Sunday, September 21, 2008

Where was Perry Mason?

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

622 comments:

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airtaximan said...

Baron,

I agree with you... but Dave is just saying, there's a lot more required, and everyone knows THIS - so don't over emphasize the importance of this announcement.

It could be just an agreement to agree to build a factory, at some point if all else plans out... and in the meantime, attract a cluster of aerospace companies.

BTW, I think this IS a big deal for Roel and the whole "story"... it certainly make room for more blogging!

IO, if you are saying there MUSt be some analysis that makes sense and shows profitability is possible, I disagree - -not in the real world, anyhow. This plane, the spec, the marketsize, the BS orders, the loss on each one thus far and comntinuing in mods... etc... makes it a dog. They will never make a dime on this plane.

NOw that they have begun to outsource the MRO, NEVER.

Dave said...

Details...details....

Some entity is throwing $200M+ towards an effort that has consumed $1.2B and counting with no real prospect at a positive return.


The details are important. As I said in my previous post VEB might not actually put up $200M+ unless ETIRC shows that they have additional financing.

If you are not asking WHY, you are missing an important question.

I'm asking both WHY and IF. It is like each day it is a new story as to what exactly VEB is doing.

I'd like to know one single palusible reason as to WHY anyone would do that? Surelly VEB can find better things to finance in Russia, right?

For the same reason ABQ/NM did it, particularly if ETIRC has to show cash on the barrel that will pay employees as well as promise to buy from local businesses. I haven't thought what ABQ/NM did was good or wise, but if they thought that way, they can think that way in Russia too. If ETIRC can show that it has enough money that it will pump into Russia, Russia will let them lose however much money they want. In any event, I think there are lots of questions to be answered particularly with Eclipse acting like the Russia/ETIRC deal will be a payday for Eclipse/ABQ in a matter of weeks for something that isn't supposed to producing jets until late 2009 at best.

PawnShop said...

There is an entity willing to put $205M or so in financing related to production of the EA500, when none of you (us) can see how this can ever generate enough profits to re-pay the loan.

What gives? Either they know things we don't know or they chose not to see the things we do know.


I think it's pretty simple. ETIRC has sole manufacturing rights for Russia/Eastern Europe, and essentially no development cost invested. FPJ's range is a bit short for Russia, but the road/rail infrastructure there is no match for Western Europe, so it could still be considered a superior way of getting around. Maybe the Russians actually believe it can be mass produced.

Who knows? Maybe they stuff the thing full of the "finest Russian avionics", certify it with that, and let'r rip.

Still puzzling to me why anyone wuld make such investment.

Somebody invested in the Sukhoi Superjet - probably similar rationale at work here...

Particularly, since production capacity is NOT Eclipse's problem, given that they are now producing at 1/6th their recently demonstrated production capacity.

I don't think we'll ever see ABQ production spool up to even the level we saw earlier this year. EAC USA will be allowed to die on the vine. I do believe that ETIRC & the Russian investors will be unpleasantly surprised when they realize how expensive the plane is to build ( not ALL of that $1.x billion was lost during development ).

Pay at the first window,
DI

Dave said...

I don't think we'll ever see ABQ production spool up to even the level we saw earlier this year. EAC USA will be allowed to die on the vine. I do believe that ETIRC & the Russian investors will be unpleasantly surprised when they realize how expensive the plane is to build ( not ALL of that $1.x billion was lost during development ).

There is so much to be answered. Previously Eclipse said that the ABQ plant would make kits to be finished by the Russian plant, but they might have just been lying about that. If Eclipse ABQ is to make kits for Eclipse Russia that screws up the volume counts. Eclipse has acted like the 1200 total and the 800 total are separate things, but for that to be so that would mean that ABQ would have to produce a staggering 800 kits plus 1200 completed units, which is an obscenely high figure beyond the vernacular. On the other hand if parts aren't going to be flowing through ABQ, then that is a different problem altogether. In a manner of less than a week we've gone from claims of $205 million to now more than 50% more to $330 million as well as new claims that Russian funds can be used for Eclipse ABQ. I question everything about the deal because everything about the deal keeps changing.

