This is what makes up the total $550M of senior secured debt. That amount, plus another $550 million in private equity, together with sundry other inputs drives the investor funds towards $1.2 billion.

Add what the customers have paid in already (about $320 million) plus the remaining deposits (about $60 million), you can see where this has been a party worth more than $1,500,000,000. Supplier activity is harder to measure, but they must have invested heavily. This could easily drive the TOTAL amount spent close to $2 BILLION plus the involvement of thousands of people's lives. All for 250 odd aircraft delivered so far.

These are expensive jets!

I think we can all agree that this last line is an understatement of historic proportions....

UPDATED FRIDAY 24th October 22.34GMT.

The DayJet birds made headlines again. I sure hope they find a home shortly, as they are in real danger of clogging the market unless they do. My hunch is that FPJ Inc have little choice at this stage and will have to take anything around the $850,000 DayJet agreed to pay originally. The following from AIN Online, which is a great source for business news.

OurPlane Makes Play for Former DayJet Eclipse 500s
By Chad Trautvetter

London, Ontario-based OurPlane–a fractional provider of “new light aircraft,” including Cirrus SR22 piston singles and one Eclipse 500–today made a bid to purchase the entire fleet of 28 Eclipse 500s formerly operated by DayJet. OurPlane, which also has a separate standing order for 21 Eclipse very light jets, said it submitted a “fair offer reflecting the current market value for the Eclipse jets.

Company president and CEO Graham Casson told AIN that the bid is more than JetsAmerica’s previous offer of $500,000 each but less than $1.5 million apiece. If its bid is accepted, OurPlane plans immediately to begin selling quarter shares in the jets for less than $449,000, with the first ones likely to be based at its locations in Southern California and the New York City area.

Additionally, Casson said the very light jets would enter service in the first quarter next year after their interiors are upgraded to the LX version and, at minimum, the DayJet logos are removed from their exteriors. OurPlane, which has 12 locations across the U.S. and Canada, is “confident that Eclipse will follow through in the final modifications and refurbishment that are due on these and all Eclipse aircraft.

And finally (drum roll, clash of symbols, trumpets)

THAT ALL IMPORTANT COMPETITION

You will remember I posted a fantastic prize offer on this thread. The correct answer to the question 'what would Vern's FPJ have on the tail' is, I'm reliably informed, 'N500VR'. I'm glad to report that I've saved myself a lunch bill, since none of you got it exactly right.

However, since a number of you posted very well thought out 'suggestions' I prepared to offer the following contributors a pint (of Guinness, naturally) in my favorite pub.

N0PE (short for No Hope)

N00NE (pretty clear, I think)

N505TU (Several variants of this one....)

CR-APJET (from the Cape Verde Islands!)

NOTVLJ (Pretty much sums it up)

NYETJET ('Russian' entry)

And last, but not least

0 + 0 = 1+ (our principle 'European' correspondent, and my personal choice)

You all know who you are, and how to contact me. I'll be very happy to pay for the 'prize'.

We look forward now to our long weekend here in Ireland, with lots of fireworks. Come to think of it, some of the 'rumblings' out of New Mexico would suggest that this won't be the only place with the odd explosion over the next few days. Stay tuned...

Shane

Darkening skies in Albuquerque

2008-10-15T01:46:00.000-07:00

Eclipse Aviation, under it's previous 'leadership', boasted that thousands of FPJ's would darken the skies. With production down to one aircraft a week and falling, this boast seems yet another EAC failed promise.

But there is more.

Customers are frustrated.

Not only have EAC failed to produce aircraft at the rate they said themselves was required for the plan to work, they are LOSING customers, some of whom now 'enjoy' the status of unsecured creditors. These are the people who have requested deposit and/or progress payment refunds after the price increase in August. As far as I can tell, only those who had money in the Frankenjet (a.k.a E400) have had cash back from Roel. As a group these people are mad at EAC and have joined forces to seek the refund they are entitled to. One of them sent Mike McConnell (President of all that Peg is NOT President of) an email last week, seeking answers to specific questions. So far, he has not had the good grace to reply. Herewith the list:-

Mike,
1. It was reported that Eclipse had issue a certain amount of refund checks and those checks were not honored by the bank. Has Eclipse made good on those checks?
2. How many depositors have had their money refunded?
3. Have there been any concessions to those seeking refunds? Partial refund? Aircraft at reduced prices? Etc?
4. What intellectual rights have been transferred, assigned, pledged to ETIRC during the last 12 months?
5. If a cash infusion does not occur within 30/60/90 days what contingency plans does Eclipse have? How long can you operate?
6. Recent releases on “Russian Funding” have been non-cohesive. What is the amount? Have any funds been received? What contingencies are attached to the Russian funding? When is Eclipse “US” expected to receive these funds?
7. Eclipse stated that a majority of vendors are in place to resume production. Yet at least one major vendor (empennage) has closed the facility that manufactures the empennage. How do you plan on handling critical vendors that are no longer willing to provide products to Eclipse?
8. Other than harming the secondary marketplace what financial interest does Eclipse have in the ex-Dayjet fleet?
9. A number of depositors are talking about forcing involuntary bankruptcy. Does Eclipse have contingency plans if this occurs?
10. How many 60% progress payments has Eclipse collected above serial number 266?

Pretty heavy stuff, especially from a customer, I think you will agree. A lot of us would like to know the answers to some of these questions. If anyone 'out there' would like to share their views in confidence, email me at eclipsecriticng@gmail.com

Staff have doubts

The internal sources on the 505 continue to contradict the public utterances of Mike, Peg and Roel. As is normal in any business, especially one that it trying to restructure, cash is king. Let's examine the 'traditional' sources of EAC funding. Sales of aircraft. Well, the picture here is bleak in the extreme. Activity here has all but ceased. After refund requests are taken out of the picture, EAC have not had a deposit on a single FPJ for 9 months.

