Thursday, October 23, 2008

Sometimes, it pays to be unpopular


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

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

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

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

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

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

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


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

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

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

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

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

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

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

Read the Teal Group report carefully. It's a PDF file, which you can 'save as' and digest in your own time. Here are two snippets for those who need encouragement to make the effort:-
First, commenting on the DOT IG investigation.
The IG stated: “This isn’t about a certification process riddled with flaws…What this case is about is an accommodative approach to a new manufacturer using new technology and a new business model to put a high-speed, high-altitude jet in the hands of relatively inexperienced private pilots.”
Second, the difficulty in predicting what might happen to the company.
Keeping up with this program has become a surreal experience. Irrational investors make forecasting difficult, but socialist governments make it even tougher. The latest post-Soviet five-year plan calls for the Russian government to fund an Eclipse line in Russia. This is not a business decision made by the private sector, and therefore we can’t predict whether it will be provided. We also don’t know when the money will be provided. With numerous lawsuits from suppliers and customers, Eclipse faces the prospect of involuntary or voluntary bankruptcy.

From the 'inbox', which you all know as eclipsecriticng@gmail.com
We all saw the Teal report here. Richard missed the round of financing that happened in summer of 2007 which was another $275M of debt financing. This is what makes up the total $550M of senior secured debt. That amount, plus another $550 million in private equity, together with sundry other inputs drives the investor funds towards $1.2 billion.
Add what the customers have paid in already (about $320 million) plus the remaining deposits (about $60 million), you can see where this has been a party worth more than $1,500,000,000. Supplier activity is harder to measure, but they must have invested heavily. This could easily drive the TOTAL amount spent close to $2 BILLION plus the involvement of thousands of people's lives. All for 250 odd aircraft delivered so far.
These are expensive jets!

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

UPDATED FRIDAY 24th October 22.34GMT.
The DayJet birds made headlines again. I sure hope they find a home shortly, as they are in real danger of clogging the market unless they do. My hunch is that FPJ Inc have little choice at this stage and will have to take anything around the $850,000 DayJet agreed to pay originally. The following from AIN Online, which is a great source for business news.

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


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

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

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

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

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

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

N0PE (short for No Hope)

N00NE (pretty clear, I think)

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

CR-APJET (from the Cape Verde Islands!)

NOTVLJ (Pretty much sums it up)

NYETJET ('Russian' entry)

And last, but not least

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

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

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

Shane

215 comments:

1 – 200 of 215   Newer›   Newest»
Dave said...

To follow up from the last thread. First to HME, the $45 million dollar loan was with the City of ABQ and it was specifically an "Industrial Revenue Bond." I suspect that the City of ABQ can't absorb losing $20M+ (the last I heard Eclipse hadn't spent the total amount of the loan and it instead was in the 20 millions) as well as the State of NM can. Now in regards to TAB, it's nice to see that you've elected yourself spokesperson for all FPJ owners.

eclipso said...

WHEW!!! At least I made the bottom six....

Shane,
I will write whe I head that way

eclipse_deep_throat said...

I just found this on the AviationWeek site:

Eclipse 500s For Sale 'as is'

Oct 23, 2008
By Fred George/Aviation Week

The 28 Eclipse 500 aircraft formerly operated by DayJet are being offered for sale "as is" by Eclipse Aviation, reiterated Mike McConnell, president and general manager of the manufacturer's customer division.

Eleven such aircraft are in the original configuration, fitted with Avidyne avionics, small tip tanks, no drag reduction kits and no FADEC software upgrades that boost high-altitude cruise thrust output. Five of the aircraft have the drag reduction, large tip tanks and FADEC upgrades, but they're still equipped with pre-Avio NG Avidyne avionics. The remaining dozen aircraft conform to current production standards with both the drag reduction and engine improvements plus Avio NG avionics package.

Fleet buyers appear to be among the most promising prospects, according to McConnell. He believes that some buyers want to resell the airplanes quickly to government entities or other third parties. As the resale exclusive broker, Eclipse is entertaining offers of at least $1.45 million per airplane, McConnell claimed. DayJet bought the 28 aircraft for full list price and 80 percent financing was provided by an Eclipse Aviation and United Technologies consortium, a former employee told AviationWeek. So, Eclipse isn't anxious to incur more losses by accepting fire-sale price offers.

None of the ex-DayJet aircraft is certified for flight into known icing and none is certified for GPS en route, let alone approach navigation. Eclipse still is awaiting FAA approval of its Avio NG version 1.5 software that will allow factory forward-fit installation of Garmin GPS400W navigation systems on serial number 267 and subsequent aircraft. Earlier this year, Eclipse announced its intentions to retrofit all other existing customer aircraft to this configuration under warranty coverage, but the availability and timing of such upgrades has yet to be determined.

McConnell said that if prospective buyers want Eclipse to upgrade the first 16 ex-DayJet aircraft to current production standards, "It's going to get squirrelly." Eclipse has not established a retail price for performing such upgrades not covered by warranty and that scheduling priorities at service centers will dictate which EA 500 airplanes will be worked on first. "All current customers are in line before the DayJet airplanes."