Baron95 said...

For the record, I'm in basic agreement with general comments you are all making regarding the "investment". I think it is clearly an attempt to show that VEB will invest is UBS pulls together the round that saves Eclipse and UBS is waiting on the VEB investment to line up the round. I.e. no one wants to go first and/or solo.

On other news, are you guys aware that the E400 flew a full aerobatic display at EAA Oshkosh with Randy Brooks at the controls?

I wasn't aware of it till today.

For those that don't know Randy Brooks is Dir of Training at Eclipse (or was) and was on the Red Baron aerobatic team before that.

It sounds like they are putting time on the E400, and expanding the envelope to do aerobatics in front of a crowd is no small feat.

Dave said...

For the record, I'm in basic agreement with general comments you are all making regarding the "investment". I think it is clearly an attempt to show that VEB will invest is UBS pulls together the round that saves Eclipse and UBS is waiting on the VEB investment to line up the round. I.e. no one wants to go first and/or solo.
On other news, are you guys aware that the E400 flew a full aerobatic display at EAA Oshkosh with Randy Brooks at the controls?


My WAG is that the E400 flying at OSH and what's going on with UBS/VEB are are related news rather than separate news. Again with the E400 being a production aicraft brings in a whole host of issues (most glaringly being the cost of getting the model certified), so I think it has more to do with style to impress investors rather than substance.

fred said...

oooouuuhhh guys ... some comments are utterly funny ! (no offense meant!)

VEB is to hand-over 330M$ to Etirc , or was it 530M$ ? or 33B$ ?

come on girls ... a little serious , it seems to me that not a lot here have dealt previously with Russians : once they say "THAT Much" or "Niet" , you can try whatever , be nice , court their wives , offer to marry their ugly daughters , give them blow-jobs for free ...

answer remain NIET ! (as in no , non , nein , lo , laa , etc ...)


as for the E-mail from the bank : i don't know about USA
(it seems such a miracle land : so many nice happening in a timely manner ! are we in Hollywood ?)

but last time i asked about a loan in such an amount(Millions of $) , the Bank answered me back with an E-mail of only 6 letters ...

sorry ; F#U#C#K#Y#O#U is 7 letters ;-))

as for a sub-journalist writing in a local form a place lost in the middle of nowhere
(in Russian eyes ! how many of you know where is Ijvesk ? [Kalashinov factory] or Petropavlosvk ? (apart his Excellency Mr Gad !)

getting an E-mail From the other side of earth ( asked or not asked , but in that case = it is "Alice in wonderland" !)

please ...stop make me laugh so much ... i changed my pants this morning ... ;-)))

fred said...

as for the "INVESTMENT" :

sorry , i don't believe "etirc" has to show financial abilities to run the plant ...

I KNOW !

otherwise it would be completely mad from the Russians ...!
(a bit like last time your son or daughter asked for a car , you said no ! but to have some peace , you accepted to buy the four wheels ... as soon as the kid get the four wheels , he is to come back to you by saying " DAD , now that i have got the wheels , wouldn't it be stupid not to buy the engine ? or to loose the wheels ?...)

THE REASONS :

THEY BUILD the plant (after Etrick has demonstrated abilities ) ...
they REMAIN THE BIGGEST SHAREHOLDERS OF PLANT till the loan is repaid ...= No risk !

and NO whatever Roel is going to do , they WONT give any money DIRECTLY to ETIRC ...

WHAT for Etirc should be paid ? the right of construction ? for something that the country's administration of invention (USA) seems to consider more as a disgrace than anything else ?

for a firm that could be bought in XX weeks for 2 or 3 cents to the $ (BK)

for the work of a bunch of lunatics ? considering that whatever has been the "sweat and blood" floor staff put in it , upper levels gave birth to a flying piece of shit ?

the money remain in Russia , no problem = it is only a matter of writing something in a different column ...

