Monday, October 6, 2008

DayJet Folds and Eclipse Aviation Struggles to Survive

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

241 comments:

1 – 200 of 241   Newer›   Newest»
fred said...

Oh yes ...

what a brilliant work !

karen , whenever you are the "old part of world" send a message and pop-in for a bottle of Champagne ...

you deserve it !

but there is something tickling my mind ...
in previous release it was stated that Mr vladimir vladimirovich Putin (V.V.P) was only supervising the board-committee of the bank who decided to give a formal ok to the financing of RU plant ...

after some time (and lots of iteration !) now it become "V.V.P. IS supervising the financing "??

soon it will be "V.V.P. is putting his own money into the project !"

then we will be very close now from a divine intervention into the whole matter ...:-))

Ps:
if V.V.P. is to follow-on the project , only one thing to be said :
in Russia , it is common to say about him that he starts to smile ONLY when both his hands and feet are put in fire ...
Good luck , Roel , even if i believe you'll need a bit more than luck on this one ...!!! ;-)))

fred said...

Monsieur Shane :

i feel you are definitely right on the BuyBack ...
if anyone would try to make some sens out of it :
why an engine-maker would "give-away" precious resources to please a customer ?
if it is so ; is the engine-maker in a sound financial situation ? (sounds like suicidal attempt to boost selling = what for ?)

sounds like the story "a product (?) wrapped in newspaper page remain a good product"

what could be the aim of this ?

without BuyBack , apart pleasing EAC (then again :what for ?) no way to risk a shekel on such ...it make no sens !!!

fred said...

as for EASA :

i am completely lost ...

is it going to be soon ?
or
When Gavio is going to be certified?
or
when the new tires are going to be certified ?

and do they believe EASA is going to accept ONLY one plane ???

since the production certificate is so "Grey" , do they believe that EASA is not going to have its own survey of Production ,Standards and Quality Methods ??

in the even that EASA wants to have its own survey = IN which plant ? ABQ ? Ulyanovsk ?

then what about a service-center ? which has to be certified as well !
Where about ? ABQ ? Ulyanovsk ? anywhere in E.U. ?

so many question remain to be answered ....

FreedomsJamtarts said...

Dajet says "...and that it had a 95 percent on-time performance record."

I would bet that 95% of flights were within the +/- 4 hour window, rather than within the +/-15 minute window which is the industry standard for defining a delay.

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.

I bet the ATCA is thrilled about the concept of jets buzzing round in RVSM airspace with “transponder switching and frequency switching issues".

Shane do you have any detail on these issues?

Are the transponders going into standby uncommanded? Type Tansponder into the FAA AD server to see how seriously Transponder issues are normally addressed!

What are the COM's doing?

Baron95, how do you feel in terminal airspace single pilot IFR is the radio goes quiet for a while? The Pucker factor goes up right? I know what is like to have a suspect A/P (two pilot) and the effect on workload is very noticable (even if it is only suspect and currently working).

Dave said...

Here's Roel now claiming that DayJet had been in trouble for 9 months and he's touting his own ETIRC order (but not saying it was his own company that placed it):
"DayJet has already been more than nine months in trouble," responds Roel Pieper Quote opposite. 'So that they are less important for us is clear, it has no impact on our plans. Too bad they do not anymore, we prefer to do it or not, but for us that means nothing else than that we previously multiple customers now can make their plane. "Pieper According to the order book is still so full that even three years can produce. ‘Het loopt zeker anders dan we gedacht hadden in deze bijzondere financiele tijden maar so far so good. "It is certainly different than we had thought in this special financial times but so far so good. Our biggest customer is now in Turkey, Atasay wants 180 aircraft. That is the biggest aircraft order ever in Europe. "
Turkish VLJ

Here's a former DayJet pilot looking for a job:
Pilot Resume
Here are resumes for those who have some experience or another with an Eclipse:
FindAPilot.com

fred said...

dave :

# Our biggest customer is now in Turkey, Atasay wants 180 aircraft. That is the biggest aircraft order ever in Europe. " #

the Atassay story is old enough to have been touted by Vern in his time ...

it is smelling like 100% fake as the said company have absolutely NO past as aircraft owner , operator or whatever is related to aviation ...

Roel must be real desperate !

on an other front , today the RTS (Moscow stock exchange) has been suspended after loosing some 18% ... the credit-crunch is affecting the RU market as most state banks warn theirs past and potential customers that credit is going to be tighten !

sounds quite bad for the russian plant , may be a reason why the Turkish re-surface again ...

Dave said...

it is smelling like 100% fake as the said company have absolutely NO past as aircraft owner , operator or whatever is related to aviation ...

It was ETIRC (Roel) who placed that order. Roel touting the ETIRC orders is worse than when Vern touted the DayJet orders. At least Vern wasn't CEO of DayJet.

airsafetyman said...

"At least Vern wasn't CEO of DayJet."

Hard to believe Ed was either. Maybe the dude that built the ant-farm?

fred said...

airsafety :

#Hard to believe Ed was either. Maybe the dude that built the ant-farm?#

not sure any of the three from the "merry band" understood what they were doing , anyway ...

it sounds very much like a soviet joke (soviets peoples had terrible joke about their system ) :

two guys are partying and abuse a little too much of alcoholic beverage ...
they get kicked-out of the pub they were in ...
and on the way back to their shack , they talk about "how could the world be wonderful if only ..."
since they are totally drunk , they play with each other shouting in the streets at night their brilliant theories ...
very late at night , they are conquered by all the alcohol they drank and fall on the floor , not able to even reach for their bunks ...
the day after , trying to recover from a giant hang-over , one tries to open the window ...

in front of the house all the ones who heard the night story are watching the little house , wanting to know the rest of the story , to be able to decide for themselves if the joke is good or not ...

the names of the two drunkards :
Vladimir Ilitch Oulianov & Joseph Vissarionovitch Djougachvili ! "

FreedomsJamtarts said...

Ouch. Dow is back under 10K.

Funny how all the new rescue hopes are coming from developing countries (Russia, now Turkey...)

Doesn't pass my sniff test. Eclipse never did though.

fred said...

freedom :

#Ouch. Dow is back under 10K.#

my sniff-test tells me : "only the beginning ,buy gold , NOW !"

Shane Price said...

Freedom,

Shane do you have any detail on these issues?

Are the transponders going into standby uncommanded?


Almost everything that can happen with the FPJs' avionics, HAS happened.

The list is endless. If you mean by 'uncommanded' that the transponder switched itself off, the answer is I don't know.

But I'd be very surprised if the transponder had not failed at some point, given what we all know about Avio (various flavors) and the other bits and pieces that were thrown together by partially trained personnel with little or no background in aviation.

Not for nothing do we call this 'toy' the Fischer Price Jet.....

Hang on, that's being a bit hard on Fischer Price. At least they trained staff properly and tested the product fully before shipping their 'jet' to trusting parents all over the world.

I'm sure we'll all hear stuff from NBAA. Send what you hear to

eclipsecriticng@gmail.com

and I'll filter the best ones out for inclusion in my next 'snippets' post.

I'd be very interested in any sightings of Vern, especially if he's seen lurking in the vicinity of a Mustang....

Shane

Shane Price said...

Fred,

I think a 'translation' for our 'Cold War' educated American friends may be of value.

Vladimir Ilitch Oulianov = Lenin

Joseph Vissarionovitch Djougachvili = Stalin

Better joke that way, too....

You know what they say about the Americans and the British?

One people, divided by a common language.

Shane

Dave said...

I bet Eclipse is doing the same thing all over again as they did with the FAA with how EASA has to "save" Eclipse because Eclipse financing and orders are tied to EASA certification.

Yesterday there was an interesting bit on 60 Minutes about the electric car industry and Detroit versus Silicon Valley. They profiled Tesla Motors in particular with how they at first touted not having Detroit experience was a virtue, but now they're hiring people with auto industry experience and meeting all the regulations was more difficult than they thought it would be...and this is only for a car!

I'm hopeful for Tesla and I also think there's a difference between Telsa being lead by Elon Musk and Eclipse under Vern and now Roel. Elon Musk actually has a track record as a successful entrepreneur but Vern and Roel don't. Roel's fortune for instance doesn't come from entrepreneurialism, but rather from being CEO at a decades-old company. The same goes for Vern. Vern's biggest claims to fame have been as an employee working under others rather than as a business founder.

Dave said...

Oh, here's the type of jet owned by Elon Musk. It cost Musk about $250K, which is half the price of the DayJet FPJs:
Aero L-39
Right now there are about as many Aeros in the US as there are FPJs and worldwide there's 2800 in active military service. It would seem like $500K is too much to pay for an incomplete buggy aircraft with high mileage when there's cheaper alternatives out there that are complete and can be serviced.

fred said...

OOOUUUPPSS , Sorry Monsieur Shane !

you are right , as usual ...

i keep on forgetting that not everybody is interested into the deep reason why this world became so crazy ... ;-))

Dave said...

A trip down memory lane. Here's a projection of VLJ on-demand service:
Future On-demand (VLJ) Aviation Forecasts Using TSAM Report to JPDO

Joe Patroni said...

"......now they are hiring people with auto industry experience, and meeting all the regulations was more difficult than they thopught it would be."

Which is why I look at ANY hype coming from the Silicon Valley hucksters with a high degree of skepticism.....especially when they say they are going to do it better than the "dinosaurs" (no matter what industry).

These guys have been telling themselves that they have all the answers for so long, they are believing their own BS.

Google "Segway"

So they are finding out that preparing a "kit car" for sale to Joe/Jane Q. Public, who can break an anvil in the middle of the desert with no tools, while at the same time complying with all the Federal Regs is a harder problem to solve than they thought.

I'm just stunned........nobody every saw that coming.

Giving Silicon Valley guys money is as good an idea as giving an undocumented strawberry picker an $800,000 subprime mortgage for a 900/sq ft. cinder block "crack shack" in Compton.

But once again, I digress.......

Deep Blue said...

I'd like to reiterate that no "founder" unlaterally exits his company, and moreover, turns his back on any continuation process (e.g. Etirc, however implausible) unless he knows that he has left behind a ticking time bomb. VR has already taken his financial exit and now his personal risk management exit.

RP is trying to do the same by trying to offlaod EAC into another unsuspecting believer, but I suspect this time, just like in so many classic venture projects before them, it finally gets crushed financially and is thrown mercilessly into Chapter 7.

I realize this is speculative, but all signs point this direction.

At any rate, Karen and others had tracked the blood trail years ago.

Dave said...

These guys have been telling themselves that they have all the answers for so long, they are believing their own BS.

I think they caught on at Tesla. I give Tesla a fighting chance.

Google "Segway"

The Segway is a good niche product, just it was overhyped by the VCs.

Giving Silicon Valley guys money is as good an idea as giving an undocumented strawberry picker an $800,000 subprime mortgage for a 900/sq ft. cinder block "crack shack" in Compton.
But once again, I digress.......


I think it depends on what the money is for as well as who it is for. Vern for instance despite his background doesn't seem fit for a Silicon Valley project even though he has a Silicon Valley background, but others in Silicon Valley are quite capable.

baron95 said...

Freedomjam said ... Baron95, how do you feel in terminal airspace single pilot IFR is the radio goes quiet for a while? The Pucker factor goes up right? I know what is like to have a suspect A/P (two pilot) and the effect on workload is very noticable (even if it is only suspect and currently working).

I think your statement is very important. A single pilot IFR/IMC environment is BY DEFINITION high work load. I.e. the pilot has a big proportion of neurons allocated already.

Once you lose confidence in your equipment, you have to allocate a non-trivial neuron budget to constantly re-check everything, and, most improtantly, to doubt and suspect everything.

Just think about how *HUGE* a workload increase it is to add to your (ingrained) instrument scan "Transponder still on 3476 and AP Altitude still on MDA of 640".

In my book, any neuron that you have to dedicate to tend to equipment problems is one less neuron you have available to do something really important in IFR.

That is why I have said all along that, in its present state, the EA500 is a VMC or very soft IMC only plane.

But that is onld news.

Dave said...

RP is trying to do the same by trying to offlaod EAC into another unsuspecting believer, but I suspect this time, just like in so many classic venture projects before them, it finally gets crushed financially and is thrown mercilessly into Chapter 7.
I realize this is speculative, but all signs point this direction.


I don't think there is much speculation there given what Eclipse has publicly stated. The only way for Eclipse to survive outside of continual life support from whatever great fool can be found, would be for Eclipse to sell a huge amount of units per year. Both of Eclipse's 1000+ orders (Nimbus and DayJet) have blown up. Though Eclipse will blame the economy, it doesn't matter how good the economy is as you're simply not going to get the volume. The sustainable volume wasn't there back when the FPJ priced under $1 million and the economy was stronger and it certainly isn't going to be there with the units cost over $2 million and there's supposedly going to be two factories that have to at least each break even. If you believe each year Eclipse can sell 800+ units then they wont lose more money, but if you don't believe that, then there's only one thing that can happen.

Dave said...

Read this article from 2002 about Eclipse and Nimbus. It doesn't sound like anything has changed:
And that may be why, in August of last year, around the time he was trying to close one difficult round of investment for $62 million and looking at the immediate need for another $38 million to get him to the critical moment of first flight nearly a year later, Raburn reached an agreement with a charmingly brash would-be air-taxi mogul named Ilia Lekach. Lekach's company's announcement that it would order 1,000 planes made a splash in the aviation press and in one stroke validated Raburn's hope: the new plane would create its own huge market...

Put starkly, Raburn appeared to be raising capital on the basis of a too-good-to-be-true order from a financially challenged company in which Eclipse was taking significant ownership: the $62-million round had closed in September, just weeks after the 1,000-plane order, and $38 million more closed after the even more spectacular announcement that Nimbus had locked down the financing. A cynic would say that Eclipse was promoting the feasibility of its own business by taking a financial piece of its main customer.

How could such a seemingly desperate act be associated with Raburn? This is a guy who counts among his almost 200 private investors Bill Gates -- best man at Raburn's wedding, for goodness' sake -- Red Poling, former chairman of Ford; Bob Eaton, former cochairman of DaimlerChrysler; serial entrepreneurs like Al Mann, who sold two companies for $3.8 billion last year; and Sam Williams, whose Williams International makes the power plant for the Tomahawk cruise missile and whose startlingly efficient microjet engines are to exclusively supply the Eclipse 500. Raburn knows everyone who is anyone in the technoindustrial complex. Why get into bed with Ilia Lekach, whose Nimbus was only recently transmogrified from the steaming remains of a dot-com called Take to Auction? Answer: because no other putative air-taxi operator was giving Eclipse an order for 1,000 planes...

But Raburn did not lose a beat. Someone -- just as he had predicted, it was someone from outside traditional aviation -- was going to take the planes he had not yet built and turn them into America's first national air-taxi service. By Raburn's reckoning, Nimbus would be merely the first of a series of operators to create a market for up to 200,000 planes over the next two decades. Of course, not all those planes would be Raburn's; Eclipse's success would spark competitors. "All I want," Raburn says in teasing reference to his Microsoft upbringing, "is my natural 75% of the market..."

That leaves the handling of that 1,000-plane order. Was it used to promote investment? Regarding one round of investment, when $62 million was closed, Raburn says: "All the money was already committed ... in August." In fact, the investment round closed on September 11, after Nimbus's August order of 1,000 jets. A subsequent tranche closed February 14 on the heels of Nimbus's February 11 announcement of that $1.2-billion "commitment" from an "affiliate" of Royal Bank of Scotland. "There's nothing we've kept from our investors," Raburn says. "This is not a public company. I know what I've told my investors, and I know what my investors understand. We were trying to work with a customer that didn't have the cash. It turns out it was a mistake. Now, I don't know how many other CEOs would stand up and say, 'I made a mistake,' but I made a mistake in accepting that stock. I'm also going to let my actions speak for themselves. We returned it.... Hey, in business you make decisions based on conditions at the time."