Think about that.

It gets worse. Roel and his merry crew have talked about '$200 million' investment required to get to profitability. Currently, creditors (including refund requests) are 'overdue' just over $170 million and total liabilities (including secured lending) exceed $650 million. In the midst of a general liquidity crisis I think it's fair to say that '$200 million' is less than a third of what is actually required.

Internally, politics are causing friction. The senior management have been promised 100% bonuses if the company gets to 'cash flow positive' in Q1 2009. Sales staff are being promoted by Mike, who seems to think he's the 'real' President, and CV's are flying around the industry from specific people. These are the ones you would expect to know the likely short term outcome, but they still appear to be keen to 'jump ship'.

Lets work this through. The Frankenjet is on hold, which is hardly surprising given that the initial burst of under 100 deposits (only $25K, btw) has been decimated by almost 50 refund requests. The FPJ has a remaining order book of 440 units (at best) with a number of those positions for sale in the aftermarket or likely to vanish when buyers can't get the loans they need. The largest single 'order' outstanding is from Roel himself, to provide air taxi services in Turkey, and it's not even properly deposit backed. The company has had to repossess 28 second hand units from DayJet, and carries a significant bad debt as a result of this failure. Plus of course the difficult task of finding buyers for these 'used' FPJ's without further damage to the already fragile order book.

I can't see this mess appealing to another investor myself, can you?

UPDATED Thursday 16th 20.15hrs GMT

Seems someone in ABQ reads the blog and has a problem with the deposit on the Frankenjet. Glad to see they recognize the ConJet for what it is, by the way. Anyway, the FULL deposit on at Oshkosh was $100,000, not $25,000. My fault. They are also in denial about the 'zero orders in 2008' bit, so I told them where to find their own records. Perhaps they will believe me, if they bother to check.

The FAA and that DOT IG saga

A group of FAA stalwarts are surprised that the transcripts of last month's hearing in Washington have not made the appropriate web site yet. So they posted some video on youtube. Have look at one in particular, from a lady called Maryetta Broyles. She gives a first hand account of the pressure the original FAA inspectors were under, to 'get it done' for Eclipse. At a time when the FAA were under severe budget pressure, her group were told that 'money was not a problem' and were instructed to stay at EAC no matter what. There are other people who are worth a look at the same site

This major issue hasn't gone away you know. It's only on hold until after the U.S. Presidential election.

Current spending

You've all read about the $106 mil contract with CSC for IT outsourcing. Well it seems this is just the beginning as there will be another contract signed with IBM for an undisclosed 'small fortune'. The primary objective is to make SAP functional as it is currently, well, broken. I know that some here will be familiar with SAP, but for those of you who are not, it's major claim to fame is 'end to end' integration of all aspects of manufacturing. From this seat, all I know is that a number of 'household names' that my company deal with have thrown it 'under the bus', primarily because they could not understand the software. So, another yet another 'disruptive' idea from EAC. A company that can't sell aircraft uses software no one can understand NOT to build the volume it needs to survive.

I'm reminded of what has to be one of the best one liners in modern cinema, from 'As Good As It Gets' when Jack Nickleson's character, Melvin Udall is approached by the receptionist in his publishers office. She asks "How do you write women so well?" He replies "I think of a man, and I take away reason and accountability"

Owners in contact and possible future direction(s)

As you know, I keep in touch with the different 'groups' with interests in the Eclipse Aviation story. Clearly that starts with those who post here and continues with Eclipse staff and suppliers. I also have regular contact with journalists and, last but not least, owners. One who contacted me recently made several points, most of which agree with what 'we' are doing here. He did suggest that we 'widen' the blog to include discussion of other VLJ's.

My initial reaction, personally, is that I have my hands full keeping up with one company. I also have a sneaking suspicion, voiced here before, that this blog will be the last resource available to owners of FPJ's when EAC closes its' doors for the last time.

The question is a fair one however, and I think it's time to have an open discussion. October was always touted as the month that EAC had to secure it's funding, or shut down. Before that event occurs I would be interested to hear what the blog thinks. Suggestions that have crossed my line of vision include focus on another (jet) aircraft, with names like Honda and Piper floating around, as well as a more general VLJ forum.

Being a blog, it's a discussion we should have 'in the thread'....

Shane

NBAA and all that

2008-10-09T10:29:00.000-07:00

Well, it's been a lot of fun hearing from all of you who attended. I think it's been the best few days for information in a while, so I've decided to bring everyone up to date.

Al Mann

Well known as a serial inventor and latterly investor, Al is one of the most significant people in the past 10 years at EAC. He's currently a Director, as well as a significant shareholder. During the most recent restructuring I had several independent reports of his presence at ABQ, and he also took delivery of a very early s/n FPJ for his own use. Needless to say, anything he does in aviation is bound to attract attention, so when I first heard about a possible 'air taxi' venture, my antenna sprung to attention. I now have several reliable sources linking Mr. Mann with Van Nuys and a 'very light jet' company. My only problem with this is that it appears this 'company' is currently flying a Mustang, prior to commencing service.

Say it ain't so, please. His fellow members on the EAC BoD will be most disappointed if it's true....