The plant is working = the loan is repaid = Russia got investment , money back , industrial know-how , etc ...

the plant is not working : Russia keep the ownership of most of Etric , so the biggest share of papers, rights , spare parts and rights to upgrade , fix , maintain , etc ...(if it has any value ...)
STILL the money DID NOT go out of country ! but Etirc/EAC following their need to demonstrate financial abilities BROUGHT XXX value in Cash (running of plant)value in spare-parts (running of plant) technicals (running of plant) Staff (running and training) etc ...

surely they have everything to gain , almost nothing to loose ...
may be a bit of "Image and prestige" but since most western countries do not give any credit to Russia , why should they care ?

ps : i think it is Deep-Blue who wrote Third-world country , speaking of Russia (?) ...
sorry , man ...!

if such a country is to be define by ownership of Populace ... Russia has a much higher rate of Ownership than USA or U.E ...
(at the end of USSR , all residents got ownership of the place they were living in !)

By the rate of indebtedness? : once again Russia has a much lower rate of personal debts than USA or U.E ...(credit did appear only a very few years ago and is still NOT in mentality ...Mortgage = may be , consumer credit ? Russians are exactly like the Frenchs on topic = Credit is EVIL ! we don't even have Credit-Card but Bank-card ![no money on account = no use possible]))

as for the state indebtedness , the Russian budget is steadily making a SURPLUS in EXCESS of some 70 Billions $ per year ; how about USA , Germany , France , UK ?

Richness ? more Billionaires in the Moscow region than in the Whole of USA ...

progression of purchasing power ?:
in constant rise (some incredible figures in 2 digits) since the last few years ..

Wages ? :
in Moscow , a normal managing position into a corporation of respectable size is about 4000€ (5800$+) per month , rising of some 2 digits figure every year ...

infrastructure ? they are building like mad ...

each time i go to a place i haven't been for a while , i always fear not to recognize it ...

so Third world country ? yes ! 15 years ago ...

eclipso said...
This comment has been removed by the author.
eclipso said...

"Could it be possible that the bank was responding to an email inquiry by the Journal? Do reporters ever ask questions of people when they are writing a story?"

Sounds like the old days when much of the infomation given by Russisa (former Soviet Union) was really Dis-information. Be on watch for conflicting "information"

julius said...

Fred,

bonjour - bon dimanche!

I think the Russians will be less optimistic than the pros at Lehman, WaMu etc. on the other side of the pond. They did observe the american way of ... bulding aircrafts (ok - Superjet isn't super at all, but after more than ten years a first trial is acceptable..) and decide what is transferable to their country.
Putin's initiative to revitalise the civil aircraft production (naturally the mil. as well) was no secret. But it is not a ticket for easy money for westerns !

If the investor is based in Russia or perhaps CIS, he can make his money via Ulyanoswk plant. Otherwise he must get his money (or most of it) before the parts are in Russia. But for the time being EA50 must get the latest certification and the EASA cert and
RP must keep on running ABQ.
But RP still must prove that there is a sustainable EA50 production in ABQ.

His latest PR action concerning retrofits is just fostering reputation as a serious businessman you realy can rely on.

Who will harvest this crazy fruit called EAC/Etirc aviation?

Julius

P.S.: When changing to Garmin 1000
is EAC inventing the keyboard for reducing the workload?

WhyTech said...

"Still puzzling to me why anyone wuld make such investment"

Its not claer to me that they have actually made such an investment yet. Its not a done deal until its signed up and the cash is "in" (whatever form this takes).

Also, we dont know the terms of the proposed deal. The answer to the puzzle may be found here. It seems likely thatthe terms will be overwhelmingly in favor of those putting up the money - onerous at best would be my guess.

WhyTech said...

"It sounds like they are putting time on the E400, and expanding the envelope to do aerobatics"

This was a publicity stunt. The only existing EA400 was hand built in the woods by elves, and is amost certainly not representative of the proposed production aircraft except at a broad conceptual level. There would seem to be little purpose in "expanding the envelope" if this partucular airframe except to support fund raising.

fred said...

