VERN RABURN JOINS OBAMA PRESIDENTIAL CAMPAIGN
August 23, 2008 – Denver, Colorado – The Democratic National Committee announced today Vern Raburn has joined Barack Obama’s campaign team as a key adviser. Raburn, chief executive officer of Eclipse Aviation until earlier this month, was asked for comment, “I wasn’t surprised to get the call from Mr. Obama and I was pleased to accept his offer. Barack mentioned that the Republicans had brought influential business leaders into their campaign and thought he should seek high level advice too. Carly Fiorina, the highly successful CEO of Hewlett- Packard is now on the John McCain campaign team.”
Barack Obama, with his arm around Mr. Raburn in the aisle of the campaign aircraft, offered the following, “Vern started telling me about the wonderful little jet he invented. There’s never been a plane so capable and I had to get more advice from the man who made it possible. I am all about ‘green’ and this little baby seems like the most efficient airplane possible. Vern tells me that the fleet of 250 Eclipse 500 jets has the lowest kerosene consumption and smallest carbon footprint of any comparable aircraft. The statistics show that as a group they are hardly burning any jet fuel at all. This has to be a compelling and disruptive technology.”
Raburn followed up, “I couldn’t have said it better than soon-to-be President Obama, but I would like to comment on Eclipse Aviation. I’ve read that the company just had a big layoff, affecting employees worldwide. I don’t’ understand this as I left only a few weeks ago and everything was going fine. I am shocked that the new management could have destroyed the company so quickly. And all those layoffs… the toll on my friends, their families, the mortgage payments and good jobs left behind… it’s just too much. It was a heartless act that only someone of the Republican persuasion could have done. I’ll bet the new management of Eclipse supports John McCain – it is a disgrace.”
“Well, I’m going to do the best I can for my main man – Barack Obama. I’ve been consulting with the business heroes I’ve admired during my career. I’ve put together a business affairs advisory team consisting of Bernie Ebbers, Jeff Skilling, Andrew Fastow, Richard Scrushy, John Rigas and Dennis Kozlowski. We haven’t been able to schedule face-to-face meetings yet so we hold telephone conference calls.”
Raburn leaned over to this reporter and whispered, “After a winning business career I’ve got my eye on a Cabinet post. I’d make a real good Secretary of Transportation… don’t you think?”
Thanks Black Tulip, I think that's cracking! The timing is perfect, as Vern is 'gone' but not forgotten. 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.
Some of our newer readers may not be familiar with our extended history. FlightCentre, our 'statistician in residence' posted this. It clearly deserves greater visibility, so here it is in full.
When the blog was asked in June 2007 to predict the number of aircraft Eclipse would deliver in 2007 and 2008, the answer came back exactly correct for 2007.
For those who may not have been around last year, the average of all the projections from naysayers to die hard supporters and the prediction of Black Tulip both came to the same answer, 99 aircraft.
After all the dust settled, this turned out to be exactly the number of aircraft that Eclipse delivered in 2007.
A lot fewer people participated in predicting E500 deliveries for 2008, but it looks like the blog is again going to be substantially more accurate than any prognosticator from Eclipse and will probably get the answer correct within 10% or so.
Meanwhile the official Eclipse plan in June of 2007 was for 216 deliveries for 2007 and 747 deliveries for 2008. Off by approximately a factor of two for 2007 and a factor of 5 for 2008.
Of course, there was at least one member of the blog who asserted that Eclipse would deliver exactly zero complete aircraft in 2007 and 2008 that met the original specifications. That position also turned out to have been exactly right.
Who would you trust when making a bet on the future of Eclipse?
Meanwhile back in Q2 2007, the blog suggested that Eclipse’s long term success was totally dependent on DayJet’s success and that DayJet’s business model was fundamentally flawed and doomed to failure. No DayJet, no Eclipse. It was the blog that noticed that the DayJet aircraft were flying less than 1 hour per day per aircraft on average.
At the same time, the blog suggested that Eclipse would launch a new airplane to distract depositors, investors and the media from the issues associated with the E500.