Inc:The Plane Truth

baron95 said...

On Segway... I fly often through DFW, and I was totally shocked to find that the Airport Police was riding INSIDE THE AIRPORT on Segways. Needless to say, without exception, the officers I saw on them were very overweight to obese.

For crying out loud. Get those guys to walk. Save some tax $$$ and maybe even save their lives.

They looked completely ridiculous with their biking helmets and pads. I should have taken a picture, but I was dashing to board a flight.

baron95 said...

Back to Karen....

Wow!!! She trew in the kitchen sink - a comprehencive recitation of items.

But it all ended abruptly. Is there a page 2?

Where is the writing of putting all the facts in context? What is next for EAC? How about telling us if she tried to contact EAC and what their official line is?

I liked the confirmation of my estimate that DayJet in fact "paid" $850K/plane. Looks like the UT Finance arrangement was a straight loan with a lien.

What is Eclipse's involvement? A buy bac guarantee? A lien of their own? Did Karen ask the question?

Re her accounts of the owners conference, to me, that was the most revealing aspect. It does look like Eclipse is now like a deer caught in the headlights - stunned and paralized.

I'm convinced there is no plan. It is just hoping on their part that Mann and Roel can convince some more "pals" to throw more money away into this.

I wonder if Vern would be crazy enough to try to buy this out of BK. Either way, he is sure to tell his pals that "All went to hell after I left". And he would be right. They were in purgatory with him. Now they are closer to the fire ;)

Black Tulip said...

Dateline: October 6, 2008

Location: NBAA Show Orlando

Subject: Eclipse Maintenance and Operations Briefing

Your reporter attended this 2.5 hour meeting this morning and brings you a few highlights. I sat behind Ken and Shari Meyer and about forty others were in attendance.

The data acquisition system on the Eclipse 500 has allowed the factory to draw a number of conclusions, and to improve operations. Tire blowouts were running 2.57 per thousand landings but have dropped to 0.84 per thousand landings as a result to this analysis. Eclipse concluded that most had occurred as pilots made ‘Vref plus ten’ landings, not right at Vref. Training has lowered final approach speeds. Speaking of training, an interesting announcement was made. Eclipse has downloaded flight data for individual pilots, noted improper operation, briefed the operator, and implemented this in a pilot’s recurrent simulator training for the first time last month. A murmur ran through the attendees.

The benefits of Avio NG 1.5 were discussed at length. Some just bring the avionics suite up to the level of performance found in many aircraft – GPS roll steering, the ability to fly to GPS waypoints instead of VOR to VOR, and localizer coupling. Of course, these features require the Garmin 400W which is not yet fielded. The company’s software background shows as Avio 1.5 allows programming 48 different weight and balance configurations and loading ten of them in the aircraft… so you can pull that entertainment center and potty out when you want more people, put in more seats, and just press a few buttons. (Sophisticated software no doubt, but reminds me of the question, “If my VCR is so advanced why has it been flashing ’12:00’ for the five years I’ve owned it?”)

Numerous bugs are to be fixed:

The transponder will no longer randomly change reply codes in a high-density environment when interrogated by multiple ground sites. A software data packet is being lengthened.

The altitude preselector will stop jumping at random from say 35,000 feet to 18,550 feet as a result of correcting a software timing issue.

Instead of waiting twenty seconds to respond, the elevator pitch trim wheel will start to move immediately on pressing the trim switch.

The minimum descent altitude will not reset randomly.

Since there are several variants in the fleet, Avio 1.2 and 1.3 are to address these problems in aircraft without the Garmins. The FAA is completing testing and certification is expected at the end of the month. Known ice installations are to begin October 20th.

Regarding the much anticipated EASA certification, Eclipse says approval is near. They represent that in spite of speculation otherwise; the aircraft’s electrical design has been accepted. EASA has required:

Addition of a third mechanical attitude indicator, a la DayJet, located by the windshield post but to have a tasteful fairing added.

Two improved electrical ‘door open’ sensors to prevent false annunciator indications.

Painting the master electrical switches red color to meet international standards.

EASA pilots are to be in Albuquerque at the end of this month. There are 21 Eclipses in Europe and the aircraft is a regular visitor to Moscow.

Regarding training, Eclipse has trained 432 pilots, 322 of whom are owners. They have two Level D simulators and two Flight Training Devices in operation. The pass rate of their Part 142 training has been 95%, with a washout rate of 11% in the flight skills assessment conducted beforehand.

The Aircraft Flight Manual is to be amended shortly to account for the following. There have been five cases of aircraft experiencing engine surging at high altitude as a result of rapid carbon buildup. This is the result of extracting too much bleed air to heat the cabin. The AFM will be amended such that above 35,000 feet, cabin temperature must be set at or below 68 degF. Also maximum power is to be used for three minutes on each takeoff to burn off any deposits built up on the last flight. Pratt & Whitney is exploring a new burner can design.

A few quotes in closing:

“Roel Pieper is focused on Eclipse being a real company, as in one that makes a profit.”

“We are not a 501C (charity).”

“The Russian factory changes nothing in Albuquerque.”

“The Eclipse fleet has flown 38,000 hours with no fatalities, one incident and one accident.”

Finally and perhaps most important, the need to obtain additional financing by year end was mentioned several times as required to continue the work mentioned above. Herewith, your humble servant in a hotel room in Orlando, closes this unedited report.

Shane Price said...

Snippet time.

A 'usually reliable' source confirms that UTH are the holders of the first lien on the DayJet aircraft.

But EAC hold the secondary lien.

Seems that UTF would not lend the entire purchase price, so EAC agreed to 'lend' the balance, secured against each aircraft.

Yet another 'disruptive' practice is uncovered at EAC.

What the net effect of this means is that DayJet will still owe EAC money at the end of the merry go round.

Roel will be asked to provide parts and technical support for aircraft that EAC have never been fully paid for.

How will that one work?

Shane

Shane Price said...

Black Tulip,

Excellent report, many thanks.

Did they say HOW they would be able to source money in these difficult times?

Did they PROMISE EASA certification before the end of October?

Shane

Dave said...

Regarding the much anticipated EASA certification, Eclipse says approval is near. They represent that in spite of speculation otherwise; the aircraft’s electrical design has been accepted. EASA has required:

Addition of a third mechanical attitude indicator, a la DayJet, located by the windshield post but to have a tasteful fairing added.

Two improved electrical ‘door open’ sensors to prevent false annunciator indications.

Painting the master electrical switches red color to meet international standards.


How do any of those address the EASA Special Condition?:
Also it is not considered reasonably possible to safely land the aircraft within 30 minutes from 41000 ft on battery supply, taking into account the time needed to perform the failure procedure, general pilot capability, lost services and ATC environment.
Or is the gotcha gonna be that the FPJ wont be able to fly to FL410 in european airspace?

The Aircraft Flight Manual is to be amended shortly to account for the following. There have been five cases of aircraft experiencing engine surging at high altitude as a result of rapid carbon buildup. This is the result of extracting too much bleed air to heat the cabin. The AFM will be amended such that above 35,000 feet, cabin temperature must be set at or below 68 degF.

Gosh, when I put on the heater at home, it only raises my electric bills, but with the FPJ it wrecks the engine. Not being able to put on the heater (at least past 68) would seem to be bad when trying to sell a vehicle as a luxury.

“We are not a 501C (charity).”

They just want charity - even by metaphorical gunpoint.

Black Tulip said...

Shane,

I heard nothing about the prospect for financing, or source of funds. The presentors came across as operations folks who were not involved at that level. I did not hear the word 'promise' used. I'd say that management came across as working to do the right thing but under consideable pressure. One of the four was Matt Brown; I believe we have read that he has given notice.

Dave said...

A 'usually reliable' source confirms that UTH are the holders of the first lien on the DayJet aircraft.

But EAC hold the secondary lien.

Seems that UTF would not lend the entire purchase price, so EAC agreed to 'lend' the balance, secured against each aircraft.


That makes sense since $850K seemed too low. Depending on how the transaction worked, this couldn't have happened if they were a public company. Much of what Eclipse does wouldn't go over very well if they were publicly traded. Once I was a temp for Realtor.com where some execs eventually went to jail over conducting roundtrip transactions. Though they're calling it a loan with DayJet, it still could have been used by Roel/Vern to inflate Eclipse's revenues.

What the net effect of this means is that DayJet will still owe EAC money at the end of the merry go round.
Roel will be asked to provide parts and technical support for aircraft that EAC have never been fully paid for.
How will that one work?


Frankly it sounds like DayJet is the only customer to have gotten relatively fair treatment. The aircraft hadn't been fully paid for, but they hadn't been fully completed either. All of Eclipse's customers should get the same treatment of not having to fully pay until their aircraft are fully delivered.

TBMs_R_Us said...

Dave,

They could get away with it as a public company as long as they accounted for it properly (as determined by independent auditors). That might or might not require disclosure (if it was deemed to be material and/or not in accordance with GAAP, it might have to be disclosed). As a private company, EAC doesn't have to to disclose anything (except as required by contract, e.g with NM or ABQ).

What happened with Homestore.com (Realtor.com) entailed hiding triangular round-trip ad deals from the auditors (to inflate revenues, to support the stock price, etc etc). The founder/CEO went to prison.

chickasaw said...

Shane said:
"You know what they say about the Americans and the British?

One people, divided by a common language."

Ain't that the truth. This past summer I learned more than I wanted to about, faggots and peas, spotted dick, the difference between pants and trousers, sweaters and jumpers. Not to mention the correct pronunciation of oregano, Toyota Celica, tomato, privacy, and the list goes on and on..

Anonymous said...

Shane,
It would be proper netiquette to provide a direct link to Karen's article in the OP.

Anne Onymous

Anonymous said...

M. Flower,
Was that real or satire? I honestly can't tell the difference.

A

gadfly said...

And still, we rarely hear a word about the fact that not one single complete little bird has ever been produced, to this day, at the west end of ABQ.

gadfly

(‘Betcha that the “senate” and “congress” could bail out the little bird in an instant . . . provided they could pay off everyone with enough “pork”! . . . and the president would sign it. Excuse me while I make a long distance call into the porcelain telephone! . . . I’ll need to shout real loud!)

Dave said...

They could get away with it as a public company as long as they accounted for it properly (as determined by independent auditors). That might or might not require disclosure (if it was deemed to be material and/or not in accordance with GAAP, it might have to be disclosed). As a private company, EAC doesn't have to to disclose anything (except as required by contract, e.g with NM or ABQ).

I'm aware of that that it depends on the method of disclosure, just for some strange reason I've come not to trust Eclipse for making proper to disclosure. Eclipse still can't commit fraud and I would think that accounting fraud still could have been committed, depending on what Eclipse did and didn't tell [potential] investors. Given how Eclipse's Chief Accounting Officer isn't even a CPA that also leads me to not have high hopes for Eclipse's accounting practices.

What happened with Homestore.com (Realtor.com) entailed hiding triangular round-trip ad deals from the auditors (to inflate revenues, to support the stock price, etc etc). The founder/CEO went to prison.

I know what happened with Homestore and I think something similar happened with Eclipse. I suspect that Eclipse touted the full value of the sales without pointing out that Eclipse funded part of the sales revenue with a loan. I don't trust Eclipse to talk straight, particularly since they aren't publicly traded.

baron95 said...

Chicksaw said... This past summer I learned more than I wanted to about, faggots and peas, spotted dick, the difference between pants and trousers, sweaters and jumpers.

And if you need something other than a belt to hold you suit trousers up, don't ask for suspenders. Apparently in the UK suspenders hold the ladies nylons, and braces hold your pants. Now don't ask me what they call the apparatus to straighten kids teeth.

baron95 said...

Black Tulip - Thanks for taking the time to post. A rare first hand account with new information.

Did you have a chance to join or listen in on the owner chit-chat after the presentation? What was the tone/mood? Do the owners still have hope that their planes will be finished and supported?

baron95 said...

Dave, Shane,

As I said before, there is nothing unusual about an OEM providing part or even all the financing in a deal. It is even proper, depending on the accounting method used and the independence of the financial arm to recognize the full price as revenue at the time of sale. There are really many, many different ways to structure and account for this, but it is a common and ordinary transaction.

In any event, I'd be surprised if ANY investor would put money into Eclipse without scrutinizing the deal with its largest custoer with a fine tooth comb.

As this is a secured (by the asset - the plane) loan, it is traditionaly a low risk transaction, IF You are never upside down - i.e. the quick-sale residual value of the asset is never less than what is owed to you.

Now, as we all know, when people lend against 90 or 100% of an asset value and/or the asset is not valued correctly in the first place, and/or the asset value declines rapidly, all hell breaks lose.


Be it a 100% loan against a home with inflated prices to a buyer with marginal credit or 100% loan against an incomplete plane and a startup company buyer, the results are equaly predictable - i.e. Bad.

Dave said...

As I said before, there is nothing unusual about an OEM providing part or even all the financing in a deal. It is even proper, depending on the accounting method used and the independence of the financial arm to recognize the full price as revenue at the time of sale. There are really many, many different ways to structure and account for this, but it is a common and ordinary transaction.

You don't think I know this? I know there are ways to do deals that are perfectly above board, but this is Eclipse we are talking about! Given what we know about Eclipse via Congressional investigation, it is safe to say that Eclipse doesn't exactly have a tendency to do the "proper" thing, but rather does the whatever-is-expedient-to-keep-the-funds-coming thing.

In any event, I'd be surprised if ANY investor would put money into Eclipse without scrutinizing the deal with its largest custoer with a fine tooth comb.

You should read the NM SIC filings.

airsafetyman said...

"Seems that UTF would not lend the entire purchase price, so EAC agreed to 'lend' the balance, secured against each aircraft."

Very curious to say the least. Did Eclipse ever pay for the engines in the first place, or was the UTF lease really just a "power-by-the-hour" contract between the financing arm of Pratt and DayJet?

Dave Ivedorne said...

Now don't ask me what they call the apparatus to straighten kids teeth.

Baron -

It's a trick question - this is British dentistry you're pondering. There is no apparatus to straighten kids' teeth.

Pay at the second window,
DI

baron95 said...

dave said... You should read the NM SIC filings.

If they did, they should accept the consequences. even with due dilligence investing or buying long-lead products from a startup company is risky at best. Without due dilligence it is foolish. And fools typically lose out.

baron95 said...

DI said... British dentistry you're pondering. There is no apparatus to straighten kids' teeth.


Priceless. ;)

baron95 said...

ASM said... Did Eclipse ever pay for the engines in the first place, or was the UTF lease really just a "power-by-the-hour" contract between the financing arm of Pratt and DayJet?


I'm pretty sure Eclipse "paid" (or at least was invoiced) for the engines. Eclipse is not Boeing or Airbus that enables customers to do the engine deal separately.

Dave said...

If they did, they should accept the consequences. even with due dilligence investing or buying long-lead products from a startup company is risky at best. Without due dilligence it is foolish. And fools typically lose out.

Actually it shows why politicians shouldn't play VC. Regular VCs only answer to their investors and don't have to worry about being re-elected, but with political VCs they've got a distinct disincentive to to do a proper job. Political VCs don't want to do serious digging into their own political investors (campaign contributors) and embarassing them and they've got mixed goals that aren't always congruent with making money. I do hope the politicians pay the price - namely Governor Richardson.

Dave Ivedorne said...

Between Karen's Airport Journals article & Black Tulip's report from the belly of the beast, a number of the questions I posed to Bob have been addressed ( if not completely answered ).

