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.”
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
238 comments:
«Oldest ‹Older 201 – 238 of 238NEW STOCK MARKET TERMS:
CEO --Chief Embezzlement Officer.
CFO -- Corporate Fraud Officer.
BULL MARKET -- A random market movement causing an investor to mistake himself for a financial genius.
BEAR MARKET -- A 6 to 18 month period when the kids get no allowance, the wife gets no jewelry, and the husband gets no sex.
VALUE INVESTING -- The art of buying low and selling lower.
P/E RATIO -- The percentage of investors wetting their pants as the market keeps crashing.
BROKER -- What my financial advisor has made me.
STANDARD & POOR -- Your life in a nutshell.
STOCK ANALYST -- Idiot who just downgraded your stock.
STOCK SPLIT -- When your ex-wife and her lawyer split your assets equally between themselves.
FINANCIAL PLANNER -- A guy whose phone has been disconnected.
MARKET CORRECTION -- The day after you buy stocks.
CASH FLOW-- The movement your money makes as it disappears down the toilet.
YAHOO -- What you yell after selling it to some poor sucker for $240 per share.
WINDOWS -- What you jump out of when you're the sucker who bought Yahoo @$240 per share.
INSTITUTIONAL INVESTOR -- Former investor who's now locked up in a nuthouse.
PROFIT -- An archaic word no longer in use.
( continued from my previous post )
...Mike Press, as well as many others who've already taken delivery of their incomplete FPJs, stop making payments on them and the aircraft are repossessed. Ramps at Gainesville, Albuquerque & Double Eagle fill with destitute preemie-jets, never to see light beneath their tires ever again.
Bernalillo County connects their share of the erstwhile scrap metal with curved ramps, creating a high-concept aviation-themed skateboard park for the kiddies. Likewise, Alchua County, recognizing the deliterious effects of its environment on aerostructures, launches a massive experiment in organic gardening in Phostrex-and-alumina-enriched soils.
Naturally, like everything else associated with the Greater Albuquerque Incomplete Aircraft Works, it results in a massive crop failure - driving up commodity prices worldwide, leading to international cessation in most commercial & industrial activity, followed by global cooling and the rapid encroachment of a new Ice Age, and grounding any remaining FPJs because they aren't capable of FIKI.
Ken Meyer, desperate to be right about the FPJ, resorts to ever more drastic measures in order to keep his plane aloft - funneling money from his business at the same time discretionary spending on his services comes to a halt. He has to start selling personal possessions, and Shari ends up leaving him for a chiropractor in Taos. He opens 300 different Blogger accounts to post his hatred on the critics' blog - and gets away with it for quite a while, because his tone changes from 'asshole', to 'lonely asshole'. Dave posts links to his log-ins & divorce filings, exposing his new condition. Ken continues to fly his aircraft, even in hazardous conditions - he's a Bold Pilot.
An old truism receives new proof of its validity.
Pay at the first window,
DI
I think we now know why Ed didn't start DayJet initially with leased used aircraft to prove out his concept: the company was essentially bankrupt in real-world terms from the start. Be interesting to see at what value the ant-farm software is being carried on the books. Would you like to mark that to market, Ed?
Be interesting to see at what value the ant-farm software is being carried on the books. Would you like to mark that to market, Ed?
You should see the value that Ed put on SCO's old outdated rights to UNIX legacy code (which this is a Roel connection BTW - Roel at one time ran Unix System Labs and USL sold rights that eventually worked their way to SCO) saying that all these people owed SCO BILLIONS. Whether or not these guys were friends or just business associates, they run in a circle that is connected with fraud and shady dealings. Maybe one of these days I'll represent this with a chart as I think it is easier to visualize the associations than to read about it in paragraph form.
Be interesting to see at what value the ant-farm software is being carried on the books. Would you like to mark that to market, Ed?
Not.
Very.
Likely.