Vern Raburn

This you will enjoy. Vern has his very own FPJ, or at least the use of one. He naturally went to NBAA in it, and attended various stands and other events at the show. In an effort to appear important he went in disguise, wearing a beard and casual clothing. A number of people failed to recognize his eminence, and one who did (after a double check) said he 'looked like a mountain man'. The usual rabble, including Zoom, were trailing around after him, lap dog fashion. Vern, in a desperate effort to attract attention, regaled anyone who would listen with tales of Microsoft and Bill Gates. What any of this had to do with EAC or even aviation in general was beyond my (limited) comprehension.

Vern did, however, give an interview to Aviation Week, which is available as a podcast here. Needless to say, nothing is his fault, everyone else was to blame, the suppliers were useless etc etc.

Maybe the disguise was a genuine attempt to avoid angry depositors, several of whom were hoping for a quiet chat....

Aha, you say, what of those 'Depositors'?

First, I've been quietly in contact with a number of them for some months now. They are not in a good place, as EAC have made it very clear that a) any attempt to force bankruptcy will be resisted and b) even if successful, they will get nothing. Second, a number of these people are convinced that it will be possible to 'nail' the officers of the company for fraud. If that were to happen the consequences for EAC senior managers will be unpleasant, at the very least, and likely very expensive. So, what are their options? Most are not short of a few dollars and will proceed to purchase something else which has two undesirable effects for EAC. One, they lose the order(s) and two they strengthen their competitors. Finally, by acting in this dishonorable manner they have created 'bad blood' which will hang around long after the company ceases to exist. The outcome will not be good for the value of used FPJ's.

The 'Jets America' offer

A chap called Brandon Carlson of Jets American, one of the most successful brokers for FPJ's and a man who's had the odd brush with EAC in the past (and I do mean odd) issued the following letter addressed to the finance company with the first lien on the DayJet birds on the 1st of October. I've clearly removed any sensitive information, as I know the banking system worldwide is in enough trouble already...

I am pleased to inform you that ____________________ (Buyer) is offering Pratt & Whitney / UT Finance (Lien Holder) $500,000 (Five Hundred Thousand Dollars) for (1) one Dayjet Corporation Eclipse 500 aircraft.

1. Buyer agrees to deposit an earnest $100,000 refundable deposit into an escrow account with xxxx xxxxx of Oklahoma City, OK. (escrow agent) upon written notification to Brandon.Carlson@jetsamerica.com .(Buyers Agent) of acceptance of this offer by Lien Holder.

2. Lien Holder understands and agrees that this is only an offer to purchase an Eclipse 500 aircraft from Lien Holder and that Lien Holder shall consider this offer non-binding to the Buyer until a formal aircraft purchase agreement can be mutually executed between the Lien Holder and Buyer.

3. Buyer agrees to pay all escrow fees incurred as a result of this transaction. Escrow fees shall not exceed $2,000 (two thousand dollars) for this transaction

We've discussed this on the blog, and some think $500k is too much for these birds. However, I'm reliably informed that 13 people produced the $100k to show they were serious, which is pretty impressive. I'll be curious how this pans out, and will of course keep the blog up to date.

An interesting new group

Mark was kind enough to email the blog (eclipsecriticng@gmail.com) with the following, which I told him I would be delighted to post as part of my next headline. It just shows how well read 'we' are and that Cessna buyers are a clever bunch of people. No, not just for buying a Mustang, but for doing their research properly.

"Shane, this is not directly related to the Eclipse 500, but something I wanted to make you aware of. I am writing to tell you about a new group I have formed for Citation Mustang owners called the Citation Mustang Owners and Pilots Association (CMOPA).

You are welcome to participate in the group or even in its formation, as I am actively seeking ideas and help. If you run across others that may be interested please let them know we are out here. And if you ever make it to Houston, please look me up, as I would love to meet you over lunch or dinner.

Sincerely,

Mark J. Baumgartner"

The Parting Shot

EAC always exuded class and style when dealing with staff.

Not!

But this takes the biscuit. It's in the 'Termination Agreement' otherwise known as the waiver, which all ex employees end up signing. Naturally, a copy has made it's way to me. One paragraph stood out:-

"On your termination date, your stock grants will cease vesting. If you wish, you may exercise

your vested stock options anytime prior to 30 days from your date of termination, or the
expiration date of the option, which ever comes first. If you do not exercise your options before that time, the vested options will expire."
OK, let me work this through. The company, which has no money to pay refunds to customers, has shed half its staff, slashed production by 80% and increased the price of the product by 40% wants to sell stock to a person who's just signed a termination waiver?

Only one word for it. Someone at EAC is just plain bonkers....

Another headline, another milestone.

This is Number 50 in the series I've been responsible for since taking up the baton. The future looks bright and the blog is now widely quoted and discussed. I probably shouldn't tell you, but even the Eclipse Aviation web site for customers called E5C has taken up reposting from here!

Take good care of your friends and wrap up warm before you venture out. I will anyway, as I head to my local pub for a pint (or three) to celebrate....

Slan go foil,

Shane

DayJet Folds and Eclipse Aviation Struggles to Survive

2008-10-06T01:12:00.000-07:00

By Karen Di Piazza /Senior News Editor/ Airport Journals/ Oct. ‘08

Original article here

Without notice, on Sept. 19, Boca Raton, Fla.-based DayJet Services LLC closed its doors. DayJet, with a fleet of 28 three-passenger Eclipse 500 very light jets, was forced to discontinue service after being unable to raise funding. Although the per-seat, on-demand air taxi operator listed 28 VLJs, it wasn’t fully utilizing more than seven to 10 aircraft on a regular basis.