Listening to more detailed descriptions of the software-related issues brought to mind two words: "buffer overflow", that lead me to the conclusion that Avio must be built on top of NT kernel. Which raised another string of questions: Did Eclipse provide FAA with source code for the software ( including NT kernel ) as a condition of "certification"? Will Eclipse be providing the source code for NT to the Russian government? Call me a cynic, but I'm not so sure that that's a good idea. And I wonder what Steve Ballmer would say about such a thing. Has Eclipse paid Microsoft for that right?

Where do you want to not be allowed to go today?
DI

TBMs_R_Us said...

Will Eclipse be providing the source code for NT to the Russian government? Call me a cynic, but I'm not so sure that that's a good idea.

DI,

Actually, giving the Russians the source to NT would send them on a merry goose chase. Great idea!

But, of course, they already have it!

Dave said...

Listening to more detailed descriptions of the software-related issues brought to mind two words: "buffer overflow", that lead me to the conclusion that Avio must be built on top of NT kernel.

I believe that it is Windows-based.

Will Eclipse be providing the source code for NT to the Russian government? Call me a cynic, but I'm not so sure that that's a good idea.

Nah, the Russians should be entitled to get BSOD as well.

And I wonder what Steve Ballmer would say about such a thing

One word: Chairthrowing

Dave Ivedorne said...

For Anne Onymous, a direct link to Karen's article ( since she gave Shane express permission to reprint it, I'm uncertain that netiquette was violated ).

For the rest of us, an answer to a question that has lingered for a while...

A gaggle of geese,
a murder of crows,
a flock of sheep,
a troop of monkeys.

What is a collective of Eclipse 500s? One glance at this photo suggests that it must be:
"A flounder of FPJs".

Would you like the tartar sauce?
DI

fred said...

Dave I.

the source-code for NT has been cracked long time ago by russians hackers by reverse-engineering ...

i remember to have seen few microsoft products "russified" by some guys in a very efficient manner , some guys i work with told me that the cracked versions are much more stable than original ... (ok , i admit it's not such an exploit ...!;-) )

but if EAC has to give the Source-code to FAA = how can they do it ?
(microthing stubbornly refuse anything such things , the E.U. commission had to pressure them with daily deadly fine to make them move a bit !)

then , granted the fact FAA got S-C , do they have to go trough the few millions lines of codes related to NT?

then do they have to look trough the code added by EAC ?

then do they have to look for interactions between the 2 softwares ?

don't you think that's already a few years of work for quite talented peoples ?

fred said...

dave ;

everyone has to read carefully what EASA wrote :
#Therefore there should be a new required standard being defined for an
aircraft with a novel design like the Eclipse 500 in order to make sure that the
safety level is not reduced. Alternatively, Eclipse Aviation could opt for a
design that is similar to existing designs (time unlimited and dedicated FADEC
power supply and a mechanical fuel shut-off means)#


to me it means few things :

1° FAA papers are not to be recognized as valid since this is obviously a new standard !
(burying dinosaurs has some advantages but some drawback as well ...)

2° EAC is claiming BS (once again) : it is not the wiring which was at default but the whole concept !

3° did EAC implement a new system in the FADEC (if so , something new to be certified ? or do they intends to have multiple versions of hardware after software ?)

4° they have to either make a new standard or have the whole issue about battery , fadec and mechanical fuel-stop fixed !

5° if they don't follow EASA requirements = Bye Bye EASA ...!

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

Joe ;

no , i don't think you're digressing !
# Giving Silicon Valley guys money is as good an idea as giving an undocumented strawberry picker an $800,000 subprime mortgage for a 900/sq ft. cinder block "crack shack" in Compton.#

you see as a (hopefully maybe) finances specialist , i see exactly the same pattern here than for the FPJ ...

what is the problem here is the amount of crap some can insert in some others minds for serving their own little ambition ...

when a "strawberry's picker" is given a subprime of an amount everybody knows he will never be in capacity to pay back ...
it serve first the interest of the bank ( % on subprime were higher than regular !)

it serve as well the seller of the house with a higher demand , owner left with the illusion of his house worth 50% ; 100%; 200% more than reality !

it serve local politicians because when most are busy making $ , nasty questions are postponed !

it serve nation politicians for the same reasons , while everybody is busy counting the Grants , no one ask "where are we going ?"

at the end , everybody end-up thinking "wow , we are so great that any of our item are more and more valuable ..."

later followed by " why things are more and more valuable ? because we are great !"

which is a very good vicious circle as EAC situation is !

the Fpj started as something cheap , that could be used in many aspects but mostly made for one ...

giving the illusion to some that they were rich enough to own a jet ...

as usual illusions never last , wake-up is sometime difficult , sometime painful ...!

fred said...

it is not related with a special place on earth ...

at a given time , all make the same type of mistake !

the Nazi Germany was supposed to last a thousand years ...

French and British colonial empires collapsed after the WW2

last month , a friend of mine in Moscow asked me to meet with one of his client who has a house to sell to make him understand that sometime 80% of something is better than 100% of nothing ...

the guy in question was so sure of becoming this great that he told me "the house is to be sold for 15 M$ , each month passing by i am going to raise the price of an other M$ , because we are great and soon will become greater !"

i would like to see his face , now :-))

WhyTech said...

"Eclipse has downloaded flight data for individual pilots, noted improper operation,"

One cant help but wonder about potential legal & insurance implications of this.

WhyTech said...

"All went to hell after I left".

You mean sort of like Bill Clinton?

airsafetyman said...

"I'm pretty sure Eclipse "paid" (or at least was invoiced) for the engines. Eclipse is not Boeing or Airbus that enables customers to do the engine deal separately."

But there were two leins on the aircraft, one by UTL and one by Eclipse. I see Pratt of Canada selling the engines to their leasing arm (UTL). UTL leases the engines to DayJet through DayJet Leasing with a "power-by-the-hour" arrangement. Eclipse does a similar arrangement with the airframe less engines. UTL insists on being paid on time for the use of the engines, which it probably was. Eclipse (Vern) lets the payments slide until Roel takes over. Everyone was wondering how DayJet got the money to pay for the airplanes. The beauty of it was that they didn't! Pratt was covered for their part. The Eclipse investors essentially bankrolled DayJet when Eclipse didn't insist on timely lease payments. Nice. But unethical. And probably illegal.

WhyTech said...

"Giving Silicon Valley guys money is as good an idea as giving an undocumented strawberry picker an $800,000 subprime mortgage for a 900/sq ft. cinder block "crack shack" in Compton."

So, Joe, who has all the answers? You tar too many with the same brush. Many of the great (technology) companies of the last half century have been started and/or financed by Silicon Valley guys.

Shane Price said...

Snippet time, again. 'Usually reliable', but no backup or second source.

Some of this is pretty damming, especially the Gainsville stuff. Can anyone cross check tail numbers with Flightaware?

"First of all, I know that EAC is selectively making some refund payments. Seems that the louder one howls and the closer they get to serving papers, the more willing EAC is to send cheques. I do have absolute knowledge that they ARE sending a very few refunds to customers. This needs to be posted.... maybe those who are playing nicely with EAC will start playing VERY HARD BALL. I think that is is important for that to happen.

Secondly, a Sheriff showed up in Gainesville and impounded a few of DJ's EAC500s to pay some bills. Perhaps more of DJ's creditors should be so bold. EAC also flew away from GNV as many planes as they could over the weekend, kind of a reverse air raid, to get as many planes out of FL as possible. Shame was, so many were unairworthy that they only got a few. They want to get the rest to get them out of the bad weather environment as well as away from more police raids......."


Phew!

If even half of that is true, the fat is really on the fire now.

Shane

WhyTech said...

"The Segway is a good niche product, just it was overhyped by the VCs."

You are doing (perhaps) an injustice to the VC's with this statement. I am a VC living a few miles from Segway and from what I can see, it is the founder and his team that are/were doing the over-hyping. VC's of course are not immune to over-hyping, but usually they are talking to other VC's when they do this.

julius said...

airsafetyman,

The Eclipse investors essentially bankrolled DayJet when Eclipse didn't insist on timely lease payments. Nice. But unethical. And probably illegal.


that is just a big misunderstanding...
Dayjet was just partly the advertising and test branch of EAC!
(Mr. Lekach/Nimbus was ...hmmmm... not strong enough, therfore a pro -like Ed - was engaged!)
And in 2005 RP already wanted to build a/c in Uly .... But FAA and EASA failed to do their duties...

And now the banks even don't trust eachother!
How to get a piece of the big money cake still on the table without optimizing wrapping of the project EA50?

Oh - there are some customers and the own investors...

Julius

fred said...

whytec :

#So, Joe, who has all the answers? You tar too many with the same brush. Many of the great (technology) companies of the last half century have been started and/or financed by Silicon Valley guys.#

may i add a little "nuance" ...

i think it would be closer to any truth to say :

Some of the companies launched , made in or by guys from the Silicon Valley were/are great !

otherwise it's a bit like saying :
"all winners at lottery had played !"
there is no special place as such to make success or failure !
i would bet that on the TOTAL numbers of firms developed in S.V. , the ones which has/had some success are not really significantly more than average ...

the same story that with trains : the only ones who get noticed are the ones running late ...!

fred said...

Julius :

the banks do not trust each other because at some point banks , which normal business is to take deposits and lend money , were left to make more money in others sectors which are/were none of theirs business , stocks-markets , speculation , etc ...

i DO believe bank are very special activities ...
therefor they should never , never ever be allowed to put themselves as shares in the stock-market , not to become hostage of the greed of shareholders AND HAVE to be controlled at ALL TIME by Govt for which short term political interests should never be a goal ...

if this would have been respected ; US banking system wouldn't be the origin of the (probably) biggest banking crisis in mankind history ...
Fed.Res. would have done its job ...
Allan"bubbles"Greenspan would be crucified ...
and other countries wouldn't have been greedy enough to put giant chunk of cash into the nightmare ...

airsafetyman said...

EAC also flew away from GNV as many planes as they could over the weekend, kind of a reverse air raid, to get as many planes out of FL as possible. Shame was, so many were unairworthy that they only got a few. They want to get the rest to get them out of the bad weather environment as well as away from more police raids......."


But what about the Avio upgrades? When can we expect that?

fred said...

airsafety :

#But what about the Avio upgrades? When can we expect that?#

when can you expect truth coming out of a politician mouth ?
about the same date !

airsafetyman said...

Fred,

This is like watching an impailed insect squirm. I would like to see the authorities sieze Roel's maxi-yacht as well. Hard to win those Rolex races when the boat is chained to the pier.

julius said...

airsafetyman,

But what about the Avio upgrades? When can we expect that?


that's quite simple:
- EAC is in momey-cnservation-mode
- EAC is in money-back-to-Lux-mode
- EAC is in investor-attracting-mode
- EAC is in emplyee-fire-hire-mode
- EAC is in AVIONG-Certifying-mode(trial No. 3, see Karen's article)
...
EAC will say: after EASA Cert, hiring software people, trainging software people.....
Perhaps first half 2009, together with... after financing round is finished...

But you can speed up the update - 50k$ - naturally will be paidback... after financing round...

Julius

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

julius

ich habe zu klein Problem ...

#EAC will say: after EASA Cert, hiring software people, training software people....."

but in order to have money they need EASA ...

to have EASA , they need to finish FIRST ...

to finish , they need money ...

do i miss something or are we trying to re-invent the wheel ? ;-))

WhyTech said...

"i would bet that on the TOTAL numbers of firms developed in S.V. , the ones which has/had some success are not really significantly more than average ..."

Fred, you are making a different pont with this statement than what Joe was implying - that all "Silicon Valley guys" are hucksters.

While I have seen the data which addresses your point,I dont have it in front of me to quote. My best recollection is:
1)in per centage terms, the numbers of successful SV companies is somewhat higher than "average" due to the quality of resources (management, capital, etc) available in SV
2)in terms of absolute numbers
(not percentages), SV is hugely ahead of any comparable geographic area in the world, due to the concentration of entrepreneurs, VC's,and capital in the region. The numbers are eye opening.

fred said...

airsafety :

you are definitely much more kind than i will ever be ...

seize the boat ???

how about roasting some feet ?
or cover the whole bodies of the "merry band" with jam or honey and force them to sit on fire-ants nest ?

;-))

Dave said...

You are doing (perhaps) an injustice to the VC's with this statement. I am a VC living a few miles from Segway and from what I can see, it is the founder and his team that are/were doing the over-hyping. VC's of course are not immune to over-hyping, but usually they are talking to other VC's when they do this.

Here's an analysis of the situation and it seems fair. Kamen benefited from what those associated with him where saying even though he personally didn't do much hype generation. What I specifically remember and what is mentioned here is John Doerr's saying that entire cities would be redesigned around the Segway and that is mentioned:
Paper on Segway Hype

Actually seeing what happened with the Segway I learned a good lesson about new products. Since then I've seen it shown historically as well. The best inventions really take over a marketplace when they are built on existing technology and generally work under existing rules/laws. Much of today's high technology was built off old technologies such as how the telegraph turned into the telephone and then the telephone morphed into the internet with each piggybacking on the prior technology. Cities are not redesigned for new technolgies, but rather they incorporate new technologies. Like the invention of the car didn't require cities to be redesigned as they used the same roads as the horse and buggy. More roads ended up being paved, but paving roads goes back to roman times.

Also here's Esther Dyson blaming DayJet and Eclipse's problems on the economy. The article is otherwise unrelated to them:
Esther Dyson at HuffPo

fred said...

whytec :

yes , you are probably right ...

but don't forget this :

they managed to invent "the internet bubble" ...
off-course the techies have been very well helped into the matter by greedy bankers and foolish public ...

where i have doubts : that ANY place in the whole world can succeed in gathering many talented , keep them , lead them to success AND be unique at same time ...

don't forget this ; many jobs have been outsourced in India since the peak of Silicon Valley ...

this is the natural greed of human nature , not a lot to be done about ...!

Dave said...

Despite the recent shutdown of air-taxi operator DayJet, which had orders for a huge number of Eclipse 500s, Pieper said, “We have a good orderbook.”
After slashing costs at Eclipse and finishing the final certification steps, the company will ramp up production of the Model 500 early next year.

Pieper expects that if all goes well, Eclipse will be able to ramp back up during the first half of 2009 to the same rate of production as during the first half of 2008, when it shipped almost one per business day. During the second half of 2009, Pieper expects Eclipse to have enough momentum to grow production to 1.5 airplanes per day.

Because of Eclipse’s financial and unfinished-airplane problems, which resulted in Raburn’s departure, the company has had to work closely with suppliers to which it owes money to make sure they stick with the program while they wait for their accounts to be brought current.

The company does have enough cash on hand to move forward with the new production plans, according to Pieper, thanks in part to a recent financial infusion from its agreement to build a factory in Russia, but Eclipse is also seeking a final round of equity financing. This round, being arranged by financial firm UBS, should close in the next few weeks.

In addition, a group of depositors has formed and is threatening to try to persuade a judge to force Eclipse Aviation into involuntary bankruptcy, based on the group’s claim that the company defrauded its customers by taking deposits that were supposed to be followed by delivery within six months. These deliveries have yet to occur. “I think there will be no judge who will do that,” Pieper said of the group’s plan.

AIN:Pieper puts focus on Eclipse profitability
So Roel is claiming Eclispe has already received cash due to the Russian deal, Eclipse will make 1.5 units per day in the second half of 2009 and depositors are threatening to take Eclipse into involuntary BK.

julius said...

Fred,

vous avez raison - une autre fois!