We've instituted a new pricing structure at the Burger Depot. You pull up to the talking sign and place your order, and one of the decisions you must make is when you'd like your food completed. If you'd like it now, it'll be six times as expensive as it would be if you schedule "delivery" for after we've closed - with a sliding scale for everything in between. It seems to be causing a lot more waste - so much that the dumpster is always overflowing uneaten food on to the ground, attracting insects and the like.
Ours is a REAL ant farm.
Would you like fries with that?
DI
HOLY SHIT BATMAN!!! Vern is on a podcast!! Chatting about his "reflections" about EAC. Check it out at www.aviationweek.com
E.D.T.
HOLY SHIT BATMAN!!! Vern is on a podcast!! Chatting about his "reflections" about EAC. Check it out at www.aviationweek.com
Nice to see Vern's showing the way former Eclipse employees that their NDA isn't worth the paper it is printed on. Vern blamed three things for Eclipse's problems: The Aviation Industry, the Aviation Industry and the Aviation Industry. Vern then blames others for spreading "lies" and says that he isn't doing anything now and doesn't know when he'll be doing anything in the future or what it is he will be doing when he starts doing something. BTW since Vern is flying in an Eclipse-owned aircraft (probably given to him in his employment contract as a perk where he can use it even after he left Eclipse), couldn't Western Skies repo it or anyone else who gets a large enough judgment against Eclipse?
BT,
"The Eclipse head of marketing said Vern had been into the Eclipse booth a couple of times at NBAA."
there was no booth - it was a large empty space with 2 planes - the e500 and the e400... NO facilities at all.
If this makes any difference regarding the story.
ATM,
I agree that you and I saw the same thing. I simply used 'booth' as a term of art regarding a tradeshow exhibit.
well, thanks - I'm glad the discussion has become lively and centered... you see, I really don't know how much money was spent at Dayjet, or how much they paid for planes, or whatthe Roel, Vern, Ed relationship looked like.
I do know that either Dayjet had no money, and as some smart person points out - was essentially bankrupt on day one, but for the possible leverage they could obtain on the free fleet of planes they got from Vern and apparently also from UTF.
They must have had some money, because they did get off the ground. How much - OK, perhaps total cash available since day-1 was $50M. Did BAron say this?
If they blew $25 to begin with, they blew $25 plus the credit card money, and additional bank lines of credit, trade credit etc... in around a year - but lets forget this... say its just $25M.
$25 million dividde by 9000 flights IS: $2,777.77 per flight.
Wanna know something - this actually seems about right to me.
Know why they were looking for $40M? Becasue they knew they would incinerate more cash as they tried to fly more flights until any possible markets opened up for an IPO. My guess... 1.5 years of incineration.
Who screwed who? Ed or Roel? I think Roel stopped the freebees, and Ed had no money anyways. Would VErn have continued to provide free MRO, training, etc... so Ed could shill and the illusion could continue for an IPO, perhaps? I think YES. WOuld Roel care.... no, becasue IF he's ging to sluff off funds to ANY air taxi company (albeit a completely non existant, non operational air taxi company) it was going to be HIS, not someone elses.
So, I think Dayjet lost $2777.77 per flight, and never paid a cent for the planes, except some debt service. Imagine how a "real" buyer, like Linear is doing?
Its so far from possible, makes so little sense, that it could be a complete joke, hoax, sham, scam...
Any talk of proving any air taxi business model is complete BS.
Vern's comments actually reveal how the Eclipse business model was DOA. Vern basically said that Eclipse doesn't build anything (no mention of the Eclipse factory and especially not friction stir welding) and so it is the suppliers fault. However, that highlights Eclipse's fatal flaw (well one of many fatal flaws). If the Eclipse suppliers functioned the way Eclipse wants them to, then it would benefit all the other aircraft manufacturers so Eclipse would have no competitive advantage. Vern Eclipse as saving so much time in manufacturing due to FSW and whatnot, so Vern acting like Eclipse doesn't manufacture is clearly false and if true, cancels out the competitive advantages Eclipse sold itself as having. Vern of course didn't address the issue of there being no real market if Eclipse did reach the production rates goals and hence Eclipse's need to cook the order book with DayJet, Nimbus, etc.
BT, no problemo.