Currently, DayJet’s abandoned aircraft fleet is parked outside at Eclipse Aviation Corp.’s Gainesville, Fla. maintenance facility. The lien holder on the planes is United Technologies Finance, subsidiary of United Technologies Corp., which also owns Pratt & Whitney Canada, the engine manufacturer for Albuquerque, N.M.-based Eclipse.
Although Ed Iacobucci, DayJet’s cofounder and CEO, attributed the company’s fall to the current financial crisis, he laid some of the blame at Eclipse’s doorstep.

“It failed to install missing equipment or functionality or to repair agreed technical discrepancies in accordance with the terms of DayJet’s aircraft purchase contract,” he said. “It’s unfortunate that these developments have come at the same time our nation has fallen into the most serious capital crisis of our lifetime. Regrettably, without access to growth capital, we have no choice but to discontinue operations.”

Unable to honor refunds for customers who paid in advance for trips, DayJet said for those who used credit cards, they should contact their credit card companies.

Many in the aviation industry have questioned why Iacobucci didn’t pull the plug on DayJet five months ago, after its unsuccessful campaign to raise $40 million led to laying off 100 of the company’s 260 employees. Cash-strapped, yet bullish on his company’s ability to overcome a serious financial blow, he said DayJet was “far from dead.” He indicated that he’d keep about 12 aircraft and would sell the rest off. He also hinted that DayJet’s airline-like reservation software system could be licensed or sold.

Despite DayJet becoming the first per-seat charter operator, promoting its online booking system to member companies, under the radar it was selling traditional on-demand charter trips, hopeful to increase revenues. Whole plane charter efforts were in effect for a good six months before the company’s financial crisis hit rock bottom. Even though the company didn’t make it, Iacobucci said it demonstrated that customers will sign up, purchase and become frequent users of this new service.

“The DayJet per-seat, on-demand model works,” he said.

Since service launch, DayJet said it had built a membership base of more than 2,400 regional travelers, flying more than 9,000 segments totaling more than one million miles, and that it had a 95 percent on-time performance record.

DayJet planned a mammoth operation

On May 2, 2007, for the first time, Traver-Gruen-Kennedy, vice president of strategic operations at DayJet, confirmed to this journalist that in 2002, under the name of Jetson Systems, not DayJet, 1,400 EA-500 orders were placed. During that time, Gruen-Kennedy said that although the colossal order was placed, the company would first operate 300 VLJs within a two-year period. But because the 1,400 orders existed, at least on paper, they were used during a 2005 New Mexico State Investment Council meeting, which prompted the state’s private equity program to purchase more than $3 million of Eclipse Series F preferred stock. Since that funding, the state invested much more into Eclipse.

For years, aviation analysts have said they doubted there was any substance behind the 1,400 orders. To this day, Eclipse has refused to make its order book available, for verification of orders and cancellations. With the Eclipse 500’s price now reaching $2.5 million, and with the 1,400 orders gone, aerospace analysts are skeptical about the company’s likelihood of survival. Eclipse’s marketing plan was based on mass production with a VLJ in the $1 million range.

A buyer in the wings for DayJet aircraft

Scottsdale, Ariz.-based JetsAmerica Inc., a new air charter company that also does aircraft sales, management and acquisitions for positions on VLJs, has offered to purchase 15 of DayJet’s aircraft for $500,000 per plane. On Oct. 2, Brandon Carlson, president and CEO of JetsAmerica, told this journalist he’d talked with UTF on Sept. 29 about his offer.

“This is a cash offer,” Carlson said. “These aircraft aren’t worth more than $500,000, because they need a lot of work. Most need basic Avio NG avionics, flight into known icing (FIKI) upgrades and other modifications.” Without basic Avio NG software installed on the aircraft, FIKI can’t be installed.

“My investors are aware that purchasing these VLJs is a risk; in today’s market, it takes a ‘special buyer.’ When you have investors with cash, the deal is hot then,” Carlson said. “UTF said it’s the ultimate decision maker on price and purchase contracts; however, Eclipse has involvement.”

He said Eclipse is helping UTF access the value of these aircraft.

When asked if the plan was to purchase all 28 VLJs, Carlson said that was the goal. With all of the maintenance issues involved with these planes and because so many retrofits and upgrades need to be installed, Carlson said, aside from the purchase price being offered for each plane, a significant amount of money would be spent on getting these aircraft up to snuff. He added that he was confident the offer would also satisfy UTF’s investment in the aircraft.
“DayJet paid about $850,000 for each aircraft; we hope our offer will be accepted,” he said. “Right now, we manage three Eclipse 500 jets, and if our offer is accepted, we’d like to have JetsAmerica perform the aircraft modifications.”

Eclipse: financial woes, customer complaints and future

During the same afternoon that DayJet announced it was ceasing operations, Eclipse was holding a conference call with its customers, claiming it hadn’t heard about the closure of its largest customer. However, as the call went on, Eclipse admitted to a customer, DayJet “isn’t in our current financing plan.”

Roel Pieper, Eclipse CEO, told callers that the company still anticipated obtaining millions of dollars in funding, so it could continue operations. He said that initial financing attempts were made with institutions from around the world, but now, they’re down to a small group for further analysis.

“The small group consists of the top players in the financial world,” Pieper said. He added that these people aren’t affected by the worst financial times we’ve seen, and that they have “committed funds and committed budgets.”

“Each of the players we’re talking to do financing deals on their own; that’s actually what we like,” he told anxious customers on the other end of the phone.

Pieper said that Eclipse was committed to closing a new round of funding in October.