Mais voila:

Link: AIN pieper-puts-focus-on-eclipse-profitability

There might be some delays because of "...a group of depositors has formed and is threatening to try to persuade a judge to force Eclipse Aviation into involuntary bankruptcy, based on ...claim that the company defrauded its customers by taking deposits ...".

Julius

WhyTech said...

"What I specifically remember and what is mentioned here is John Doerr's saying that entire cities would be redesigned around the Segway and that is mentioned:"

Good link on Segway hype. I have worked with Doerr in the past and consider him to be a person of enormous strengths. IMHO, however, he is sometimes prone to excessive hype, as in this case. Most of the hype I have seen on Segway came from Kamen, who is a bit of a folk hero in this region.

Optimism is the fuel of new ventures. If entrepreneurs made a cold blooded assessment of their chances of success at the beginning of a new venture, they would never begin. Over my 20 years in venture capital, I have had a quotation displayed on my desk which sums this up in an elegant way: "Whatever you can do, or dream you can, begin it! Boldness has genius, power, and magic in it." The dream, however, must be tempered with a modest dose of realism and a large dose of integrity.

julius said...

Dave,

The company does have enough cash on hand to move forward with the new production plans, according to Pieper, thanks in part to a recent financial infusion from its agreement to build a factory in Russia..

that is strange: EAC has no stake in Russia - it's ETRIC aviation's claim!...
So UBS didn't find someone and RP has to return some money...

Julius

Dave said...

This is from Alachua County, FL (where Gainesville is). If the reports are true of Eclipse's assets being seized, perhaps it was Western Skies (Electromech) who was doing it:
01 2008 CA 004708 - CIRCUIT CIVIL - DIV J
WESTERN SKIES INDUSTRIES LLC -VS- ECLIPSE AVIATION CORPORATION, A DELAWARE CORP


2 records found

Docket Date Docket Text Amount Amount Due
09/08/2008 COVER LETTER DATED 9/3/08
09/08/2008 CERTIFIED COPY OF AMENDED FINAL JUDGMENT IN THE AMOUNT OF $6,388,691.00 W/ INT. @ 10%; $425,000.00 FOR ATTORNEYS FEES W/ INT. @ 10%; $256,682.34 FOR CSOSTS W/ INT. @ 10%; $42,892.93 FOR REIMBURSEMENT FOR ADMINISTRATIVE FILING AND CASE SERVICE FEES

Dave said...

that is strange: EAC has no stake in Russia - it's ETRIC aviation's claim!...
So UBS didn't find someone and RP has to return some money...


Eclipse previously claimed this would happen:
The Ulyanovsk plant will have the capacity to build up to 800 Eclipse 500 aircraft per year, as well as provide customer support services, according to Eclipse. But ETIRC isn't obligated to invest all of the $205-million in the Russian facility. An undisclosed portion of VEB's will be paid directly to ETIRC essentially as a production rights fee, potentially providing a much needed cash infusion to the struggling Albuquerque firm, in which it hold a sizable interest. ETIRC will use another part of the funding to build the physical facility at Ulyanovsk. ETIRC will pay the remainder of the money to Eclipse to provide tooling, engineering services, training and quality assurance.

However, the timing of the funding has not been announced.

Pieper, who is also Eclipse president, is working with UBS to secure underwriting of a new $200- to $300-million investment in Eclipse to resume normal operations in 2009. Eclipse expects to receive either the VEB funding or a substantial cash infusion underwritten by UBS by Oct. 31st.

"The good news is that either source will come in, in time," Mike McConnell, president and GM of Eclipse's customer division, said confidently. "When it comes in, our priorities will be to settle our relationships with our suppliers, take care of our customers and resume normal operations in 2009."
Sources close to Eclipse estimated that the UBS investment to be as much as $200-300 million.

But if neither funding source comes through in the next five weeks, Eclipse's depleted cash reserves could encounter rough going in early November.

AIN:Russian Bank Okays $205 Million for Eclipse

Joe Patroni said...

"Who has all the answers?"

Not me. But from my (admittedly narrow) viewpoint, the Silicon Valley boys haven't produced anything particularly useful since about 2000-2001, especially considering how much money has been thrown around out there.

It would also be nice if they would build a slightly simpler, but "bulletproof" product, instead of throwing something onto the market, and letting their customers find and fix all the problems.

They also have a bad habit of adding features that nobody really needs, but are forced to buy......take a look at your cellphone sometime. My bottom of the line cellphone has a camera, (still and video) audio recorder and player, and about one hundred other features that I NEVER USE, but had to pay for.

So let's recap.......we are talking about tech companies that basically designed and build products that are more complicated than they need to be, then make their customers sort out all the problems

Pretty much describes an E500, don't you think?

Dave said...

Pretty much describes an E500, don't you think?

Silicon Valley does many great things, though many of the greatest things happened without being readily apparent to the average consumer (unless of course it is a consumer product). I think Eclipse was founded (and still continues to run on) the worst character traits that can be found in Silicon Valley, but Eclipse doesn't itself symbolize Silicon Valley itself.

Dave said...

Here is an article about the mass firings at Eclipse as it relates to the WARN law:
BizJournal:No WARNing
Depending on how Eclipse got the employees to sign the waivers, the waivers might not be enforceable if the employees weren't given a chance to take them home and have time to think about it.

Dave said...

Here are the Russians yet again saying it is for $205 million and not $330 million despite claims supposedly from VEB otherwise and also the Russians are aware of DayJet going down and the Russians say the aircraft were returned to Eclipse from DayJet:
VEB Help Eclipse
Also here's a new article on ETIRC/Eclipse from Russia, yet it talks about Williams engines:
The company Etirc will participate in the II conference "AON Russia-2008"

TBMs_R_Us said...

WhyTech,

I have worked with Doerr in the past and consider him to be a person of enormous strengths. IMHO, however, he is sometimes prone to excessive hype, as in this case.

Small world! I've known and worked with John for over 30 years. His hype is almost always a product of his hyper high energy and enthusiasm. I think often it takes that kind of super enthusiasm to get things moving. Also in the small world department was his backing of Homestore.com, with its not so noble outcome.

It's normal for an entrepreneur to hype his deal. After all, they are largely creating something out of nothing but an idea and a dream, and have to convince others that it's a great idea deserving backing. It's also common for successful entrepreneurs to have oddball personalities, often with potentially disastrous character flaws. These oddballs sometimes create tremendous value (Gates comes to mind), and sometimes stumble along the way (Vern comes to mind). The true character of the individual is to a large extent unrevealed to others, especially during the beginning excitement period of a new venture. Good guys get backing and bad guys get backing, and telling the two apart is very difficult, even for the best VCs and smartest investors. Sometimes the good guys succeed, and sometimes the bad guys get caught or just fail and go away.

As the going gets tough, the character of the entrepreneur gets tested and put on display. In the case of EAC, the character displayed after the first failed flight was evident to many on this blog. Unfortunately, it wasn't seen for what it was by many many others.

WhyTech said...

"They also have a bad habit of adding features that nobody really needs, but are forced to buy......take a look at your cellphone sometime. My bottom of the line cellphone has a camera, (still and video) audio recorder and player, and about one hundred other features that I NEVER USE, but had to pay for."

Joe, I am mostly in agreement re feature proliferation (am therefore my handle, "Whytech," a play on "high tech" which is intended to make fun of needless technology, as in "why would you want these features?"). However, a couple of observations: you werent "forced" to buy your feature laden cell phone, you chose to do so. And, its been a long time since cell phones came from Silicon Valley. Your complaints in this area should be mostly directed to Korea, Japan, Finland, etc. (Sole exception being, perhaps, Motorola.)

WhyTech said...

"Good guys get backing and bad guys get backing, and telling the two apart is very difficult, even for the best VCs and smartest investors"

If this were easy, everyone would be a successful VC!

FreedomsJamtarts said...

Black tulip,
thanks for going along to the show and reporting back. Good to have someone keeping it honest :)

The transponder will no longer randomly change reply codes in a high-density environment when interrogated by multiple ground sites. A software data packet is being lengthened.

Why has this not be AD'd?

The altitude preselector will stop jumping at random from say 35,000 feet to 18,550 feet as a result of correcting a software timing issue.

Why has RVSM type approval not been revoked?


The minimum descent altitude will not reset randomly.

Why has this not been AD'd to restrict the POS to dual pilot operations, again?

Anybody know anyone in the ATC association? I bet the controllers are just thrilled with this kind of behavior in RVSM and terminal airspace, with them responsible for separation.

I remain amused.

fred said...

wytech

#If this were easy, everyone would be a successful VC!#

here i agree a thousand % with you !

Silicon Valley isn't that bad , at least less than EAC ...! ;-)))

what you said about unneeded techs is right , this is why i suggested about the 2CV ...

i guess we are all kind of spoiled with our toys ...

Dave said...

It's normal for an entrepreneur to hype his deal. After all, they are largely creating something out of nothing but an idea and a dream, and have to convince others that it's a great idea deserving backing.

I believe in a mix of qualitative and quantitative analysis and with Segway it seems moreso to point to lack of analysis that was done on Segway. Maybe that isn't the right way of expressing it, but it should have been a warning sign that Segway couldn't be successful under existing regulations. Segway should have been considered a niche product as you can't expect thousands of jurisdictions to rewrite their laws and regulations for some product...it just doesn't happen. I'm not for the excessive qualititative analysis that strangled PARC, but you have to have some reality checks. Doerr should have recognizing that he was giving himself his own reality check with his statement (as I recall much was made about how regulations would have to change for the Segway aside from that isolated statement from Doerr), but he didn't cash it.

Don't get me wrong as I don't inherently fault hype, but there gets to be a point where you either should have known what was going on (Doerr) or you're trying to deceive others (Eclipse). The warning signs are out there if you take a step back (as this blog has found many different types of warning signs with Eclipse). I think Vern and Roel have seen the warning signs, but they hope others dont. With Doerr I think he made an innocent mistake as he should have considered the practical implications of what he said before he said it.

fred said...

dave :

#An undisclosed portion of VEB's will be paid directly to ETIRC essentially as a production rights fee #

thanks for the material ...
i have sent it to a friend in VEB ...!
i guess they are going to have a good laugh :

why a bank would pay "PRODUCTION fees" if they want to remain a bank ???

(i can guarantee you they do not intent to anything else than their banking job !)

why , if the case occurs , would they pay "FEES" for something they will pick-up for 2 or 3 cents to the dollars , IF they don't give the money ?

anyone can say whatever on the Russians ... one thing is absolutely sure : they are no angels !!

Joe Patroni said...

".....You weren't "forced" to buy you feature laden cellphone......"

You obviously haven't been to a cellphone store lately.

The phone I bought was the CHEAPEST one they had available (T-Mobile)

True, I could do without a cellphone (except my job requires that I have one).

And I suppose that I could spend hours trolling the internet locating a basic phone (but I have a problem buying products sight unseen, then turning my credit card info over to God knows who......). But who has time for that?

And true, most of the phones now are built elsewhere........but I think it would be safe to say that they are following the SV script for product development.

I haven't seen anything lately come out of SV that justified the fact that all the money flowing out there is starving run-of-the-mill businesses of capital.

But all of this is my (admitted) narrow perspective.

Dave said...

Joe, you might want to check this out. I believe this addresses your concerns regarding turning your CC info to parties unknown while also addressing excessive features:
T-Mobile Prepaid Cell Phones
Virgin Mobile Prepaid Cell Phones
AT&T Prepaid Cell Phones

Dave said...

Shane in another podcast regarding Eclipse and VLJs in general:
Airplane Geeks Podcast

Here's a fractional ownership company that recently received an FPJ:
PlaneSmart! Expands Fractional Service Offering to Current Aircraft Owners!

Deep Blue said...

A few comments:

Dave:

Great post on technology; as for cities, I suspect they are optimally designed around people, which is why existing tech is often modifed for some other human use (agree w/JP on cellphones and their absurd technical clumsiness); one might point to Southwest Airlines or NetJets that were not merley based on, but centrally dependent on, existing tech, but in a new modified consumption format.

WhyTech:

Nice post on entrepreneurs. In addition to good and bad ones, I might ad another categtory: self-sacrificing.

If I were to give VR the benefit of the doubt (I don't believe he undetook EAC for sinister reasons, for example), I'm sure spending ten years of his life was an enormous personal and emotional experience; entrepreneurs will often also walk away from a failing venture, turn it over to investors/lawyers/replacement management out of a sense of guilt, shame or merely the belief that their "sacrifice" is somehow the ultimate investment and hope for their "child."

Unfortunately, the founder often shoots himself in the foot (I have more than one entry wound there)by actually destabilizing the venture and leaving it in the hands of parties that do not share the risk appetitite, commitment or social/communication skills.

It's a shame no one at EAC had enough authority and courage to reinforce and balance the founder.

Deep Blue said...

Concerning Dave's link to Esther Dyson:

It doesn't suprise me that she cancelled her "Flight School" synmposium that she ran the last two years, promoting DJ, EAC et al.

Evidently, the future of mass personal mobility is worth her promotion only when it's promising; when the real hard work appears, she evidently losses interest and commitment.

I think she can now count herself in common company with VR and EI in their sudden disinterest in new ventures. It's a shame shew didn't use the symposium as a platform to conduct some "post-mortum" analysis and adjustment srategy.

As for her astronaut training, she may convince the Russians to turn the E500 into a mass market sub-orbital reuse vehicle (no Garmin, Fiki required)?

WhyTech said...

"With Doerr I think he made an innocent mistake as he should have considered the practical implications of what he said before he said it."

I can see how Doerr might actually be right in his vision for Segway - just not in a time frame relevant for anyone currently living! In addition to picking the right people, getting the relevant time horizon right has proven very tricky even for experienced entrepreneurs and VC's.

eclipso said...

Dave said

...Depending on how Eclipse got the employees to sign the waivers, the waivers might not be enforceable....


If Eclipse followed the law, WHY would they need a waiver?...

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

Because they didn't follow the Warn Act at all!!

Under the Warn Act you can't just lay people off in those numbers without giving them a warning. Maybe EAC tried to cover their ass by telling them they had to sign a waiver, waiving their rights under the Warn Act.

Joe Patroni said...

A general apology to all the SV/Venture Cap/Entrepeneur types, for my general cynicism......but in the world of us bottom-feeders, this is usually how it works:

THE PLAN

In the beginning, there was the PLAN

And then came the ASSUMPTIONS

And the ASSUMPTIONS were without form.....

And a darkness was upon the face of the WORKERS

They spoke among themselves saying, "It is a crock of sh#t, and it stinks"

And the WORKERS went onto their SUPERVISORS and said, "It is a pail of dung, and none may abide the odor therof."

And the SUPERVISORS went unto their MANAGERS saying "It is a container of excrement and the strength of it is such that none may abide by it"

And the MANAGERS went unto their DIRECTORS saying "It is a vessel of fertilizer, and none may abide by it's strength"

Whereupon the DIRECTORS spoketh among themselves, saying to one another, "It contains that which aids plant growth and it is very strong"

And the DIRECTORS went upon the VICE-PRESIDENTS, saying unto them, "It promotes growth, and is very powerful"

And the VICE-PRESIDENTS went unto the PRESIDENT, saying unto him, "This new PLAN will actively promote the growth and vigor of the company with powerful effects!"

The PRESIDENT looked upon the PLAN, and saw that it was good.

And the PLAN became POLICY....

And this is how SH#T HAPPENS

eclipso said...

TBMs_R_Us,

My point exactly. Alana what's her face said Eclipse did not violate the WARN Act.

That's what I was referring to. And again, if they did not violate the Act, why the waivers? (rhetorical question)

Deep Blue said...

Joe P.

I've enjoyed your posts and respect your experience.