There were those on the blog that suggested that perhaps the Avio NG FMS wasn’t “complete” as originally announced and that it might be some time before it was certified. It was the blog that was first with the news that Eclipse would abandon their commitment to Avio NG’s GPS and FMS and switch to Garmin 400Ws.
It was the blog that noticed that aircraft retrofits were taking weeks longer to complete than what was promised by Eclipse.
As for sources of collective wisdom, you will find blog posts from aerospace and mechanical engineers, avionics software developers, DERs, QA and reliability engineers, and production line staff, many of whom have worked on the E500. You will find experts in aircraft production techniques from welding to riveting to composite technology. You will find posts from flight test pilots, Eclipse 500 pilots and owners, aircraft pilots of many levels of experience from single engine piston pilots to ATPs and military pilots with tens of thousands of hours. You will find posts from people who work for companies conducting Eclipse training and Eclipse aircraft management. You will find posts from people who seem to have read and understood every line of the FARs including the latest interpretation of A/C 23.1309 1c.
Of course, some of the most colorful posts have come from the ex-customers and ex-depositors. There are posts from lawyers who understand how the court system works. There are posts from HR folks who understand employee rights. There are posts from people who have known Vern, Roel, and Ed for years. You’ll find CEOs of many successful companies, investors, and board members. You will find posts from air charter operators, FAA certification personnel, A/P mechanics, Eclipse vendors and Eclipse investors. There are people who remember why Eclipse made the design tradeoffs as far back as 1999. There are regular international reports from at least Germany, France and Russia. I’m sure I’ve left out many, many folks.
Of course, there are occasional posts from an itinerant, pub crawling, Irish ex-journalist who has a nose for a story.
Then there was Stan, who called it right from the beginning.
Of course, there are occasional posts from an itinerant, pub crawling, Irish ex-journalist who has a nose for a story.
Then there was Stan, who called it right from the beginning.
Thanks FlightCentre, that's a superb summary of where we have 'been' and how we got 'here' as is possible in so few words. But for the record, I've never been a journalist. Not good enough...
Many, many emails to get through. I've tried to reply to all of them, as fast as I can. Apologies if you have not had a reply, but trust me, it's not for want of effort. I'm working to 'digest' all of the news from last week, and will update you all as soon as I've got my thoughts in order.
In the meantime, anyone with information on the changes at EAC can contact me at the usual address:-
eclipsecriticng@gmail.com
Shane
215 comments:
«Oldest ‹Older 201 – 215 of 215> Pieper wants to get Russia into biz
> jet market. He secures Eclipse
> distribution rights. Later, he gets
> equity stake, right to manufacture > in Russia, and enlarged territory.
My understanding is that the range of the Eclipse is too short to be of any use in Russia - even east of the Urals. Keep in mind that it was just a few years ago that Russian airlines carried navigators and multiple types of navigation equipment (even after GLONASS went into operation) because the distances were so large.
sPh
The current debate over finance is interesting but as an aircraft owner may I repeat...
As did the dinosaurs, the Eclipse twin jet will go extinct... too small, won't carry enough, won't go very far and costs too much to operate.
If you spend some time looking through Controller's ads for Eclipses, you'll notice some interesting things.
Like - why are there so many newly-delivered Eclipse's for sale? These aren't just low-time aircraft. They are brand new, delivered aircraft.
Were these previously advertised positions that didn't sell, and the owners were forced to take delivery?
Did the aircraft not meet the owners expectations and so they are now for sale?
I'm wondering if Mike Press isn't selling his aircraft as well. Many of his ads don't have serial numbers. On one, for example, you must mention aircraft "1A". I'm wondering if, when you enter that secret setting on the Eclipse clubhouse decoder ring, you come up with the initials M.P?
And why do some owners not list their position #, their aircraft registration number, or any other info which could help identify the aircraft? And why is this behavior unique to E500's? Doesn't seem to be happening much with other jet ads.
Hmmmmm....fishy. Very fishy.
From flightglobal....
"Customers offering financial help to Grob: chief executive
Several customers who have ordered the Grob SPn have offered to help bale the airframer out of its financial crisis after repeated delays to the light business...(22 August 2008)"
Is that the future of the Eclipse owners?