“We continue to talk to our suppliers and to work with them, to ensure we understand their concerns, and so they know where we are. We plan to talk to them when new financing closes. We’ll publish a new schedule as soon as we can—when we’ll be back up,” he said. Pieper added that it was his belief that the company was on track and would be able to ramp up production of aircraft next year.

Peg Billson, Eclipse’s newly appointed president overseeing the production division, brought up the Sept. 17 House Transportation and Infrastructure Committee’s aviation panel hearing. The hearing focused on the Federal Aviation Administration’s rush of its issuance of a provisional type certificate, followed by a full TC and production TC on the EA-500. Billson told callers that the Department of Transportation’s inspector general had said the “aircraft was safe.” Calvin L. Scovel III, the IG, specifically stated that his office’s investigation “did not focus” on if the VLJ was safe or not.

The IG said that initial investigation results showed a combination of FAA “actions and inactions,” indicating that the agency expedited the certification processes for the VLJ to meet a September 2006 deadline. Scovel said that the FAA chose to certify the EA-500 and other VLJs using certification requirements for general aviation aircraft, rather than the more stringent certification requirements for larger transport aircraft.

“However, in a post-design certification ‘lessons-learned' internal review of the Eclipse project in August, FAA managers acknowledged that the general aviation certification requirements were ‘inadequate to address the advanced concepts introduced on this aircraft,’” Scovel said. FAA management testified that the Eclipse VLJ was certified meeting compliance.
FAA inspectors that worked on the VLJ project testified against their senior management, claiming they were pressured to OK the aircraft, though they expressed that numerous safety issues existed. Ignoring this, the FAA issued its full TC for the EA-500 on Sept. 30, 2006, a Saturday, which isn’t common. The production TC was issued on April 26, 2007.
Testimony uncovered that Eclipse set the certification date and that the FAA treated the plane maker, rather than the flying public, as its customer. Testimony also revealed that Vern Raburn, founder and former CEO of Eclipse, was personally involved with demanding a certification date and met with Marion Blakey, former FAA administrator, regarding requests.
According to testimony, when Raburn realized the plane wouldn’t receive full certification in his time frame, tied to financial funding, it was agreed a provisional TC would be granted. FAA inspectors objected but were overruled by Washington. Blakey personally presented Raburn with the provisional TC on July 27, 2006, during EAA AirVenture. Based on testimony, Eclipse’s funding was tied to achieving certification within 30 days from the time Pratt & Whitney obtained certification on the engine used in Eclipse’s VLJs. FAA field inspectors testified that management told them, “We’re here to save a company.”

When the EA-500 received its TC, the FAA granted the TC allowing EAC IOUs, including software design functionality. Testimony disclosed that many IOUs weren’t remedied quickly enough. Today, several IOUs are outstanding. FAA inspectors in the field believed that the aircraft should’ve never received a provisional TC.

The IG testified that the European Aviation Safety Agency “declined” certification on the EA-500.

“That’s not true,” Billson told callers. “We’re closing on EASA certification right now; EASA pilots will be at Eclipse in mid-October to fly the final configuration of the airplane. We expect EASA certification within a couple of days after that.”

EASA certification, she said, will satisfy commercial use of the VLJ in Europe, which she forecast would follow within two months after basic certification.

Billson said Eclipse is working on its final Avio NG 1.5 software certification, which includes Garmin 400 avionics; the company needs to present an aircraft equipped with upgraded avionics to the EASA. She said that although Avio NG 1.5 is late (a third certification attempt), the company “identified the root cause” of the “transponder switching and frequency switching issue,” and that the redesigned software “has been certified” and is currently being tested.
The company also addressed pilot complaints about aircraft tires blowing out. Eclipse said it expected certification on improved tires in November, after EASA/Avio NG 1.5 certification. However, Eclipse said after it obtains certification on a new tire, modifications would have to take a backseat due to the company’s financial shortcomings; all resources are going towards an EASA compliant aircraft.

Additionally, Billson said that sometime during the week of Sept. 22, Eclipse was scheduled to undergo an audit of its production certificate. She said the audit was a normal, regulatory 18- to 24-month event, which should last about nine days.

Mike McConnell, newly appointed president and general manger overseeing the customer division, gave Eclipse’s customers updates on production and delivery of aircraft.
“We’ve slowed our production for the next several months to stabilize our current financial situation,” he said.

Then McConnell dropped the bomb on the direness of the company’s production schedule.
“The last aircraft slated for delivery in 2008 is serial number 267,” he said.

He said that the company planned to produce two planes a day in 2009. McConnell said that if Eclipse can meet the new milestone production, it would only face a delay of up to nine months. He acknowledged that some owners have paid their 60 percent deposit but still don’t have a plane; without cash infusion into the company, position holders aren’t likely to get their VLJs.
Although some customers want their deposit money back, they were informed refunds aren’t being distributed yet.

Eclipse also shared with customers that in addition to its Canada-based third-party service center that will install Avio NG 1.5/ Garmin with GPS and FIKI, it recently signed contracts with two other companies in the United States. Although modifications will be paid for by Eclipse, it said customers who’ve had aircraft for the last year would come first.

Responding to a caller’s question regarding if the company had qualified technicians to install upgraded avionics, etc., the manufacturer said it would attempt to hire former or new employees. Eclipse recently reduced its workforce down to about 1,000 employees.

Another caller, who has a position on serial no. 264, said he was due to take delivery of his VLJ on Sept. 15, and expressed frustration. He also said he’s been under contract for about five years.

“I can’t get anything out of your customer service department,” he said. He said that since no. 267 would be the last aircraft produced in 2008, he wanted to know when his plane would be delivered, and would it be equipped with Avio NG 1.5 and FIKI. Eclipse responded that no. 264 would be scheduled for assembly by the end of the year, “providing it could complete no. 267 by 2008.”