I might ad however that while the "employees" have doubts about entrepreneurs and the new company, they never have any doubts whatsoever about cashing their paychecks until the final dollar of cash runs out and the're the first in line at the courthouse for a creditor claim in bankruptcy.

I've owned businesses, started them, raised millions of dollars of VC capital etc; I've personally guaranteed millions of dollars of debt and I've made personal loans to cover payroll.

I can say in my humble experience that very little of the sacrifice changed the fundamental attitude of employment (even with stock options and other equity sharing).

Employees can be as short-sighted, selfish but ultimately in better shape than many company founders, more than a few of whom go BK or nearly wreck their lives while "employees" move on.

I suspect the current EAC crew will do the precisely the same.

Dave said...

That's what I was referring to. And again, if they did not violate the Act, why the waivers? (rhetorical question)

I'm in no way defending Eclipse and I question whether or not they violated the WARN Act, but there are reasons other than violating the WARN Act for getting employees to sign waivers. I also think that Eclipse has something to hide and may very well have violated other employee rights, but as to why this is done...

Companies frequently offer departing employees X number of weeks in exchange for a waiver not to sue. Employees are given consideration ($$$) in echange for waiving future claims. Companies have this as a matter of corporate policy to offer departing employees this irrespective of who the employee is or what is going on at the business. It wouldn't be accurate to call it severance, but as a corporate policy it protects the company from being sued X months later over for instance claims of unpaid OT or whatever while the employee (as they aren't specifically targeted for this) gets extra money. The usual and proper way to do this is to allow the employee to think about it and let them be allowed to take whatever documents the company wants signed to a lawyer.

Depending on the circumstances in which Eclipse handled this, the waivers could be unenforceable. If the employees were given the bad news and then quickly pressured to sign the documents, it could be challenged.

To make myself clear, I think Eclipse probably was up to no good (as I don't give Eclipse the benefit of the doubt on whatever activities could be done wrong), but there are legit reasons for having departing employees sign waivers.

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

"Employees can be as short-sighted, selfish but ultimately in better shape than many company founders, more than a few of whom go BK or nearly wreck their lives while "employees" move on."

Absolutely on target and 100% consistent with my own experience as an employee, entrepreneur, executive, director, and investor. "Employees" gotta learn that there are no guarantees in corporate life or life in general, and step up to taking full responsibility for their own well being. Dont like the view from the bottom? Then do what it takes to move up on the food chain to what ever level you like. I have had it with "employees" who whine incessantly about being unfairly treated, but who take no personal responsiblility for their circumstances. Life is all about choices - make some different choices and stop whining!

julius said...
This comment has been removed by the author.
eclipse_deep_throat said...

Regarding the WARN act ....it is pure bullshit. This was the first time in my life that I have been laid off via a CD-ROM. Seriously, my buddies and I got a laugh when shooting the breeze at the bar. I literally had to print up my own termination notice with my own paper at home. It is buried in the fine print, but it does prevent the employee from suing EAC for any 'breach' of contract AND/OR warn act violation.

One weeks' pay per year of service was paid to me a lot faster than NOT siging the damn waiver and waiting for divine intervention to deliver a check for 2 months base salary. We gotta be practial here, eh? If anyone really wants to beat this dead horse, I can send the file to Shane to post.

Regarding silicon valley, Segway, biz owners ...its all rather pedantic. I used to listen to my mother rant at all those "evil" people with money. She hated Ronald Reagan. Naturally, I became a Republican and I finished a business degree and economics minor (today I am an independant and I will be voting a straight Democrat party ticket as the Dow sinks another 300 points today). I could never get mom to see this basic truth about wealth: I have NEVER worked for a poor person / corporation before.

The point is that my value system had to eventually change to not hate any one biz owner just because they are a biz owner (LOL, there are plenty of **other** reasons to hate them, is my father-in-law reading this???). Anyway, it was amazing to me that I could graduate from a biz school without ever having to WRITE my own biz plan. But then one day I got the crazy idea of opening up my own store ...yada, yada. In order for me to function in this new role, I had to come up with some kind of "sub-conscious self-deception," my own term, for visualizing the reality I wanted to create. I hate to admit it, but that is NOT a skill that I have, for me to walk into a bank and give them the presentation and then get the loan, AND THEN START AND OPERATE A BUSINESS....

My view now is more along the lines of a SimCity 3000 approach with all that agent-based modeling: we need our Govt to encourage ANY and ALL potential biz owners to take the plunge. But our Govt can't be biased to play favorites for Biz A versus Biz B, say Segway versus a local bike shop. We need a diverse ecosystem/ant farm full of lots of semi-delusional (like on the lines of a RELIGIOUS delusion) people to create 21st century businesses. That is hard work and I truly respect the one's that can pull it off. I do think some respect is warranted for the Preston Tucker's and Vern Raburn's that roll up their sleeves and TRY to make it happen.

I am not sure about the Richard Fuld's of the world. Lehman Brothers, Enron, WorldCom ...that is at a whole new level. But there is psychology to the effect that CEOs need to be people able/willing to take risks. Thus, CEOs must be wealthy and semi-delusional in order to make those leaps of faith that regular Proletariat mortals can't handle. We see this with every Sunday football game then we berate the quarterback at the water cooler on Monday. We just need a way for Fuld and Kenny Lay to have been publically sacked every once and a while. We all know that Vern has been raked over the coals ...so hopefully it won't dampen his spirit with any new ventures. We need people like him to NOT see all the negatives, strange as it may be.

E.D.T.

Dave said...

Anyway, it was amazing to me that I could graduate from a biz school without ever having to WRITE my own biz plan.

I feel the same way. I feel like I've had to unlearn what I learned in college in most of my business classes (I was a Business Admin major). I think at the undergraduate and graduate levels that business schools don't teach properly. I've found having a college degree is necessary for getting a job, but most of what I've learned as it applies to my jobs has come from the School of Life.

I am not sure about the Richard Fuld's of the world

I both hate him and pity him. This guy worked his way up at Lehman and I greatly respect that, but at the same time he was working to get out bonuses to his top staff while at the same time asking for government help. It is like his views at the top became too abstract where he couldn't see what he was doing and recognize the implications (I'm giving him the benefit of the doubt that he didn't have evil intent with paying out money while hitting up the feds).

Lehman Brothers, Enron, WorldCom ...that is at a whole new level. But there is psychology to the effect that CEOs need to be people able/willing to take risks.

Risk taking and law breaking are two distinct things. Someone being willing to break the law just means they're a criminal.

We all know that Vern has been raked over the coals ...so hopefully it won't dampen his spirit with any new ventures.

entrepreneurs and CEOs can and do conduct business without breaking the law or otherwise being dishonest. You have to go after those who cross the line or else you'll only invite more to cross the line.

Dave said...

The latest from Flightglobal on Eclipse:
NBAA 2008: ETIRC upbeat over embattled Eclipse
And also on Adam, which the article mentions Eclipse:
NBAA 2008: New Russian owners pressing ahead with A700

gadfly said...

e-deep

Some of us weren’t smart enough to be able to come up with a business plan . . . ‘maybe that’s why we didn’t go to a bank for a loan to start a business. We just established a reputation of always being honest, paying our debts on time, and plunged into a business venture with only the optimism of a conservative work ethic, and nothing more than our own integrity, and a hand shake. Two men, long dead, gave me such a compliment . . . one sold me about $52,000 of new machinery (nothing down) . . . and the other, gave me a $250 line of credit for aluminum . . . all based on being honest . . . and I never violated their trust . . . not once.

That first “year” (1976) to success stretched into five years of 3,000 to 4,000 hours per year of hard work before the numbers in the black column equaled the red column . . . but no employee was ever delayed in a paycheck, nor taken by surprise in the “ups and downs” of the current financial affairs of the company.

And don’t put down “Reagan” . . . after 20.5% interest on $150K /60 month loans, ala “Carter”, we finally were able to take a breath, and figure that we might stay in business.

By always being fully honest with folks, we never had to “remember” anything special.

Years later, when my wife was injured on the job, as an “RN”, she figured that her employer, a big local Albuquerque hospital would be as loyal to her, as she had to been to them . . . and I said, “They can’t get rid of you fast enough”. She did everything, to remain on the job . . . with the “altruistic” attitude of a Florence Nightingale . . . to no effect. And she learned the mind-set of the world fast enough, that the ethics that we counted as “normal” in our own business, were the exception, not the rule. The unfortunate part of this education is that it usually takes place early on . . . with a wife, a kid, or two, or three, and/or a “bun in the oven”, and a heavy mortgage payment . . . and an employer that couldn’t care less about your troubles . . . only in proving something in his own business.

In the many years of working for others, I have worked for honest businesses . . . and many who were not honest. And I learned to be alert . . . never surprised when employers were dishonest. So, those who come to work for a company with the “ethics” (or lack thereof) of Eclipse, they should either “not be surprised”, or count their time at Eclipse as the expense of practical education in the “University of Hard Knocks”.

This does not excuse the “goings on” of Eclipse . . . company officers should be prosecuted and brought to justice . . . there is no debate on that sort of behavior. But every employee needs to take responsibility for their own actions . . . evaluating the employer on an equal scale to the answers on their own job application.

gadfly

(Every employee of mine was told that within ninety days, they would either receive a raise, or be “let go”. ‘Most received a raise!)

("Business Plan": A form of fiction, commonly written to entertain bank employees and bean counters, who have never once had their own business . . . nor ever will.)

WhyTech said...

"It's a shame no one at EAC had enough authority and courage to reinforce and balance the founder."

This often falls to the Board in a new venture. They were sound asleep for close to 10 years.

Dave said...

Roel now says that Eclipse is flush with cash thanks to the Russian deal, so Eclipse next year will be able to ramp up to 1 unit per day:
Starting next year, Eclipse Aviation plans to ramp up production of the Eclipse 500 back to a rate of about one airplane per day, chairman and CEO Roel Pieper told AIN. Eclipse has enough cash on hand to move forward with the new production plans, according to Pieper, thanks in part to a recent financial infusion from the company’s agreement to build a factory in Russia.

However, the UBS money will be used to push Eclipse into finally having an IPO:
But Eclipse is also seeking a final round of equity financing with the assistance of financial firm UBS. This round should close in the next few weeks, Pieper said.
It will be the last round for Eclipse and is expected to take the company to its planned IPO.


Now here is the part that really disgusts me:
Pieper also has another problem on his hands: a group of position holders is considering trying to persuade a judge to force Eclipse Aviation into involuntary bankruptcy, based on the group’s claim that Eclipse defrauded its customers by taking progress payments that were supposed to be followed by delivery within six months.
“I would be very surprised if a bankruptcy judge would even go there with all the jobs at stake and all the other obligations at stake,” Pieper said.

AIN:Pieper Confident about Eclipse Production Prospects
So Pieper is using blackmail to steal from customers. Anyone could provide jobs with stolen money, so it doesn't mean that businesses should engage in theft! Pieper's self-centered sense of entitlement is astounding. Though I think I think our courts are far from perfect, I don't think they'd buy it and I hope that none of the customers that Eclipse has stolen from buy this either. That Eclipse does have other debts ("obligations"), that would only further make it more likely that a judge would put Eclipse into involuntary BK.

Also I'm left to wonder why if Eclipse has all the money it says it has due to the Russian deal that will let them ramp up to 1 per day, why isn't Eclipse paying all its customers with their new cash hoard? Roel has an "obligation" to his customers and if he's got the money for Eclipse, his statements about jobs and whatnot are contradictory and he would instead say involuntary BK would be denied because Eclipse has the money to pay its debts. I guess Roel is just lying again since his lips are moving...

gadfly said...

A footnote on my previous comments:

How does a potential “employer” determine the worth of a new employee? That was always a question in my own mind. My “simplistic” solution was, “Ask the applicant how much he’s worth!”

Well, sometimes he was taken by surprise . . . but in every case he already had a fair idea of his own worth. So, whatever he said he was worth, I agreed to pay him that figure . . . and told him that within the first 90 days, he would either receive a raise, or be “let go”. In rare cases, I had to let someone go . . . but that was “rare”. I found that treating a person with respect and honesty, they made it their goal to live up to my expectation . . . and exceed it. People, generally, want to do a good job . . . with the “hope” of being appreciated for their efforts. And I’m here to testify that that system works.

“Work” is a God given gift, built into the human “psyche”. Not a single one of us is happy with just “doing nothing” . . . it is within our nature to work . . . and have someone say, ‘you did a good job’, and “Thank you”.

Back in ancient times, even David spoke about “rather being a doorkeeper (Psalm 84:10) in the house of God, than to dwell in the tents of wickedness”.

And I have often thought of that basic concept . . . work is a privilege, if it is for the right purpose . . . and you know that it is appreciated by the person in charge, a person of your respect, and ultimate loyalty.

gadfly

(A brief note to “WhyTech” . . . None of us can “fix the world” . . . that remains for “Another” . . . and will ultimately take place. In the mean time, we are responsible for our own actions and attitudes. Beyond that, we have little control. Soon enough, they will “awaken” from their sleep . . . to a nightmare beyond their wildest imagination.)

Dave said...

A brief note to “WhyTech” . . . None of us can “fix the world” . . . that remains for “Another” . . . and will ultimately take place. In the mean time, we are responsible for our own actions and attitudes. Beyond that, we have little control. Soon enough, they will “awaken” from their sleep . . . to a nightmare beyond their wildest imagination.

The world is what you make of it.

Deep Blue said...

WhyTech responded to:

"It's a shame no one at EAC had enough authority and courage to reinforce and balance the founder."

And said:

"This often falls to the Board in a new venture. They were sound asleep for close to 10 years."

Agreed. I think however that one EAC Board member in particular, Brian Barents, knew excatly what was happening and quitley skipped town in the middle of the night last year.

Brian Barents was the fornmer CEO of Lear Jet; he had a decade long career with Cessna and other OEMs. He helped found and ran "Galaxy Aerospace," a venture he sold to the Pritzker family of Chicago (Hyatt Hotels) and then sold off to the Crown family of Chicago (General Dynamics/Gulfstream).

The "Galaxy" jet was a cheap derivative "super mid size" airplane cobbled together from IAI Westwind parts. Now it's billed as a "Gulfstream." To anyone in the aerospace business, it's a shameful Ford Edsel of technology, built in Israel; it is not a Gulfstream; it is a stepchild orpahn abortion of technology, bought as a private favor from the Crowns to the Pritzkers who were trying to unload it after Jay Pritzker passed away (and the family realized Brian Barents had "oversold" the old man).

At any rate, Brian Barents had enough experience peddling "projects" to rich non-expert investors to finally figure out that even EAC was pushing the envelope of credibility.

But did he inform anyone? Investors; employees; share holders; the State of New Mexico; suppliers; the FAA? No one.

He quietly slipped away, resigned and then took a position with the next "aviation promotion," the SSBJ pro forma called "Aerion," another aviation project he helped sell to the billionaire Bass family of Texas.

Brian Barents especially could have done more than any other EAC Director to set things straight.

He didn't.

He skipped out of town in the middle of the night.

I appreciate that this may seem a bit dramatic, but he should be put in the spotlight; he has arguably more fiduciary obligation than VR or even RP.

WhyTech said...

"None of us can “fix the world” . . ."

I am in complete agreement. But I do believe that we can strongly influence our own path in the world by our choices. Unless one believes that all choices are predetermined by a higher power (I am not in this camp) then one needs to try to understand the world he cannot fix, and make choices which are calculated to produce the life outcomes one wishes. Too many folks never give this any concious thought and, by default, go with the flow, regardless of where this leads.

Jim Howard said...

Black Tulip wrote: "[EISA requires] Addition of a third mechanical attitude indicator, a la DayJet, located by the windshield post but to have a tasteful fairing added."