Gruß Gott , julius ... hast Du gut Sontag ?

yes , sometimes it is so comical ...!

if i would write that last time i was in New-York , all the US Govt was waiting in line to kiss my ass at the airport in showing some respect to me , because i am what i am ...

everybody would be shocked and swear to me ! (which would be normal)

But when it is about a nearly bankrupted US firm and a product they make which has not sold into in own country by any other means of bloated orders-book or pure machination to have some gullible trapped , it is perfectly normal the prime minister of a country open his arms (and wallet) wide ...!

it become absolutely normal = it is Russia ...!

( just a hint for the crowd : when do you stop to be a leader ? = when you start considering things normal because it is you , and you are soooooo goooood , that any need to question anything become useless !!!)

the ticket you wrote about has been already fully understood by Russians ...

They call it : Mr One-Shot !

in the last 15 years , they have seen some many wankers coming to their country ... with all the best intentions (of taking them for stupid) ... a bit of cash ...intentions of changing everything ... making a fortune overnight ...

usually , they are the ones to escape by the night plane , leaving believers in disarray , lots of bills behind !

are Roel/Vern/Ed of such qualities ?

yes , very probably !!

are the Russians stupid enough to be fooled over and over ?

i wouldn't bet on this ...

for the SuperJet , i would say the result is not that bad ...
considering all the trauma of changes , the brain-drain , the wind of craziness that was blowing in the country , not so long ago ...

in conclusion :

who is to pick-up the fruit ?
i don't know !!

as some fruit seems to be rotten BEFORE being ripe !

fred said...

eclipso :

#Sounds like the old days when much of the infomation given by Russisa (former Soviet Union) was really Dis-information. Be on watch for conflicting "information" #

YES !

only one difference NOW , the ones who give the disinformations have changed of side ...!

from disinformations FROM Russia , now it is disinformations ABOUT Russia ...

airtaximan said...

what is full aerobatic display?

Is this a whacky Russian translation of Engligh that the plane flew... or did someone intentionally
fly the plane inverted?

Deep Blue said...

Dave:

Your comment about not trusting the information precisely because it is constantly changing, is central to this entire saga.

In fact, the current streams of variable and conflicting news is precisely at odds with how a more professional organization would handle media and public relations, just as EAC/Etirc is precisely at odds as an OEM, with how a professional manufacturer (of aircraft especially) would act.

Variability and inconsistency are exactly the features of an enterprise that generate doubt and skepticism; rejection and customer/investor/public abandonment.

airtaximan said...

once again, we can speculate all we want, BUT I sincerely believe the Russian "financing" is a huge accomplishment given the program/market/economic realities.

Someone is a great "saleperson"...

We'l see where this takes EAC... lets hope for the best:

- A new vibrant market somewhere requiring a lot of planes
- a finished design
- profitable production at a rate that meets the market
- product pricing that is profitable, and provides enough volume
- prduct pricing that provides enough volume and is profitable
- and end to qquality and safety issues
- all mods provided at EAC cost
- all refunds provided ASAP
- all suppliers paid ASAP
- 2000 high paid aviation jobs ins the US

anything else...


As DI likes to say:
"Would you like Splenda, Nutrasweet, Sweet'n Low or Sugar with that???"

Black Tulip said...

Meanwhile over at the Eclipse Owners Club… last night a ‘delivered’ Eclipse was offered for immediate sale for $850,000. Comments express dismay from another owner and speculation as to whether this is a DayJet machine.

airtaximan said...

BT,

great target marketing...

;)

Shane Price said...

Many thanks to everyone for their kind words this past week.

New post is now up, thanks to Black Tulip.

Enjoy!

Shane

Baron95 said...

airtaximan said...
what is full aerobatic display?


I wasn't there, but the reports is that it did a full routinne, cuban 8s, wing-overs, rolls, etc...

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