The caller became furious with Eclipse after being informed that his aircraft wouldn’t have Avio NG 1.5 and would only have FIKI. Eclipse told the caller that Avio NG 1.5 aircraft stopped at no. 266.

For whatever reason, Eclipse has either manufactured aircraft or has installed various components into some aircraft out of sequence. Serial no. 266, which had been equipped with the upgraded avionics, was on static display during EAA AirVenture.

Trying to verify current serial numbers in production or aircraft that had been delivered, to get an idea of when he’d get his VLJ, the caller demanded to know if no. 253 had been delivered. Eclipse claimed it had and that no. 254 was scheduled for delivery during the week of Sept. 22.
The caller also wanted to know how many aircraft the company was delivering, as he believed “deliveries amounted to two or three a month.” The company responded that although it didn’t shut down deliveries, it was “trickling” along with production. The customer asked why his plane couldn’t remain at Eclipse after assembly and have Garmin avionics installed. Eclipse officials responded, “We won’t have parts.”

On Sept. 29, Eclipse emailed its customers a 12-page brochure outlining a few issues of concern. One of the reasons the company said it lacked spare parts for service was because “suppliers cut back due to perceived uncertainties regarding Eclipse’s future.”

Another caller, laying claim to serial no. 356, was told his aircraft wouldn’t likely be on the assembly line for up to nine months—hinging on the company’s ability to secure new financing.
A position holder who has requested a refund remarked that he was concerned about the “lack of financing information” coming from Eclipse. Pieper responded that the company was trying to act in a responsible way, yet didn’t answer the caller’s question with any specifics.

Unsatisfied with Pieper’s response, the caller asked how refunds would be handled, in light of Eclipse’s reluctance to communicate. Pieper reiterated that future financing was the key to being able to pay refunds.

In response to another caller’s question regarding if the Eclipse 400 project was a go or not, Eclipse said it hasn’t begun the certification process. The company also said it hasn’t spent any of the deposit money for the four-place, single-engine VLJ.

When a caller expressed concern regarding several lawsuits launched against the company over refunds, Eclipse downplayed the significance and didn’t provide details.

The conference call only allowed about 20 minutes for Q & A.

Eclipse’s September e-broadcast also mentioned that “engine surge events” have occurred on five aircraft. The company additionally said that “recent anomalies” have occurred on Avio NG aircraft, but didn’t say how many aircraft were involved.

On Oct. 1, Eclipse emailed customers advising them that the next conference call would be held on Oct. 10.

The Russian factor

On Sept. 23, Eclipse released a press release stating that it had gained approval and financing for its Russian production facility for $205 million. The financing, led by Vladimir Putin, prime minister of Russia and recent former two-term president, will oversee the financing, which is owned by the country.
Eclipse said that production of its 500 model would take place at the Russian facility in 2010, with a projected 800 jets a year. It claims that production of the VLJ in New Mexico will continue in full, prior to and following Russian operations.
There’s been no final word about funding of Eclipse’s U.S.-based manufacturing plant.

Thanks, Karen, for permission to use this article here. That's an excellent summary of the 'story so far' and worth taking the time to read it in full. One quote stood out for me:-

Carlson said. “UTF said it’s the ultimate decision maker on price and purchase contracts; however, Eclipse has involvement.”

In my opinion these three words are key to finding out WHAT 'involvement' Eclipse Aviation has here. Is it a 'buyback' clause, given by EAC to the UTF to facilitate the deal? Do they retain exclusive rights to service the aircraft, which would make the offer to upgrade them difficult to fulfill?

Just in case anyone needs reminding, Karen has a long history of keeping an eye on EAC. Long may that continue....

UPDATED 7th October

I've added a link to the original article, updated the formatting here to reflect same and wanted to add the following on behalf of the author. EAC have refused to answer questions from Karen Di Piazza for a considerable period. But that's their problem, not hers'. She's only asking questions on behalf of her readers, after all.

Shane

EAC stumbles on...

2008-10-02T06:18:00.000-07:00

"SUMMARY: The FAA is adopting a new airworthiness directive (AD) for certain Harco Labs, Inc. part numbers 100435-39, 100435-39-001, 100435-40, and 100435-40-001 pitot/angle of attack (AOA) probes installed on, but not limited to Eclipse Aviation Inc. Model EA500 airplanes. This AD requires you to incorporate information into the Limitations section of the airplane flight manual (AFM) that will allow operation only under day visual flight rules (VFR) and allow only a VFR flight plan. This AD also requires you to test the pitot/AOA probes for heater performance and replace the pitot/AOA probe if it fails the heater performance test. This AD results from several reports of airspeed disagree caution indication due to blockage from freezing condensation within the pitot/AOA system. We are issuing this AD to detect and correct improperly performing pitot/AOA probe heaters, which could result in blockage within the pitot/AOA system from condensation freezing with consequent incorrect indication of impact air pressure (airspeed/AOA). This blockage could lead to the stall warning becoming unreliable and the stick pusher, overspeed warning, autopilot, and yaw damper to malfunction."

Ooops, not ANOTHER one. Between the previous AD's, the SDR's, which prompted the FAA's own SCR and the numerous reports of false CAS messages, PFD's going blank, burst tires, stuck throttles and the rest I'm beginning to wonder how much longer this show will go on.

There is another serious issue 'lurking' in the elevator trim actuators and/or control software. I have reports of at least three separate instances where these failures resulted in 'unscheduled' landings, one of which involved a declaration by the pilots of an emergency. EAC have told the FAA that they are 'changing supplier' of these parts, but I've also been told that the 'new' parts are proving unreliable in the field. Another example of 'disruptive technology'...