How did you like the frog logo on the side of the e500? The green stripes? the "by appointment only"?
What a joke.
I half expected a sign saying "Sold out until 2015 - please visit then to place an order".
This thing is dead as a door nail. If anyone puts up any more money for this fiasco, they are the dumbest people imaginable.
Truth be told, the floor at NBAA has smaller planes and larger planes in the Very Light Category. The cheapest, dumbest looking POS plane is the e500 BY FAR. The only way it could have ever worked was by selling it for $800,000... or so.
The Epic products far outclass this plane. They look and feel nicer and safer.
I had the pleasure of attending with a group of non aviation guests - they had their opinions. Loved Bombardier and Gulfstream - thought the Globals were amazing...seriously, they thought the e500 was crap... like the Epic jet, the Djey, the Cirrus jet, a LOT more. They didn't even care whch was more or less expensive. They liked the cheaper planes a lot more.
Anyhow, nice post mortum visit I guess.
So, I think Dayjet lost $2777.77 per flight, and never paid a cent for the planes, except some debt service.
It was probably something like that. Ed was also a cash arsonist and had tremendous overhead. Employing 260 people for 12 active jets and total of 500 customers that flew once, 200 that flew more than once and 50 who flew ten times or more. Just in labor alone that is way too much money spent on way too few commercial transactions.
Truth be told, the floor at NBAA has smaller planes and larger planes in the Very Light Category. The cheapest, dumbest looking POS plane is the e500 BY FAR.
Eclipse kluged the FPJ as well as had delay after delay, so you've got a poorly constructed product that is also outdated. Eclipse's poor planning and poor supplier relationships really came back to burn them.
ATM,
Yes, it seemed to be an underwhelming show. I gather you did place a deposit on an Icon 'aircraft'.
Thoughts on the FPJ from Orlando,
Why spend the $$ and effort to hype stir-fried welding if you're going to fasten the back half of the plane on with huge button-head rivets? I can see why they want to build it in Russia...
Anyone else look closely at the instrument panel? I took a photo of the center panel and I just realized it looks like it has the 'real' aircraft weight info on it.
A/C -200
BEW: 3752 lbs (3634 book value)
so with full fuel of 1698 lbs that leaves 584 lbs of people, or approx one pilot and 2 pax (for those interested parties)
But the other thing I realized is that the graph in the Type Cert doesn't match the wording in the Type Cert paperwork for the new envelopes. ( 204.37 in up to 5461 lbs, NOT 5550? lbs shown on the graph)
Plus, they definitely opened up the Hvy/Aft area of the envelope, which would increase MLG loads, although I'm sure it's the pilot's fault for landing in that configuration... ;>)
I thought Vern's podcast was not too bad, and he is clearly presenting himself as totally divorced from Eclipse.
One thing that I agree with him is that Aircraft high-rate production has been done many times before and can be done again. That is key to bringing prices down in any industry.
I just wonder who will try it next.
One thing that I agree with him is that Aircraft high-rate production has been done many times before and can be done again. That is key to bringing prices down in any industry.
I just wonder who will try it next.
I think there has to be a reason for it. Eclipse showed that the price elasticity of demand for the end user wasn't there even if price elasticity could be achieved on the supply/manufacturing side. I don't think the other aircraft manufacturers are stone age morons (as Eclipse has portrayed them) and they know how much they can reduce their costs with higher volume and weigh it against increased sales in order to arrive at an optimum price to maximize profits. Even in better economic times there was no gigantic market for sub-$1 million dollar twin engine jets.
Dave,
You are a fine fellow indeed regardging the price elasticity of demand comment. Too many firms don't understand the notion that maximizing profits has to be done with the right product mix, not just by maxing out sales of one product. Dare we take it to the next point and agree that Eclipse, AS A BRAND, has been fatally damaged? Will the market forever consider it to mean an "inferior good?" Only time will tell I suppose.