Happy Labor Day weekend for all.
sphealey said...
My understanding is that the range of the Eclipse is too short to be of any use in Russia
Doesn't matter, Russia is not the primary market, Europe is, and the Eclipse range is well suited to covering Europe. They don't want rubles, they want Euros. That's where the money is. 60% of Mustangs are going to overseas customers right now, primarily Europe.
Whytech,
Thank's for an IPO explanation that makes sense!! Yeah, I made certain assumptions that Roel would most likely try to use that as the Big Cash Out, to repay investors if at all possible. The (former) Wizard of the Fed, Alan Greenspan, mite infact regard EAC as another example of irrational exeuberance...
When I first started working at EAC, Vern was saying our stock could be valued at $500/share when it went public. Heck, I was just hoping for $$$ to pay for my damn house. Roel mite be hoping for enough $$$ to pay for the EA400 and a Russian factory.
E.D.T.
from Baron: (on EAC)
1 - Never before in the history of light GA have so few, extracted so much money from so many (investors/depositors).
2 - Never before in the history of light GA have so few, burned so much money from so many, to accomplish so little.
This from a guy who is generally supporting EAC on this blog - this is a pretty strong message.
P. Diddy dumps private jets to fly commercially:
http://news.yahoo.com/s/ap/20080829/ap_en_mu/people_sean_combs
IN TODAY'S PAPER:
Saturday, August 30, 2008
Company Sues Eclipse for Refund
By Richard Metcalf
Journal Staff Writer
The British buyer of an Eclipse 500 has filed a lawsuit in New Mexico to get a refund of its $180,000 deposit, plus costs, after cancelling the order to buy the jet.
The lawsuit appears to be the first of its kind against Albuquerque-based Eclipse Aviation, said Santa Fe lawyer Robert Sutphin, who filed the claim on behalf of London-based Ice Blue Air Ltd.
"It's a straightforward lawsuit about a voided purchase agreement and a buyer saying, 'I want my money back,'" he said.
Ice Blue signed up to buy a 500 jet in July 2006 at a price of $1,520,000. The company decided to cancel the purchase this past June after Eclipse raised the plane's price to $2.15 million, according to the lawsuit. The purchase agreement allows for cancellation and a full refund in the event of a price hike, the lawsuit says.
The $180,000 refund was due Aug. 1, but failed to come. On Aug. 5, Sutphin filed the lawsuit in U.S. District Court in Albuquerque.
In a terse response to the lawsuit filed Wednesday by Albuquerque lawyer David Thuma, Eclipse Aviation denies the purchase agreement entitles Air Blue to a refund.
"Eclipse ... denies the allegations to the extent inconsistent with the agreement," the response says.
Eclipse recently said it had 2,300 back orders for its jet, the vast majority of which involve purchases made before the recent price hike to $2.15 million. Most of those buyers would have grounds to cancel their order and get a refund, Sutphin said.
"I've received several inquiries from other buyers, both here and abroad, since word got out on Ice Blue's claim," he said.
A Fort Wayne, Ind.-based company recently filed a lawsuit against Eclipse seeking a refund of its $150,000 deposit, but the circumstances are different. Geiger Excavating filed its lawsuit in Northern Indiana Federal District Court over a billing dispute for a plane scheduled for delivery in October.
A week ago, Eclipse announced the layoff of 650 workers and a slowdown in production of its light jet. The company, which still has 1,100 employees, said production would pick back up in 2009.
Before the layoffs, the company said it was building about three-quarters of a jet each day.
flyger's postulate on Roel’s plans might be closer to reality than most would consider.
It’s not as much about what ETIRC owns now, as it is about the debt subordination structure.
When ETIRC has the preferred position come Chapter 7 liquidation, they claim the first $300M worth of value … say the Production Certificate, Phostrex, drawings, EASA cert, tooling, etc … and walk away to Europe to build airplanes for that market.
The US market will be in expensive spare parts, shipped from Europe.
The landscape will be littered with the shattered dreams of owners and other equity investors.