I don't know about you, but I'm kinda losing track of the limitations of the FPJ. They seem to have been one of the contributing factors in the effective demise of DayJet. Herewith a quote from their press release announcing the cessation of operations:-

"This shutdown is a direct consequence of the company’s inability to arrange critical financing in the midst of the current global financial crisis. The company’s operations have also suffered as a result of Eclipse Aviation’s failure to install missing equipment or functionality or repair agreed technical discrepancies in accordance with the terms of DayJet’s aircraft purchase contract."

That's pretty black and white in laying the blame at EAC's door. Yes, their funding was suspect, but they were not helped by the limitations imposed on operations by 'missing equipment'. Sure makes you wonder who will buy the 28 FPJ's lined up outside the EAC shop at Gainsville FL.

And another thing. Chad Trautvetter at Aviation International News reports that UBS, the bank charged by Roel Pieper CEO at EAC with finding "$200 million" in funding is reporting a '30%' decline in the biz av market. That will make it real easy for UBS to pitch the idea to prospective investors won't it? I'm sure they will put this information front and center with any client who expresses an interest. Matt Thurber, also at AIN, has provided a valuable report on the DOT IG hearings. These two excellent aviation journalists have 'bookended' the challenges facing Roel Pieper right now.

Those depositors/position holders who requested a refund are between a rock and a hard place. I've maintained contact with a number of them since they were 'officially' notified that they were not getting any money until/if the new funding mentioned above became available. EAC have played 'hardball' with these people, making it quite clear that any attempt to force repayment could result in bankruptcy for EAC and result in the loss of their deposits/progress payments. Despite these warnings, at least one has proceeded into court, where the outcome is awaited with interest in many places.

Several reports reach me from reliable sources that the 'brain drain' continues at the factory. The remaining aviation professionals are leaving as soon as alternative employment becomes available. Almost 20% of middle managers took advantage of a company offer of two months salary to leave on or before Friday last. Not a great offer, but better than nothing, which is what those left behind appear to be heading for. Seems the only business booming in ABQ these days is aviation headhunters hiring hotel rooms to hold interviews....

It's coming up to 9 months since this blog, the 'NG' version of Stan's original, kicked off. In that time, 48 headline posts (including this one) have generated almost 10,000 comments. A Google search for 'Eclipse Aviation' lists this site second only to the EAC home page. Suppliers, customers, staff and 'interested parties' are in regular contact via email or on the phone. Journalists, industry watchers and aviation professionals are regular readers and sometime contributors. We've even had a headline post from the self describe 'Cardinal', Ken Meyer who is an FPJ owner and leader of the fan club for EAC.

Not bad for a specialist blog, I think you'll agree. Let's all try to keep it relevant, focused and most important, moving forward. EAC always wanted to be leaders in disruptive technology. I pretty sure 'we' were not part of their vision!

Wherever you read this, enjoy your work, play as hard as possible and cherish time with friends and family.

Shane

ECLIPSE AVIATION DISCLOSES DETAILS OF RUSSIAN PLANT

2008-09-28T07:44:00.000-07:00

Albuquerque, New Mexico - September 28, 2008 – Last week Eclipse Aviation announced financing by the Russian State Bank to build a factory in Ulyanovsk, Russia to assemble the Eclipse 500 Jet. CEO Roel Pieper said, “Today we are pleased to provide details on our new and exciting Russian venture.”

The plant manager for this state-of-the-art facility is newly-hired Vladimir Kochoff, a retired Russian Navy Admiral. “There has been some little confusion about the relationship between Albuquerque and Ulyanovsk and I would like to mostly clarify this here, now today,” said Kochoff.

“Eclipse has described how the components of the jet will be packaged in a ‘kit’ and sent to Russia for final assembly. Our crack team of Russian specialists travelled to remote Northern New Mexico to somewhat finalize the details. They found that the reusable shipping container and shipping costs to transfer the kit halfway around the world were very expensive.” stated Kochoff.

“We eliminate those costs by spending a few more hours, completing the aircraft and we fly the ‘kit’ to Russia,” he continued. “The sky will finally be darkened by the Eclipse. If you step outside your house in Bangor, Maine at six o’clock every evening, you will see two or three contrails – those are Eklipse-Kits on their way to the homeland.”

“At the Ulyanovsk factory is where the real work begins,” said Admiral Kochoff. “Russians read news that aircraft had problem with fasteners so we took action. First the little plane does not look very Russian with too many flush rivets so we drill all those out and replace them with button head rivets. Now it look beautiful. Also no global airplane should have English fasteners so we replace with metric screws and bolts. We pick the closest size and you just have to turn the screwdriver or wrench harder.”

“We also read about many, many problems with Avio avionics. This does not surprise us if you would know the meaning of the word ‘avio’ in the Russian language. We replace all of this with tried and proven Russian electronics. This also improves the operation in known icing in cold Russian winter as the vacuum tubes provide useful heat.”

Kochoff continued, “We tinkered with the engine controls to expand the range for fuel usage for economical operation. Since trans-fats have been banned in many United States cities we see Eclipse operating costs coming way down, but it also is difficult to find good French fries in States. I set the FADEC myself and, if it is a liquid composed mostly of carbon and hydrogen we can go.”

“Finally, Russian government has asked us to add hard points under the wing so external stores can be carried. They are sending some Eclipse jets to Georgia but we do not know why.” concluded Kochoff.