I was also just thinking about all those DayJets sitting idle. With all the clever marketing at the local Lexus dealership ...could EAC come up with a "certified pre-owned" program? I'm sure Cessna doesn't need to do anything along those lines ...or do they? We all know that EAC has some kind of financial interest in the 28 jets ...so why not just bite the bullet and payoff the liens to own them 100%? They have to do the upgrade mods to them anyway and it would allow them to gradually sell them, post-mod, on the secondary market AND control the price they sell for if/when they get AvioNG 1.5/6, FIKI, etc.
Well, they'd have to get that magical delivery of cash from UBS before they could do such a thing. Erin Burnett (my future wife!, I wish) on MSNBC was rather comical this morning with AIG getting yet another $37+ billion from the feds. She said we'd all have a printing press at home soon to print our own cash. LOL, maybe THAT is what Vern should have invented: an ABM-NG = Automated Bailout Machine, NG.
E.D.T.
More from Flightglobal on Eclipse:
Eclipse Aviation chief executive Roel Pieper says turning a profit at the embattled very light jet manufacturer is a priority before it can begin ramping up production of Eclipse 500s from the current rate of around four a month.
So how does Eclipse turn a profit making four per month - unless of course Eclipse achieves profitability by simply not paying off all its inconvenient debts (not paying off debts seems to be the current plan).
Pieper says that once new factory procedures are implemented by the end of the year, production will be increased to one a day by June and 1.5 by the end of 2009. The Albuquerque-based airframer has delivered around 265 aircraft and, despite the collapse of its biggest customer, Florida air taxi operator DayJet, has an orderbook of "more than 1,000" aircraft, representing three years of production. It expects European Aviation Safety Agency certification in the next month, allowing it to begin deliveries to Europe.
Assuming that Eclipse has gone from 900 orders to more than 1000 (something that I don't take them at their word for, but will for the sake of argument) that make sense having a thee year order book at 1 per day (again assuming all those orders are rock solid), but if Eclipse produces 1.5 per day who is going to sustainably buy them all and in particular who is going to be buying them all if/when Eclipse doubles capacity and staffing with the Russian factory? Roel hasn't shown that he can pay for his own order, which represents 1/3 of Eclipse's total order book and even if he could, who is going to buy the next 300 unit lot?
"We have taken a series of steps and a hard stand on performance metrics, productivity and yield," he adds. "We have pissed people off in the past. Our new approach is to be more humble."
Eclipse will humbly build and sell 2000 units per year as Vern simply wasn't humble enough with his 1000 unit per year figure *snicker* Eclipse will humbly tell those seeking refunds to piss off *snicker* "Eclipse Aviation" and "humble" simply can't go together in the same sentence without laughing.
All from this article:
Flightglobal:Eclipse chief calls for profit before ramp-up
dave :
#Even in better economic times there was no gigantic market for sub-$1 million dollar twin engine jets.#
oh yes , i couldn't agree more on this ...
but then if Vern would have said so , where could he have found so much deposits ? don't forget that an unknown part of "scam" was all the gullible who bought 2,3,4 , etc positions ...
sure they were to re-sale with huge benefit ...
that is the reason why i believe the whole thing was doomed from day 1 !
=
they have tried to develop a giant thing without spending more than a few kopecks out of their own pocket !
vern still has the same BS in the mouth :
instead of talking about a single one FINISHED , he's talking about high production ...
now with the economic situation what are the chances ?
=NONE !
this morning i had a meeting with a few colleagues , some (not to say most,i wish i could be worth to kiss their feet !) are ranking in the 20 best worldwide ...
we all agree about one thing :
this one is going to be
long
painful
costly
Julius :
dank schön !
going to be retired soon ?
that something we share in common , i decided to stop when i will turn 48 (about 6 months)
seen too much bad things already , i need to rest !
we all agree about one thing :
this one is going to be
long
painful
costly
Something that I don't mind as long as the lessons to be learned first of all get learned and second of all stick. I'm not convinced that the lessons are being learned by the right people - but they can get voted out of office. There's been too much credit out there resulting in assets being overinflated and people/businesses who are poor credit risks getting too much credit.