Remember that there are more new millionaires in the former Soviet states than even Vernius Bloviatus could have hoped for. Those guys will be happy with GPS400’s, as they have nothing now. What a status symbol the E400 … the ETIRC 400 that is … will be zipping around Europe.
What happens immediately following the EASA certification will be quite interesting.
No Mas
Dave/Wytech/B95 et al: you had some very good thinking going concerning production economics, pricing, market size, competition.
Question: under what conditions might it be possible to realize the original volumes EAC predicted? Is it strictly price? If the E500 sold for 800K, would they be flying out the door?
As you read your comments, and others, you keep finding yourself in a box concerning how one could figure out a way to make the fundamental EAC plan work. All the issues you bring up keep pushing you back to an apparent unsolvable math. I haven't seen any comment with a "Eureka" insight or a set of assumptions that would allow not only the E500,but any VLJ, to achieve such sales levels as predicted by EAC.
The only solution I see (assuming conformity to spec, tech support etc) is a scenario where the aircraft is so relatively inexpensive that it stimulates new demand and that that price would have to be well under 1MM (prob 500-800K). I think this was (correctly) VR's original goal--build a twin jet with breakthrough pricing--but cost kept escalating such that even very high production made competitive pricing--and any real scale economies--difficult.
What do you think?
Deep Blue –
Cirrus has shown that an airplane with a BMW 3-series sized interior will sell great at under $600K, and people will fly them like crazy. So the question is, what premium would you pay for a jet in the same size/weight class.
Vern’s concept for a slightly bigger $837K airplane was in that realm … but the rest is bitter history.
The E400 is close to that realm, just at 2x the price of an SR22 … how many folks will pay that for a sports-jet?
What would the E500 cost if not for the extreme burden of full-service concierge Eclipse Flight Support overhead burden?
NM
No mas:
Good thinking; and Cirrus is clearly a rare example of a stand-alone aircraft OEM (versus multi-line, conglomorate-owned like Cessna/Textron or an airline and defense-diversified OEM like EMB or Boeing) that has succeeded (although I do not know Cirrus financials).
I like your descriptor "sport jet" as that may be much closer to what the aircraft really is in the marketplace (versus an "air taxi"). In fact, VLJ may be a useless identity for the airplane class (all it says is that it's very, it's light and it's a jet).
Looking at the charter market acceptance (effectively none it appears), the difficulties with Dayjet and jet "air taxi" generally and lastly, the high number of E500s for sale on the secondary market, one might conclude that the E500/VLJ class has not in fact found a core user audience yet, and that perhaps fundamentally it does not actually meet anyone's particular price/performance interests.
Given the trade-offs VLJs in general represent to jet buyers (i.e. buyers seeking twin jet performance and system fidelity), in the form of a very small interior, no lav, limited payload/range, that price alone is the only value that could unlock consistent demand.
That is, for jet buyers, you've got to overcome competitor/model advantages in performance and after-market and for the Cirrus buyer, you've got to overcome a hard budget ceiling and/or unecessary jet performance given their typical missions.
Still, at a breakthough price, a VLJ should make recips/tprops absolete but the market doesn't seem to be cooperating (at least at 2+MM).
New headline up.
Enjoy...
Shane
Why? Embraer has only a couple hundred orders for the Phenoms and they are opening a second assembly plant in the US. If it were true that Eclipse had a few hundred firm orders from EU/Russia, it might make sense to open a plant there, particularly if it were heavily subsidized and/or was a condition for sale in Russia (just like china did with Airbus).
Embraer's firm backlog is larger than "a couple hundred."
Also, Florida (seems silly to me) will be a final assembly plant. For the Phenoms this is not the same as Independence is for the Mustang. They will get a much more complete aerostructure from Brazil and install systems and interior. There are some specific reasons why Embraer would think this is logical:
1) Obtuse and expensive import/export system in Brazil means product from their systems suppliers is complicated to deal with.
2) Fit and finish requirements for the interiors are a concern.
3) Ferry flights from Brazil and customers traveling to their Gavião Peixoto facility are both problems. You have to fly over the Amazon in an airplane with short legs and you have to get to Gavião Peixoto, which is a challenge in and of itself.
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