In the big scheme of things this is a small detail, but it's nice to be vindicated. The lack of an independent backup has seemed to me to be a very serious design flaw from the first time I saw the proposed panel several years ago.

I think this shows there is a reason that there is not a single other glass cockpit airplane, from the C-172 to the F-22 to the latest heavy iron from Gulfstream and Dassault, to the A380 and 787 that relies on the primary displays for attitude backup.

"Equivalent level of safety blah bah". I never bought that.

WhyTech said...

" Brian Barents, knew excatly what was happening and quitley skipped town in the middle of the night last year."

I would guess that you are right about his realizing what was happening. However, since I dont know Barrents or the circumstances of his departure, it seems possible that your judgment could be a bit harsh. Sometimes, in a situation like this, one tries to influence the direction a Company is taking, but is overruled. Then, a decison to resign may be the most appropriate choice.

gadfly said...

Deep Blue

There is little that many of us know about various key characters within this operation. And those that may have had culpable involvement in the operation, may have silently left in the middle of the night, and might seem to have left with no witnesses . . . but a chief witness in each and every case “left, with them” at their side. No matter where they may go, their conscience remains close at hand, a constant reminder of their responsibility . . . and will hound them, now and for the rest of their life . . . or until they make things right.

This is a basic truth. Be patient, and you may observe the ultimate outcome.

gadfly

(We may not be in a position to judge, but given time, much can be learned by observation. In the mean time, we are given certain things to do, and we best get with the program . . . as WhyTech has indicated, we are not to sit by and let it all just "happen". In other words, those involved in the present discussion, should be taking action to correct a bad thing . . . and are ultimately responsible if they take an attitude of "Kismet".)

Deep Blue said...

WhyTech/Gad:

Your measured comments are appreciated.

Agreed, a Board member may only be able to exercise his/her position throught a resignation. That is an all too unfortunate outcome of corporate governance.

I maintain that BB had the best, (and really only) relevant experience profile, both in GA engineering and manufacturing and in new GA ventures, to help steer a more viable path. VR was after all, his direct report.

All the Board members will, after the D&O insurance runs out, be on the carpet, if any of the customers, suppliers and investors are, let one hope, less asleep than WhyTech asserts the Board was(correctly).

TBMs_R_Us said...

Pieper also has another problem on his hands: a group of position holders is considering trying to persuade a judge to force Eclipse Aviation into involuntary bankruptcy, based on the group’s claim that Eclipse defrauded its customers by taking progress payments that were supposed to be followed by delivery within six months.
“I would be very surprised if a bankruptcy judge would even go there with all the jobs at stake and all the other obligations at stake,” Pieper said.


This text is very misleading. It isn't really true that the group has to "persuade a judge". The bankruptcy code is pretty black and white. Either they are creditors not being paid or they aren't. If they are creditors not being paid, EAC has to either pay them or stand trial to prove that they aren't really owed anything. It only takes 3 creditors with $10,000 owed to initiate a bankruptcy petition. I think Peiper is full of it to suggest that "jobs at stake" or "obligations at stake" somehow mitigate the case. Obligations due is exactly what bankruptcy filings are all about. If they aren't being paid, the debtor deserves to be filed against by any of the creditors.

Involuntary bankruptcy would seem to be a good approach for the position holders, as it stops a company from dissipating its assets while they are not getting their refunds. Obviously, if all of the assets are dissipated they will get nothing. Also obviously, EAC still has assets, especially with what Roel is saying to the press.

GO FOR IT GUYS!!

gadfly said...

The best way for creditors to lose everything, is to sit idly by, and let things “happen”.

In our business, I found that to make things happen, is to “make things happen . . . right now!” . . . Tomorrow is too late!

gadfly

(Or, wait for others to take action . . . in which case, I have not the slightest sympathy.)

eclipso said...

I would like to be the judge that sits in the BK while this arrogant A$$hole thinks he can dictate what MY court would do.

Now you know, Gunner said it best when he said Vern was a tool.

But this POS Pieper...now this guy is the whole tool crib...what an absolute IDIOT!

Any one who is owed money, I hope you all get together and sue the piss out of this guy, then I hope he gets his ass ran out of the country and his visa gets revoked...

eclipso said...

WHEW!...thanks for letting me get that one out

WhyTech said...

"this is why i suggested about the 2CV ..."

Fred,

Thank God the time of the 2CV (and Porsche 356)has passed. What was once needless technology in a car is now deemed desirable if not essential. Who does not want seatbelts, ABS, automatic transmission (even now for competition in some cases), fuel injection, traction control, AWD, etc, etc. I dont know much about the 2CV, but in my younger days, I lusted after the 356, which by todays standards is a miserable vehicle for routine transportation.

WhyTech said...

"WHEW!...thanks for letting me get that one out"

Thanks for posting what many here are thinking.

Dave said...

I think Peiper is full of it to suggest that "jobs at stake" or "obligations at stake" somehow mitigate the case.

Particularly when the judge finds out that Roel is talking himself! It will be a matter of court record what payments and assignments have been made to ETIRC. No judge is going to go for "I had to pay myself with my customers money and if you make me give it back to who it belongs to, you'll cost jobs." To paraphrase a common phrase - Eclipse is robbing Peter to pay Roel.

eclipse_deep_throat said...

dave and gad,

thanks for your input. i agree with what ya'll said. that is one thing that i learned from my father-in-law while watching how he ran his 2 Piggly Wiggly stores: book smarts can only take you so far, and sometimes not as far as you hoped. no one with a Harvard MBA will choose to run a cattle ranch in Texas...LOL.

i am equally dissapointed with our educational choices. i for one feel rather "over-educated and under skilled." if i go for a Master's degree (maybe in MIS), i'm looking to get certified with a specific marketable skill. maybe a CPA would be better, LOL, with all the pending regulations for Wall St. there were just too many people at the unemployment workshop today in their 50's and 60's, which is motivation alone to get off my ass and get back to UNM. my retirement fund will have to wait, but that is also a testament to our global economy when we are forced to compete with each other by how many letters we have after our names and not based on what we can actually produce. the USA is now more about engineering and marketing brain power for creating the **ideas** about production, but the actual production is sent to Russia. okay, i am ranting again... maybe we all just need to rent that movie Primary Colors with John Travolta telling the grunts at a factory that their manual labor jobs are gone and will never be coming back. ironic, yes?!

on another note, my friend at the Abq Journal was interested in the $6.3 million judgement against EAC so that may turn into a local story soon.

if EAC manages to pull off this round of financing in the middle of a global economic collapse, i will be assured that Roel is actually Faust and that he forged a deal with the devil signed in blood.

E.D.T.

Dave said...

on another note, my friend at the Abq Journal was interested in the $6.3 million judgement against EAC so that may turn into a local story soon.

This was from an out-of-court arbitration judgment in Arizona that Western Skies has since filed it with the courts in Arizona, NM and now FL. Western Skies is the parent company of a number of business, which the one most tied to Eclipse is Electromech who was the primary subsidiary seeking a judgment against Eclipse. I could dig more into the the relationship between Eclipse and Electromech, but is late. Oh, the total judgment with attorney's fees and court costs is about $7M.

Dave Ivedorne said...

I could dig more into the the relationship between Eclipse and Electromech, but is late.

It may be late, but so am I. I'll do a bit of light lifting for you, Dave. As of July 2003 ( way down at the bottom ), Electromech was named as replacement supplier for landing gear actuators, in the wake of the collapse of a right main gear during one of the test flights.

Neither Electromech nor Western Skies are on the current list of Eclipse 500 suppliers.

Gee, I wonder what the judgment is over?

Two green? The other bulb must be burned out,
DI

baron95 said...

TBM_R_US said... As the going gets tough, the character of the entrepreneur gets tested and put on display. In the case of EAC, the character displayed after the first failed flight was evident to many on this blog. Unfortunately, it wasn't seen for what it was by many many others.

Awesome post TBM - You hit the nail on the head. There are times, early on, when an entrepeneur's enthusiasm and ability to sell a vision to raise money are a great asset, quirks, faults and all. At some point though, the transition to excellence in execution and sanity in forecasts must prevail, by the original entrepeneur or a replacement leader.

baron95 said...

eclipso said...
If Eclipse followed the law, WHY would they need a waiver?...


Are you freaking serious???!!!??? I would not think of firing an employee without them signing a waiver out the door. Why do you think companies offer severance packages? To get a waiver in return.

I insist that even my kids nannie sign waivers on the way out the door.

Again, people. Not everything Eclipse does is wrong. It is normal and prudent practice to get waivers from empoyees leaving.

baron95 said...

Pieper said... I would be very surprised if a bankruptcy judge would even go there

I think Pieper is even more unballanced than Vern.

How can a CEO/Chairman go on record commenting on a law suit against his company and telling what judges will or will not do. Doesn't he know the meaning of "no comment"?

This guy is firing his mouth in all directions with contradictory statements that are adding confusion and bound to piss of even more depositors and vendors.

The statements and actions of the CEO don't make any sense at at all.

We have plenty of funds but we can't pay refunds.

We have the funds we need to resume production but we need another investor.

We have lots of orders, the funds needed to ramp up production, but we will only do it in the second half of 2009.

We have excess capacity but we are investing in more capacity.

We face another $500M in losses in 2008 and 2009, but we plan an IPO.

I know doing drugs is legal in the Netherlands, but this is a bit much, don't you think?

baron95 said...

Jim Howard said... The lack of an independent backup has seemed to me to be a very serious design flaw from the first time I saw the proposed panel several years ago.


Jim, do you know oa A SINGLE example where an aircraft with tripple ADHRS and three screens displaying attitude was saved by refference to an independent AI after failure of the other three systems?

ANY example will do. Or any accident where the probalbe cause was due to a tripple failure of ADHRS or its presentation on triple screens?

None, right?

So why do you want to a solve a problem that does not exist?

baron95 said...

Fred said ... what you said about unneeded techs is right , this is why i suggested about the 2CV ...


Fred, please stop with the 2CV and cars are to "take you from A to B only" bits.

The 2CV, Model T, Original VW Beatle are out of production because no consumer wanted them anymore.

I'm 100% sure that you would not want your wife or daughter or son to get on a 2CV and comute to work on a highway. They are death traps, and they were terribly unreliable.

When was the last time you had a disabling mechanical problem on the road with a modern car? My last time was in 1990 (18 years ago) with a supercharged T-bird - it was a horrible experience to have the engine, power stearing and pwer brake assistance stop working on the #3 lane on a highway bridge. Since then I have done nothing more than put gas and change the oil on the cars. My current car gets an oil change only every 13,000 miles.

It is a complete myth that older (simpler) cars were mote reliable. They were not. How do you think a 2CV would do on a NCAP test? Would you really want your wife or daughter in one in a frontal collision with a tree or a modern car?

[Begin moral flogging of the French]

Think before writing mate. What if some young driver took you at your word and bought a used 2CV and actually went driving it "faster on snow" and crashed or got stuck from an engine problem on a highway and got hit from behind? Don't you have a conscience?

[end moral flogging of the French]

fred said...

whytech :

the 2CV example was not about the car itself (i admit it was a big s#@t)...
but at what it permitted AND especially HOW !

simple meaning to do the simple thing it was supposed to do !

no fancy whatever , no extra-weight for anything ,no automatic gears
(by the way in E.U. automatic cars are still a tiny minority ... even if the Bmw 7 is an automatic , i still prefer manual gears = less boring ;for me : i am much european on such !)

it was perfect in its time
(never loose sight on that anything has an objective part and a subjective part : how many of us remember of a particular something with sweet memories because of the age , situation , atmosphere then , etc ?)

i understand well Joe in his point about cellphone , as now in E.U. choices is becoming more and more available (but unfortunately not on everything) in cars :
the ones who want to be "Tech-Geeks" (nothing pejorative) can buy cars with so much stuff in it , you almost need a degree to understand half of it ...
the ones who don't see the point of spending for "unneeded Gadgets" (in their point of view) those cars are basic with tech implemented some 10/20 years ago ...

what is important here : TO have choice ! if some want to be astounded by the HP of their car = fine ! if someone , for any reasons , prefer to have simpler car for a third of the other one =equally fine !

this is about choice , personal choices , in that respect , yes i agree with Joe , if it is BECAUSE they can sell you stuff you don't need all "things" are with unneeded gadget , then it is wrong use of modernism ...

fred said...

baron

#It is a complete myth that older (simpler) cars were mote reliable. They were not. How do you think a 2CV would do on a NCAP test? Would you really want your wife or daughter in one in a frontal collision with a tree or a modern car?#


don't you have a conscience , yourself ?

think of your Amg , especially about its weight vs its power ...

one day , for any reason , you loose control ...

because it is a very powerful , so quite heavy car , you leave NO chances of surviving to the smaller car you may crash into !

so the only one way to fight with this = to make all cars heavy and secure , hence to push the price very high ...

since , you proclaim to have been living in France for a while : you should be able to understand this (without translator !)

Cela s'appelle "La fuite en avant !"

exactly what has been wrong in USA in the last few years ...!
everybody expect Better and Better , faster and faster , etc ...

without considering that at some point : there is no need ,point or possibilities to keep pushing forward just for the sake of pushing forward or for more profits ...!

so if i had a wife and daughter would i like to have a frontal with a 2CV = off-course , NO!

but could i do anything about a silly guy wanting to show-off with his new toy (Being an Amg63 of some 450Hp AND 3TONS) = anyway any NORMAL car don't stand a chance against ...

so please , don't mix-up everything ...!

fred said...

i forgot :
the 2CV i had was not reliable ...
but each time something went wrong , it was quite easy to fix-it up straight on the side of road ...

i don't think i could do anything if the AudiR8 would break down , i am quite sure that even a talented engineer would do too much without the proper tools and computers to interrogate the engine-system ...

the same about Mercedes !

it is a bit the same than when you are on a sail-boat : you can have a GPS receiver or Know how to calculate your position yourself ...
one is easy , fast and normally reliable , the other one is a bit complex and need to use some of your brain , both being equal in terms of precision ...

but what are you going to do if your GPS break down while crossing the Pacific Ocean if you decided to rely on techs only ?

fred said...

#Too many folks never give this any concious thought and, by default, go with the flow, regardless of where this leads.#

definitely more than right !

the world being constituted of three "types" of personality :

the leaders : usually having the gutts to try the ideas even they may not have it themselves ...
(few ones)

the followers : most of times only following , sometimes an identified leader , sometimes not even sure of what they are following ...nonetheless , they expect results and since they are the majority , they end-up usually obtaining what they were looking for ...even if most of times what they were looking for is to choose between a blind donkey or a dead elephant ...

the spectators : they just don't care , if it is not pleasing them here , they go somewhere else !

julius said...

Baron95,

Waiver

never sign anything or ask anyone to sign something without a very good reason.
If employee was forced to sign a waiver without appropriate time the employer may be called unfair, third class level.... in puplic.
The employer has to prove the opposite! At court the signature has no value if it was somehow forced!

Nowadays - with scanners and internet - the waiver of your employee might be found in the internet! ("Sorry, I lost it...it was stolen ...!")

At the customer site I never give any reliable cost and time estimates - I ask to go to my office and think about it etc.
If the customer insists on immediate infos, bad luck for him and good luck for me - one bad customer less!

BTW: RP seems to be lucky with his exec team - no changes and the team members like him very much or don't have any chances to find a new challenge!

Julius

P.S.: 2CV: designed 1937, produced after 1948; advantages: cheap, lot of space for money, low fuel consumption, easy to enter, low weight, practical for my needs - disadvantages: no space to list them (my current point of view)

airsafetyman said...

"Jim, do you know oa A SINGLE example where an aircraft with tripple ADHRS and three screens displaying attitude was saved by refference to an independent AI after failure of the other three systems?"