Old dayjet tails 139 and 160 fly to Albuquerque. My data base shows 238 and 244 hours on these two tails, high hour craft is tail 141 at 369.
Did others notice the dentist's FPJ flew into the same airfield (KISM) as the putative Vern craft, and flew out this morning. Do you think they huddled.
dave :
the biggest responsible : a president who conducted adventurous project costing a leg and an arm ...
to offset the cost ? no problem inflate monetary mass ...
money flows everywhere ...
all peoples take for granted things which are only illusions ...
when "The end" appear on the screen , everybody seems to be surprised !!
as you said , i am not sure anyone learn the lesson , they would guarantee you it's done ...but as soon as a moron will make them dreaming about wealth, cars , jets ... they will forget all experience ...!
sad , but human nature !
Old dayjet tails 139 and 160 fly to Albuquerque. My data base shows 238 and 244 hours on these two tails, high hour craft is tail 141 at 369.
Harder to repo them there in Eclipse's home turf I guess.
I was thinking of Eclipse's claims of 9000 segments while weighing that with the 550 one time users, the 200 who flew more than once and the 50 who flew 10 times or more. The numbers just don't add up (what a surprise) unless those 50 people were ultra-heavy users.
Giving DayJet all the benefits assume dividing 9000 by three to account for dead legs and whatnot (I'm being generous...afterall DayJet was supposed to reduce extraneous non-revenue generating segments) for a total of 3000 separate paid events. Keeping the math simple and again giving DayJet the benefit, assume 2000 paid events were achieved with the first two categories of DayJet users (actually my figures show it closer to 1800 or 1900). That would mean that the 50 hardcore users would have to have averaged 20 flights per person. There was probably some of the 50 who flew 20 flights, but to get to that average, whoever was booking those flights would probably be better off as a fractional owner or something. Probably what would be value to know was who were the DayJet "regulars" and analyze them thoroughly as that could be real valuable in seeing what can realistic be expected with air taxi/air charter/commercial charter/ground transportation/etc. There being 50 hardcore regional air travelers who used DayJet's service is not bad, just to base a business based on there being powers of 10 greater than that hardcore air travelers. Any number of air transporation business could probably serve them well while generating a profit.
Ken Ross, owner of North American Jet Charter Group, an operator of five Eclipse 500 very light jets (VLJs) from PWK, established Brigadoon Aviation to provide maintenance and support services to owners and operators of VLJs and other small aircraft. The $10 million Brigadoon campus will include two 25,000-sq-ft hangars as well as 25,000 sq ft of terminal and office space located in the eastern section of the airport.
“What we are doing is state-of-the-art,” said Ross, who described plans for Brigadoon Aviation as a five-star operation designed to provide aircraft owners, passengers and pilots alike with a “private club-like” environment. The facility will also include a certified VLJ/piston maintenance center, self-service fuel, and full-service fueling “for aircraft owners and pilots who prefer the option.”
AIN:New FBOs at PWK to cater to executive jets
Ken Ross is involved in litigation related to Eclipse. It is the Illinois case of Daniel Asher v. Kenneth Ross where Eclipse has been subpoenaed.
Baron:
"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."
OK, what happend to the $50M?
- also, their claim regarding being the best funded aviation startup is complete BS..right? They had "seller" financing for a fleet which is common practice.
So my question stands:
- Did they blow $25M before launch?
- If they did, they had $25M left, which they went through in less than a year.
Based on 7000 flights, thats a loss of $3572 per flight.
If there was any question as to ETIRC Aviation's size, this should give an indication. The IT is being handled by a consultant doing it on a part-time basis along with other projects:
Employments
1. 2007-now
my own company in Management, Consultancy and Innovation. Currently involved in three projects:
1.darple.com.eg: an online market in Egypt for which I've managed and implemented the Arabic translation, hosting, a new GUI, and the integration with automatic negotiation services.
2.price-beetle.nl: an automatic price negotiation service, complementing the darple Egypt site
3.ETIRC Aviation IT: the design and implementation of the IT infrastructure to manage CRM, Service and Financials for operating the Eclipse 500 sales and services operation in Europe.