As some of you will no doubt have realized, Black Tulip has been writing again. I really like the bit about 'vacuum tubes', as I've done quite a lot of work myself with 'valves' and can attest the heating benefits they bring to a cold workshop.

Can I also thank you all for your kind words over the past week. My next post will now benefit from a lighter touch, as my mood this week was a bit dark....

Shane

Where was Perry Mason?

2008-09-21T06:19:00.000-07:00

The hearing lacked the sharp edge of a Perry Mason trial. The transcript for DOT's Inspector General Calvin Scovel's findings (and presumably the other witnesses as well) was available days in advance of the hearing. This allowed the FAA to be prepared to respond to the charges being leveled at them which in fairness, kept the hearing focused on the issues at hand.

For instance, when Ron Wojnar, the FAA manager who gave the go ahead to grant Eclipse the Production Certificate was asked about the 13 open items at the time of the issuance of the PC, he was able to blunt the inquiry by saying, "well a couple of the items were related to FAA action items, things that the FAA needed to do, like schedule an 18 month quality audit."

But where was Perry Mason to ask, "What about the other 11 items? How many of those were flight safety critical?"

Or John Hickey, Director, FAA Certification, justifying the date set for the Eclipse type certificate on September 30 because an agency goal was to certify a Very Light Jet during that fiscal year.

Where was Perry Mason to ask, "John, at the end of September your agency goal was to have a Very Light Jet certified. Why push the Eclipse program? You already had a Very Light Jet certified, and probably with no IOU's, the Cessna Mustang three weeks earlier."

Both sides made their points largely unchallenged. Nicholas Sabatini, FAA Associate Administrator for Safety under oath could say:

"I believe the Aircraft was properly certified. I believe that the aircraft meets FAA safety standards and I have the results of a Special Certification Review Team to back me up on that."

Of course the Special Review Team did not review the complete certification, they only spot checked certain areas during their 30-day rush to judgment but nobody reminded Sabatini of that fact.

Or when John Hickey testified:

"On the date of September 30, the FAA team made two determinations. They determined the Eclipse 500 had complied to all appropriate regulations and it was in a condition for safe operation."

Nobody asked him about IOU's that even Vern Raburn acknowledged existed at the time of the original TC.

OK, so it wasn't a trial - it was a hearing. Both sides made their case with little or no cross examination and it matters little as to what was said in the hearing. It was only a small window as to the discovery obtained during the months of investigation by Scovel.

Only a few witnesses testified. Scovel talked to many more as did the staff from Oberstar's committee. And what they heard painted a very ugly picture, not only of the FAA's transgressions but of the operation of Eclipse which was not part of the inquiry.

It was little wonder then when the presiding chairman of the subcommittee Congressman Jerry Costello opened the hearing with a serious indictment:

"I am extremely disappointed that the FAA again lacks the ability to oversee its programs, in this case its certification programs. Unfortunately, this hearing will expose an agency that is as interested in promoting aviation and befriending manufacturers as it is in carrying out its number one responsibility of protecting safety and the flying public.

It is inexcusable and unacceptable to ignore rules, regulations and standard practices to accommodate those you have a responsibility to regulate -- when you have people's lives in your hands! This Subcommittee, the Congress and the American people entrust the FAA to uphold the highest level of safety. Unfortunately, the FAA conduct regarding the certification of the EA-500 makes one lose confidence in the agency."

Or Chairman Oberstar's written transcript:

"In the Eclipse case, it appears that when design deficiencies were identified that appeared to be non-compliant with FAA certification requirements, senior FAA management became personally involved, overruled lower-level engineers and inspectors, worked diligently to find "work-arounds," to find "alternative approvals and rationales and techniques." and to accept IOU's for later compliance. In many ways, the certification process in this case was conducted "backwards" from the clear intent and requirements of FAA certification regulations. Instead of certifying on the basis of safety alone, FAA senior management appeared to be highly motivated to find ways to explain why design deficiencies identified by FAA engineers and inspectors as "unsafe" were indeed "flawed" but they were still "acceptable for certification" by simply changing the approval criteria."

Both chairs had heard enough in advance to convince them to hold the hearing and get the evidence into a public forum. The written statements by the Inspector General, DiPaola and the four safety inspectors from Ft Worth contain far more detail and disturbing accusations then what they could state in their brief oral summaries. Fortunately, their written transcripts are on record for everyone to see.

Since there was no trial, there was no verdict. Had there been one, John Hickey would have been terminated on the spot and Nicholas Sabatini certainly sent on to early retirement. But that is not the way Washington works. Congressman Oberstar has been around Washington a few years. He knows where all the levers are, how to pull them and when. As one who controls the FAA's budget his influence is enormous.

Sabatini too, has been around long enough to read the tea leaves and will probably depart on his own. When? Soon, but not too soon to look guilty. Shortly thereafter, Hickey might feel that fatherly arm of Congressman Oberstar around his shoulder and hear Oberstar's soothing words, all while being escorted to the door. "Goodbye John, you did a heck of a job."

A good friend put this together for me, this past week. Clearly, DayJet's effective closure is another matter which merits a full headline, but this is the Eclipse Aviation Critic blog, so I thought the DOT IG hearing merited more focus.

I was otherwise engaged. I have been in very brief contact with some of you, who know why. My father, Brian Price, died suddenly while on holiday in France last Monday morning, the 15th of September. To quote the final paragraph of what I said at his funeral yesterday:-

"Let us all remember Brian in our hearts and our prayers. He was a rare individual, a loving husband, a kind and caring father, an intelligent and skilful lawyer and a great friend to us all.

May he rest in peace."

Shane