I believe the standard configuration is for only two separate ADHRS. Which is why the standby attitude indicator is mandated on 135 aircraft. There is an option for a third ADHRS system in the current "commercial" package listed on their web site, but most pilots I know would much prefer a dedicated, full-time, standby attitude reference. Why would you not do this? Jim is as correct as he can be.

WhyTech said...

"I insist that even my kids nannie sign waivers on the way out the door."

Do you insist that your wife and kids sign waivers, too? Wouldnt surprise me. :-)

julius said...

baron95,
Jim Howard said... The lack of an independent backup has seemed to me to be a very serious design flaw from the first time I saw the proposed panel several years ago.


please remember, three system components does not mean that they are independent of each other!
If there are three AHRSs but only two computers for the presention on the screens ...
It's difficult to design, build, and test rep. verify something like EAC tried to do!

Look at Garmin! They have good reasons not to offer this right now (TBM850, Mustang, Caravan) - perhaps in two years? Perhaps first they will offer a standby solution on screens - better cockpit design and integration?

Remember Ken's picture with the missing speed indicators etc!

Julius

fred said...

Gutten tag , Julius

#P.S.: 2CV: designed 1937, disadvantages: no space to list them (my current point of view)#

my list of disadvantage would be very long as well ...

i never really understood the ones claiming "My choices are the best possible choices ..."

without adding " they work perfectly well for me , only !"

if someone want to fly in a Fpj , WHY should i care ?
if someone want to buy a specific car , i don't give a damn !

but if that person come to me and start to explain me why i am wrong making my own choices , usually if in good mood = i only put a big smile on my ugly face ... ;-)

for when i am not in good mood ...it's better you don't know , anyway ...!

for the waiver , it very revealing of the state of mind some are living in ...

if i had to be that much scared about employing or firing staff , i would probably prefer not to do it ...

and i confirm your statement : any signature would have a zero impact in the event of a court case ...

the only one to be fooled by such would be the ones to believe it has any value !

fred said...

#At the customer site I never give any reliable cost and time estimates - I ask to go to my office and think about it etc.
If the customer insists on immediate infos, bad luck for him and good luck for me - one bad customer less!#

definitely right !

may be our approach to work might be just too different to some others ...

when i work , one of the first things i make sure everybody understand is :

i work SOLELY under my own terms or at the most on 50/50 agreed terms ...
never under client terms !

i make a little less ... perfect ! more free time and less headache for me !

fred said...

some other topic :

i was at Evian Russian president speech :

two things were interesting

1° Private firm in Russia will have to justify any bad event , shadowy deals ,tax evasion , etc and their owner , managers will have to answer before the Russian law for such actions (believe me = it is already very tough the RU legit !)

2° the Russian/European cooperation is to be developed as a mutual partnership in all field of common interests


so the first one should be very , very scary for the "Merry band"
as for the second , it is a confirmation of the : NO EASA = NO RU CERT.!

fred said...

by the way , julius ...

what is your job ?

Dave said...

Here's the latest Mike McConnell:
"I think it goes to regardless if you have uncertainty in the world, uncertainty in the financial markets, if your product is still something that is unique and it provides an alternative that has never been seen before, and in the case of the Eclipse 500 it is an opportunity to operate an aircraft far, far, far more economically than anyone could ever have operated a jet airplane before, without any tradeoffs in performance or functionality, if those things remain consistent and your product remains at the top of the choice, then you should be able to weather whatever the financial uncertainties are.
"But make no mistake, there are financial troubles in the world today."

ANN:From NBAA '08: Is The VLJ Market All It Was Cracked Up To Be?

It turns out that recently Roel put a "huge investment" into a basketball team:
Amsterdam shows his class

airtaximan said...

HELP

I have been posting here for a few years, and provided a lot of insight, I think... so now, I need to ask for HELP.

Dayjet rasied $150,000,000 or thereabouts, right?

They blew around $25M before first flight, IIRC.

The hired 200 people, who were employed for around a year. Actually, with the layoff, and accounting for a ramp to 200 employees, it probably more like 100 on average for a year... but who cares.

They has some expenses, but SINCE THEY APPARENTLY GOT THEIR PLANES FOR FREE - OR ALMOST FREE, AS THEY WERE PAID FOR BY EAC AND UTF...

WHERE DID ALL THE MONEY GO?

Ed claims they were doing pretty well, almost breakeven... proved it worked...etc...

200 people paid $75k for a year is $15,000,000...

- if they lost $1000 per flight, heck if they lost $2000 per flight, thats only $9 million or $18 million up in smoke... there were 9,000 flights iirc, right?

HELP...HELP!!

I am totally stumped.

Even if they paid for all 30 EAC full retail, cash on the barrel... $45M - ($1.5M x 30 planes)

$45M - (did'nt pay - the fleet 30 planes at $1.5M ea
$15M - 200 employes for a year
$18M - per day op losses
$25M - to service launce

So, we can show spending really (no plane acqasition cost) $58M

if they paid for all the planes, full retail which they did not, its still only $103M total.

ANYONE?

Dave said...

So, we can show spending really (no plane acqasition cost) $58M
if they paid for all the planes, full retail which they did not, its still only $103M total.
ANYONE?


I can explain that. DayJet's financing was from two separate pool to be used for two separate things. DayJet got $60 million in equity investments to be used for operations (all the spending except for aircraft acquisition) and $140 million in debt financing to be used to acquire aircraft. Even though DayJet didn't use all the debt financing, that money couldn't be used for operations.

fred said...

dave :

#$140 million in debt financing to be used to acquire aircraft.#

why getting so much for so little being really paid about aircrafts ?
(i believe they got them for almost free as well ...)

140M$ when you acquire 45M$ worth of planes is still about 100M$ too much , no ?

Dave said...

Getting back to the $7 million dollar judgment...

Here's Eclipse's attorney describing the case (what he fails to say is that his client got a $7 million dollar judgment):
Western Sky Industries, LLC v. Eclipse Aviation Corp., AAA Arbitration and District of Arizona. Representation of aircraft manufacturer in multi-million dollar dispute arising out of exclusive purchase agreement. Successfully defeated claims alleging improper termination of agreement, misrepresentation, promissory fraud, and theft of intellectual property.
Irell & Manella LLP:Robert N. Klieger

The NM case is here and it is being actively litigated because Western is subpoenaing Eclipse:
NM Courts Case Lookup
If a local journalist is interested in the story, they might want to go to the courthouse and see what court records they can get copies of related to the Western case (as well as others).

Here's the Western case info in Florida:
Alachua County Clerk of the Court Case Summary

It is my guess that Western has also filed in New York (due to Eclipse having a service center there like in Florida), but those records aren't available online. They can be obtained this way:
How to Get a Copy of any Document at the Albany County Clerk's office
And public records in general about Eclipse's dealings in NY can be obtained by submitting a public information request (it can be done via email):
How to File a Freedom of Information Law ("FOIL") Request in Albany County

TBMs_R_Us said...

140M$ when you acquire 45M$ worth of planes is still about 100M$ too much , no ?

It was undoubtedly a credit facility, not cash (like a line of credit). The could finance up to $140M of aircraft, drawing down the facility as they needed. That is where UTF and EAC come in (and others?), providing that credit facility.

fred said...

ok , i understand the whole idea ...

still it sounds very strange to me :

how to develop a firm , using a product you do not pay ...

served by a firm making the stated product , therefor claiming Mega-orders about the planes you are going to use ...

the implication of such are hilariously more complex than it seems and terribly more simple than it is !

some others think this was not planned from day 1 ...

ah ah ah ! ;-))

fred said...

tbm :

don't get me wrong ...
to me , it is like a Pandora box , each time you open it , you find some more intricacies voiding the intricacies of the day before ...

where is that going to stop ?
anyone to believe "not planned from day 1 ?"

fred said...

i tried to approach with how many different angles ...
always something getting in the way , never really cutting it , nothing naturally make sens one with an other ...
this is why i call them "the Merry band"

if they would spend the same amount of energy to write scenarios for Hollywood use , they would make a blockbuster ...!

Dave said...

Why do Eclipse's customers let Roel spit in their face when they ask for a refund?
AIN:Pieper Confident about Eclipse Production Prospects
For that matter why is OurPlane still supporting Eclipse Aviation seeing how nutty and abusive Roel is?:
NMBW:Eclipse holds on to customer loyalty despite challenges
Roel is definitely getting things out of Eclipse and you've got to question the motives of anyone who wants those who are owed to just sit back as Roel pulls more and more assets out of Eclipse. Others are taking action. Look at Western Skies.

stan said...

Wichita based Electromech Technologies is a division of Western Sky Industries.

ET was under contract with Eclipse to be the original supplier for certain actuators.

At some point, Eclipse replaced them with a new vendor.

ET's claim (which went to arbitration) was that Eclipse took ET's proprietary design information and shared it with the new vendor.

Not sure where Robert Kliege fits into the picture, but Randy Logan (Atkinson & Thal-ABQ)was in Wichita last March working with ET and was the attorney of record as far as I know.

Randy learned much about the Eclipse program by reading the blog. Some of your fellow bloggers provided him with important information to support his case and may have even testified during arbitration.

Dave said...

Not sure where Robert Kliege fits into the picture

That was Eclipse's attorney. I find it odd that he'd brag about a case he lost.

fred said...

about the "confidence of Sieur Roel"

#it will be the last (finance) round for Eclipse and is expected to take the company to its planned IPO.#

this guy must have real big Cojones ...
or the guy reporting this went out straight from interview to cash his check ...!! ;-))

Deep Blue said...

ATM:

My understanding from DJ management is that they raised approx. $50MM in one traunche in order to start a "proof-of-concept" phase, which if successful, would release an additional $50MM or more. The second traunche was never closed, evidently, hence their stated insolvency at DJ Services LLC.

DJ asserts that the credit/capital markets were effectively closed; that may indeed have been the case. But the definition of "proof of concept" is not clear and that may have also been a central factor (I suspect it was; bottom line: DJ was hemorraging cash with no clear path to profitability in the medium term).

fred said...

and this one :

#I would be very surprised if a bankruptcy judge would even go there with all the jobs at stake and all the other obligations at stake," Pieper said.#

is that what is called blackmailing ?

are we talking about some bananas-republic ?

Dave said...

But the definition of "proof of concept" is not clear and that may have also been a central factor (I suspect it was; bottom line: DJ was hemorraging cash with no clear path to profitability in the medium term).

I think the scientific method showed that DayJet's concept (business model) was disproved:
Joe Leader, president of the Air Taxi Association (ATXA) says it is important to create a market in advance: “DayJet had 1,500 customers, but only 500 actually flew. Of those only 200 flown had flown more than once and 50 ten times. We need steep numbers of passengers. The big question is how do you convert members into flights in advance of launching?” He suggested code sharing might be one option.
Flightglobal:NBAA 2008: ETIRC upbeat over embattled Eclipse
After all the worldwide primetime publicity that DayJet received in addition to the millions in advertising DayJet spent they were only able to get 200 people to fly DayJet more than once and have a base of 50 passengers.

Dave said...

is that what is called blackmailing ?

Yes, Eclipse is blackmailing their customers. Eclipse apparently has done various types of blackmailing such as saying if customers take them to court, they wont get retrofits, etc. Eclipse is a blight on aviation and business in general.

Orville said...

Hmmm - this is the N-number that Vern typically flew - like to OSH - and then to Idaho fishing shortly thereafter. Been in Kissimmee, FL for a few days...? Roughly halfway between Gainesville and Boca Raton...

airtaximan said...
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airtaximan said...

thanks folks - becoming clearer now...

Dayjet claimed to be the best funded aviation start up in history - how is this "financing" any different than aircraft financing/leasing? I would say there have been many aviation companies with this sort of "arrangement"...

So you make an order from a manufacturer... you have very little cash - they lend you the money to buy the planes... and you operate for a few months (OK, almost a year)... and then close down, BECAUSE you lack financing? You blame the markets?

HuH?

I guess this was more like Nimbus than we ever imagined.

How much money do you think Dayjet REALLY had, for operations?

(Psst, Ed... give me an order for a lot of planes - I'll lend you the money, give you discounts, etc... so you really won't need much money... what a farce)

I wonder how much they owe they trade? I bet its more that you think.

fred said...

airtaxi :

yes , it is a new model ...

called "Inflatable Orders "

how disruptive ...! ;-))

how making a nice business between the two of us ?

you put an order on my new production (to be determined )

i lend you the money on condition
i can "screw" as many as i can with your order (don't say anybody the real number !)

i gather many Millions on those false premises

we make the story lasting long enough to make "investors" look like chimps for patiently waiting for something to happen

meanwhile , after some stunts , we withdraw all assets to a safe harbor

at the end , the chapter of the law get in the way

we will say "sorry bad luck , bad furnishers , bad economic times "
if i am in a very funny mood on that day i will add " bad customers !!!" as well

then we will enjoy a nice retirement somewhere sunny and warm 360 days of the year !

how about that ? ;-)))

Dave said...

I guess this was more like Nimbus than we ever imagined.

Given what I've seen of Ed with his goings on at SCO and what we've learned about Eclipse and ETIRC, I question everything. The Nimbus order fell apart in 2002 and guess when DayJet started? 2002! Also to keep in mind that Nimbus fell apart because it was supposedly being done through 3rd party financing, so it sounds like Eclipse got around having to worry about DayJet getting fleet financing by providing it themselves...so Eclipse was able to keep their order book up by secretly financing it and DayJet placed those orders just in time to keep the fascade up about the high demand for the FPJ. Almost all of these orders/options were from DayJet:
Eclipse Aviation:Eclipse 500 Order Book Tops 2,000
And many of the rest were extremely questionable (112 unit order from Aviace is included in there).

At no time has Eclipse demonstrated that it had sustainable demand for its production rate goals. Rather than Eclipse changing their business model, they instead cooked the books and have been cooking the books for years. DayJet at least made some effort to modify their business model, but Eclipse doubles down on their falsehoods by claiming they'll produce over 1000 units per year, they need another factory because demand is too great and they'll have an order book in the thousands just in europe alone.

Now my tinfoil hat is very tight, but awhile back I speculated on the SCO stock message board that Ed got a deal on Eclipse jets in exchange for his Linux FUD at SCO. At the time Bill Gates was a much more prominent investor in Eclipse as he owned more of it (but has since been diluted to who know what)...I believe at the time he was the 2nd largest investor. Now that we seen that Ed indeed did get a really sweet deal, it isn't out of the realm of possibility that this was done to reward him for his work as Chairman of the SCO Litigation Committee. I say this because I don't think anyone else got that kind of deal from Eclipse and in fact got quite the opposite with high pressure to pay Eclipse. Like did Linear Air or anyone else get it? If it was to support Eclipse's business model of growing the commercial fleet, there's no reason why DayJet alone should get that treatment unless there was something more to the deal.

fred said...

dave :

i wrote it before :

almost nothing fit together in this story !

unless you take the angle of "screw'all"

then everything fall in its right place up to a certain moment ...!

for the end , i am still waiting for "Happy end" (unlikely) or "the plot as it was planned" or "at the end of night , wolves eat one an other !" (ed , roel and vern smelling the rope at end of trail , started to betray one an other ...)

EclipsePilotOMSIV said...

Hey Orville you ever think that Kissimee is a little more than halfway between Boca and Gainesville. Maybe its a private easily accessed airfield by Orlando or the site of the NBAA?? Just a thought....

Orville said...

Scary thought - Vern trolling around NBAA. Can anyone confirm a sighting? Assuming it IS Vern - why does he get to keep flying an aircraft registered to EAC? Parting gift?

fred said...