Flexmanager resume
Did they blow $25M before launch?
Right around there. ASTRO cost around $20 million!:
Mr. Iacobucci, a former computer whiz with Microsoft Corp., has spent five years and more than US$20-million developing the reservation system, which is based on complex algorithms.
Canada.com:Flying past lineups
DayJet must clear financial hurdles to get off the ground. The company has burned through $20-million of the $25-million raised from investors since its start in 2002.(Note this article was from 2006 so they burned through even more before launch in 2007)
SP Times:New service adds on-demand choices for people in a hurry
Also in the same Saint Petersburg Times article:
DayJet won't need airline-sized numbers to be successful, Iacobucci says. The concept will fly if DayJet can capture 1.5 percent of business trips in the Southeast made in cars and airliners. That comes to about 3,000 passengers a day.
"It could be successful or it could be wildly successful," Iacobucci says.
"In the worst case it will (pay off) like a utility. In the best case, it will be like Microsoft."
1.5% of business travelers! 3000 travelers a day! Any idea of how far off the mark DayJet was? My guess was that their actual passengers per day looked like a rounding error compared to the projections that they touted on people they were seeking money from.
My database of DayJet only has 6,343 segments with any time aloft duration between 9/19/07 and shutdown. Total time aloft was 5,225 hours in that period. I may have (or "of" for those who know my grammer) missed some flights, but very few. I believe FlightAware TOS prohibits me from reposting my database, but I am open to private discussions.
Included in this are deadlegs and positioning hops. A statistical percentage could be applied for those. I believe as the network got more dispersed in the final months, positioning hops increased (examples Miami to Boca, or KGNV to KJAX).
Deadleg values are hypothetical, Dayjet gave some talks where paid legs came in between 66% and 75%, I don't know if those are by unit or time.
Values for passenger load were variously reported, from 1.2 to 1.8.
I expect Dayjet had a lot of "comped" flights trying to build interest.
"I expect Dayjet had a lot of "comped" flights trying to build interest."
I expect they had a lot of "bribe the Florida legistator" flights given the number of TLH trips they had and the subsequent tax dodge scam given them by the FL legislature.
Values for passenger load were variously reported, from 1.2 to 1.8.
I find it appalling that DayJet was transporting fractions of people. I knew it was a 'hack job' - but I didn't realize they were dismembering bodies.
My database of DayJet only has 6,343 segments with any time aloft duration between 9/19/07 and shutdown.
I believe your numbers as the DayJet numbers don't make sense.
Included in this are deadlegs and positioning hops.
I also think there was training and DayJet executive flights.
Deadleg values are hypothetical, Dayjet gave some talks where paid legs came in between 66% and 75%, I don't know if those are by unit or time.
If DayJet had too many so-called paid legs, the numbers again don't make sense. 75% of 6300 is around 4800 and if you take away the 2000 for the first two groups of DayJet passengers, that means the hardcore's average is 50 flights per hardcore.
Values for passenger load were variously reported, from 1.2 to 1.8.
Either way it is bad.
Thinking more about the shell games that DayJet could have played, perhaps they really pumped up their numbers by playing shell games by having DayJet play DayJet for training flights, executive flights, etc. The same way that DayJet could have siphoned off customer money by paying themselves for IP licensing fees or whatever. Perhaps much of DayJet's touted numbers come from DayJet booking revenue from themselves for flights that would have been part of any regular commercial operation.
New post up.
It's a 'special edition', to celebrate my 50th.
No, I'm not that old, it's the number of headline posts on 'Eclipse Aviation Critic NG'...
Shane
thanks X...
meat and potatos stuff coming out now, instead of my "chain saw analysis"...
AMazing thing is, when yu look at this DAyjet thing from ANY angle, it looks really bad.
NOt even close.
Teh fewer the flights, obviously the greater the loss per flight, all things considered.
BAsed on X's numbers, Dayjet burned around $5000 per flight.
Someone said "they did a lot of comp, bribery, interna flights..." I think they were ALL basically comped - heavily subsidized, at the very least.
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