# why does he get to keep flying an aircraft registered to EAC? Parting gift? #

no , not a get-out-now-gift ...

just following the plan of the "Merry Band" !

they even go to the extent of publicly show their continued relationship ...

TBMs_R_Us said...

If it was to support Eclipse's business model of growing the commercial fleet, there's no reason why DayJet alone should get that treatment unless there was something more to the deal.

Dave,

I think you've pretty much got it all right. The reason EAC wouldn't support others than DayJet with the financing deal is because at the end of the day there actually had to be money coming into EAC. Vern could work out this back-scratch deal with Ed and get a ton of mileage out of it (1400 orders to brag about). He knew that during Ed's "proof of concept" phase that DJ would only need 28 aircraft. So EAC's out of pocket wasn't too big, and the perceived payback to EAC was huge. That order book allowed them to fool so many others who put up real money. From Vern's perspective, one phony order was the tall pole that held up the entire tent.

Once Roel pushed Vern out, Ed had no reason to remain loyal to EAC, especially with DayJet failing. He knew the whole thing was a house of cards, because he'd helped construct it. Now, with DJ failing, why not blame Eclipse? And step away as CEO....

We really need Turn-and-Burn back to tell us how far wrong we are!

Dave said...

Hey Orville you ever think that Kissimee is a little more than halfway between Boca and Gainesville. Maybe its a private easily accessed airfield by Orlando or the site of the NBAA?? Just a thought....

That is a perfectly valid explanation that raises any number of questions. Vern had flown that unit and if he is still using it, why is he flying to NBAA in it? If it wasn't Vern, who was it that was using it?

Niner Zulu said...
This comment has been removed by the author.
Niner Zulu said...

From the NEVER COUNT YOUR CHICKENS BEFORE THEY HATCH department:

Rumor has it Roel told certain people at NBAA that Russian funding is "contingent" upon Eclipse accomplishing a number of things, none of which has been accomplished as yet.

The press, of course, were told an entirely different story.

What the funding contingencies are is unclear, but EASA certification is likely just one of them.

So, the Eclipse Death Spiral continues unabated. Unless EAC finds another chump to bail them out for a few more months, expect impact to occur sooner rather than later.

Orville said...

Dave said...That is a perfectly valid explanation that raises any number of questions. Vern had flown that unit and if he is still using it, why is he flying to NBAA in it? If it wasn't Vern, who was it that was using it?

It's headed back to Double Eagle right now - not ABQ. You can pretty much bet it's Vern.

Anybody know anything about the DayJet planes that got moved from GNV to GGG? What's at GGG - facilities, broker, buyer...?

Jim Howard said...

"Jim, do you know oa A SINGLE example where an aircraft with tripple ADHRS and three screens displaying attitude was saved by refference to an independent AI after failure of the other three systems?"

Yes. The Gimle Glider and the F-22 crossing the IDL spring immediately to mind. There have been many documented instances where all primary and secondary displays have failed in glass cockpit airplanes.

It's great to have five hundred independent AHRS systems, but in my opinion they do no good if they can only display through one integrated (i.e. single point failure) display system.

If I recall correctly, all Eclipse displays failed simultaneously during testing, according to sworn testimony before Congress.

Or maybe every other glass cockpit is poorly designed, and Eclipse is the only one doing it right. I have my opinion on that, and it sounds like the Europeans see it the same way.

Dave said...

The press, of course, were told an entirely different story.

Eclipse is acting like they already have the money in hand right now:
The company does have enough cash on hand to move forward with the new production plans, according to Pieper, thanks in part to a recent financial infusion from its agreement to build a factory in Russia, but Eclipse is also seeking a final round of equity financing. This round, being arranged by financial firm UBS, should close in the next few weeks.
AIN:Pieper puts focus on Eclipse profitability

Eclipse has enough cash on hand to move forward with the new production plans, according to Pieper, thanks in part to a recent financial infusion from the company’s agreement to build a factory in Russia.
AIN:Pieper Confident about Eclipse Production Prospects

Perhaps Roel's Janus-faced talk only begs the question as to Eclipse's finances. I'd also like to know if Eclipse doesn't already have the money in hand, would Roel hold it out of the country with ETIRC so as to not pay creditors (other than himself of course)? It is hard to believe anyone would do deals with Eclipse given how Eclipse always throws those who do business with them under the bus and has them hold the bag.

Unless EAC finds another chump to bail them out for a few more months, expect impact to occur sooner rather than later.

Eclipse seems to be trying to cause this with their victims with their whole "if you try and stop me all the problems will be your fault" and "the courts don't care about you" lines.

Deep Blue said...

...here comes Chapter 7...

Dave said...

...here comes Chapter 7...

I'd think that Eclipse would at least try for Chapter 11 (reorganization), but that it would take the creditors to push Eclipse into Chapter 7 (liquidation).

TBMs_R_Us said...

Meteor Crater outside of Winslow, AZ is a great sight from the air, be it in a Cub or a Gulfstream.

Just think, soon, those flying over ABQ will get to point out the place where Eclipse Aircraft Corporation cratered! Many won't get it, but for those who do it will always bring a laugh and a grin: "There it is, the biggest aviation crater the world has ever seen."

Dave said...

The Mayer v Eclipse case had a stipulated dismissal. No explanation as to whether this was due to a settlement or not (my guess is that Eclipse settled for some amount). Those who are owed money by Eclipse wont get it if they don't ask and they have to ask very forcefully with an attorney.

airtaximan said...

Back to question number 1:

"WHAT DID DAYJET DO WITH ALL THE MONEY?"

OR

"HOW MUCH MONEY DID DAYJET LOSE?"

- they did not lay out any cash for planes - right?

- they had an average of around 100 people for about a year

- No huge faciltities costs; marketing?; other?

- They claim they had 9,000 flghts.

How much money did they get?
Where did it all go?

clues?

airtaximan said...

If

Dayjet had no real money...

Would there be any reason for Pieper to help Ed?

Funny thing might have been Pieper cuting off ed... the shill who made the whole thing even remotely plausible.

Maybe even the guy who encouraged Pieper to get involved to begin with - sftaer all they have the same basic plan for air taxi

Pretty funny if you ask me - hey, you over there, yeah, you - the air taxi guy - I am not going to help you help me any more with this whole story, 'cause if I'm going to help anyone with a stry, its going to be my OWN air taxi company.

WHAT?

You would think that a reporter would at least ask about some of this stuff.

TBMs_R_Us said...

How much money did they get?
Where did it all go?

clues?


Who says they are out of money?

Their structure of a parent corporation (DayJet Corporation) with 3 subsidiary LLCs (DayJet Leasing, DayJet Services, and DayJet Technology) would allow them to exit the business they are in without being broke.

Here's how: Isolate all air-taxi operations (revenue and operating expenses) to DayJet Services. Isolate the aircraft purchase, debt (or lease) and ownership to DayJet Leasing. Parent DayJet Corporation provides funding as needed to the subs from it's proceeds from the equity investment.

Now, it comes time to cease operations. We aren't certain of the trigger for this. Could be insurance pulled the plug, could be that they realized they were just throwing money down the drain. DayJet Services ceases operations and folds it's tent. DayJet Leasing defaults on the financing of the aircraft and the aircraft are repossessed. Meanwhile, DayJet Corporation and DayJet Technology are relatively unscathed, except for however much cash they burned to get to this point.

For all we know DayJet Corporation still has lots of shareholder money in the bank. They still have one EA500 for "executive use". They still have a plausible (to some) business to pursue with the ant farm software owned by DayJet Technology.

That's how I'd do it.....if I were a scumbag.

Shane Price said...

Snippet time.

Feedback on EAC deposit refunds. It appears that they have repaid a few.

To a small number of FrankenJet customers....

This money WAS (unlike the FPJ) held in a separate escrow account.

On employee waivers, of which I have a copy. Real standard stuff, first year law student would drive a 'coach and four' through it. What caught my eye was a separate letter, reminding the soon to be ex employee of their INDA obligations.

Silly muppets in ABQ had not updated it to reflect the change of ownership, so it's just a waste of paper.

Disruptive to the very end, those clowns at EAC....

Shane

Dave said...

For all we know DayJet Corporation still has lots of shareholder money in the bank. They still have one EA500 for "executive use". They still have a plausible (to some) business to pursue with the ant farm software owned by DayJet Technology.
That's how I'd do it.....if I were a scumbag.


They also have their customer's payments for flights they never got. DayJet could have gotten all that money by billing themselves licensing fees to themselves so that DayJet could claim they couldn't pay customers because they already paid themselves via accounting tricks.

julius said...

Fred,

bonne nuit,

your question - it was IT, as I am half-retired - last part of "Altersteilzeit"-scheme.

EAC:
It seems that RP must earn the full FAA and EASA TCs.

But why is RP so much interested in Russian businesses?

Revival of "Zar und Zimmermann" - ETIRC's mission?

EAC customer may get the money if they knock at the door - with some force.

Julius

P.S.: EAC IPO - only with new exec team, clean order book, ... - is that possible?

gadfly said...

“... turn the manufacturer from a development company into one that can profitably produce the Eclipse 500 very light jet.”

And some of us continue to ask the simple question: When will that “FIRST” complete Eclipse 500 very light jet be produced?

Whether at a “profit” or any other way, the audience awaits with breathless anticipation the unveiling of the “Very First Eclipse 500" very light jet!

We’ve seen . . . what? . . . a couple hundred “trailers”? . . . When will the main feature make its appearance?

Back in “olden times”, Greyhound Bus or some such company advertised that “getting there was ‘half the fun!” Well, seems to me, that when it comes to “very light jets”, the fun has long ago worn “thread-bare”.

gadfly

(Back when dinosaurs roamed, and I was a little kid, I went to a school fair . . . paid a penny (“big bucks” back then . . . the price of sweeping out my grandpa’s shop . . . for me, a lot of hard work) to see a “moving picture”. We kids all waited in a dark room for the “moving picture” . . . and a picture on the wall began to move . . . with a joker behind the wall, pulling the string up and down. ‘A bunch of little kids, cheated out of our “pennies”. This Eclipse thing reminds me of that early lesson . . . only the position of the decimal point has changed. And, no, we didn’t get our penny back . . . and the clown pulling the string thought it was a big joke.)

TBMs_R_Us said...

They also have their customer's payments for flights they never got. DayJet could have gotten all that money by billing themselves licensing fees to themselves so that DayJet could claim they couldn't pay customers because they already paid themselves via accounting tricks.

Dave,

You're absolutely right. DayJet Services had to pay license fees to DayJet Technology, management fees to DayJet Corporation, and aircraft rental to DayJet Leasing. Consequently, it was always broke, or close to it. Once it pulled the plug, there was no money in the bank at DayJet Services to repay anything. Hence, DayJet Leasing wasn't getting it's rent income, so it too was broke. Meanwhile, DayJet Corporation could have all the money in the world.

Dave said...

And some of us continue to ask the simple question: When will that “FIRST” complete Eclipse 500 very light jet be produced?

Per past comments from Eclipse it was supposed to be Avio 2.0 (that was supposed to be out by now) that would complete the functionality promised. Even if Eclipse gets EASA and Avio 1.5/6 approved, it still wont be to promised spec. Maybe Eclipse will produce one aircraft that almost meets promised spec and it will be the EASA test aircraft rather than a production model. Eclipse having FIKI and Avio 1.5 doesn't mean much if customers either have to pay extra for what they already paid for or if Eclipse doesn't do the retrofits. Having Avio 1.5 certified or EASA certified doesn't is just a press release unless Eclipse follows through and gives people what they paid for and doesn't make them pay extra for it. I do expect to go under and for people to have to pay for retrofits since Eclipse wont do them for free as promised, but the upside should hopefully be that they don't have to deal with the horrible exec leadership that has been Eclipse since inception. Eclipse going BK is described by Eclipse to customers as a bad thing...bad it could actually be a good thing if the courts replace Eclipse execs and put Eclipse's service business into a more ethical competent company.

Black Tulip said...

The Eclipse head of marketing said Vern had been into the Eclipse booth a couple of times at NBAA.

julius said...

airtaximan

Back to question number 1:

"WHAT DID DAYJET DO WITH ALL THE MONEY?"

OR

"HOW MUCH MONEY DID DAYJET LOSE?"



after the Nimbus desaster a pro was needed. And Ed wanted to have some money for the show (and some royalty for VR for the idea?).Furhermove the companies must be founded, staff hired, ads... the top management costs a little bit..They worked from 2002/3 to 2007 (end of staffing, pilot training...). 50M$ - no problem... more fun!

When Eclipse Europe was renamed (2004?)the DJ story was active and RP knew it.

Now RP is not interested and stops the show.


Julius

Dave Ivedorne said...

If Dayjet had no real money...

Would there be any reason for Pieper to help Ed?

Funny thing might have been Pieper cuting off ed... the shill who made the whole thing even remotely plausible.

Maybe even the guy who encouraged Pieper to get involved to begin with - sftaer all they have the same basic plan for air taxi


So one day in August, Roel discovers that he's propping up Ed - and asks himself, "what's in it for ME?"

Since Roel's dreams include bogo-air-taxi visions and IPOs, he seizes upon the one illusion that Ed dangled before the investing public: sooper-seekret pricing algorithms. Ant farms.

Failing to recognize that all the "propreitary algorithm" and "agent-based technology" talk may have actually REPELLED rather than attracted customers, Roel decides that he'd like to 'steal' the ant farm from Ed. Ed, failing to recognize the very same thing, declines on the offer.

Roel pulls the support plug on Ed, in an attempt to let Ed run down any equity in the DayJet mothership. Ed counters by ceasing operations immediately, so he can run down DJ's equity on HIMSELF, rather than on any stupid customers. Ed trumpets the success of DJ's business model, in the hope that somebody will actually PAY him for use of the ant farm. Those who actually OPERATE air taxis and small business jets recognize that the only thing Ed's "proof-of-concept" proved, was that it doesn't work.

The secondary market is flooded with a couple dozen incomplete FPJs ( of course, all FPJs are incomplete FPJs ) that can be had for 40% of the presumed "going rate". Speculators, realizing that they'll be unable to dump any aircraft that they've already taken custody of, start to demand refunds on deposits. Roel refuses the demands - upping the ante by stating that existing aircraft won't be upgraded timely ( if ever ).

A few disgusted depositors retain counsel, and Roel settles rather than submit to an ( inevitable ) unfavorable court judgement. Most of the rest of the depositors combine to equal the intelligence of one adult human being, and retain counsel collectively. Roel tells 'em to get stuffed. Eclipse depositors present a judge with the contracts, and evidence of Eclipse's ongoing non-compliance with them; Judge grants depositors the relief they sought. Involuntary BK forced ( my prediction, November 25th ).

Ken Meyer persists in believing that everything is fine, posts hateful messages under numerous nyms on the critics' blog.

Would you like the combo?
DI

gadfly said...

"WHAT DID DAYJET DO WITH ALL THE MONEY?"

"HOW MUCH MONEY DID DAYJET LOSE?"

Easy questions . . . easy answers:

"'Spent it!" and "All of it!"

gadfly

(Next question?!)

baron95 said...

airtaximan said...
Dayjet rasied $150,000,000 or thereabouts, right?


Nope. Incorrect. Be Careful. There is the "free-use" money that DayJet raised. IIRC $10M from Ed + $40M tops from other investors. Than there is the $100M IN FINANCING and LOC commitments to buy the first 140 planes or so.

Don't confuse the two. It is like VEB is financing $205M for a factory. Does not mean that ETIRC has that money. It simply means there is a LOC and ETIRC can draw against that as a loan.

It is pretty clear to me that DayJet had "only" between $10M and $50M in free-to-use money plus the loan/leasing LOC to finance the planes - money they never touched.

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