Buyers should be aware that full factory support is critical to accomplishing such upgrades. Only aircraft fitted with both the aero and engine performance improvement package and Avio NG are eligible for the flight into known icing upgrade kit. Any airframe, system or avionics changes require modifications to the FAA-certified aircraft computer system [ACS] software because of the high level of system integration aboard the aircraft.

Of prime importance to potential buyers is the fact that Eclipse is unlikely to release ACS software source code to unauthorized third-party modifiers. As a result, obtaining independent STC approvals for any modifications, other than perhaps stand-alone, autonomous GPS navigators not be linked to other avionics or the autopilot, will be challenging and expensive.

http://www.aviationweek.com/aw/generic/story.jsp?id=news/Dayjet102308.xml&headline=Eclipse%20500s%20For%20Sale%20'as%20is'%20&channel=busav

eclipse_deep_throat said...

WOW. I am dizzy. This is on the ainonline site:

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

October 23, 2008
Fractional, Aircraft

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

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

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

http://www.ainonline.com/news/single-news-page/article/ourplane-makes-play-for-former-dayjet-eclipse-500s/

FreedomsJamtarts said...

As the resale exclusive broker, Eclipse is entertaining offers of at least $1.45 million per airplane, McConnell claimed.

So, Eclipse isn't anxious to incur more losses by accepting fire-sale price offers.


What a joke. As if the seller can dictate a price for these things. Especially as they go on to imply that there would be no "warranty" upgrade from the existing incomplete status to the current incomplete status.

Imagine someone dumb enough to pay $1.45 Mil for a low serial number Dayjet POS, with the knowledge that they then have to pay whatever Eclipse dreams up for the "upgrade" to GAVIO NfG, Aero, FADEC, FIKI etc.

The really sad thing is that the Eclipse program has a track record of attracting such morons :)

Dave said...

DayJet bought the 28 aircraft for full list price and 80 percent financing was provided by an Eclipse Aviation and United Technologies consortium, a former employee told AviationWeek. So, Eclipse isn't anxious to incur more losses by accepting fire-sale price offers.

Which list price?

McConnell said that if prospective buyers want Eclipse to upgrade the first 16 ex-DayJet aircraft to current production standards, "It's going to get squirrelly." Eclipse has not established a retail price for performing such upgrades not covered by warranty and that scheduling priorities at service centers will dictate which EA 500 airplanes will be worked on first. "All current customers are in line before the DayJet airplanes."

So having one's aircraft meet spec is outside of warranty. How nice.

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

It sounds like Eclipse is in tailspin where they can't get their story straight as to what will or wont happen to the DayJet aircraft.

Black Tulip said...

McConnell said..., "It's going to get squirrelly."

It's been squirrelly for quite some time.

Deep Blue said...

Concerning "LinearAir;" I think Mr. Herp is being rather disingenious about the degree to which the failure of the E500 and EAC, have impacted his company.

Linear is a very thinly capitalized, small venture. Letting go "15" employees is pretty much the whole company, save a skeleton crew.

Mr. Herp had for years traveled the seminar and symposium circuits, asserting the breakthough potential of the E500 and the VLJ/Air taxi model. He bet his entire growth strategy (such that it was) on the E500. To now state that he is not that dependant on it, is like EAC claiming that DayJet's failure has no central role in its future robustness. Utterly in denial. Linear's investors are holding junk airplanes with barely any residual value; the working capital they will need to rectify the fleet is well beyond their capitalization and I would bet , their appetite for another "round." Very sad indeed.

Another fleet buyer, this one in Dubai--DAE University--bought ten as trainers; that order too is worthless and they will have to seek out a new training platform.

Orville said...

Vern is going to have to wait in line...

Reserved N-number: N500VR
Registrants Name : GORDON JEFF
Owner Address : 2436 GERRARD AVE
INDIANAPOLIS, IN, 46224-5044
Reservation Type : Fee paid
Reserve Date : 19-Jul-2004
Registration Date: 19-May-2009

Black Tulip said...

Deep Blue,

Bill Herp said recently that Linear Air doesn’t own, but leases the Eclipses. This doesn’t change the nature of the wreckage, just the names of the bag holders.

Dave said...

McConnell said..., "It's going to get squirrelly."
It's been squirrelly for quite some time.


Eclipse is in a complete state of confusion. When talking about the jets being sold in ETIRC territory the CEO said not only would the DayJet fleet be refurbished but that Eclipse had a "responsibility" to do so and that refurbishing would happen before the sale. Then it became the jets were sold "as is" without anything being done to them. Next we find out that they would be repainted and retrofitted. Now we have McConnell saying it is kinda "as is" anyway, but a potential fleet buyer saying that he expects retrofits sooner than that as part of a purchase. Despite Eclipse being around for a decade these clowns don't know what they are doing and can't even say what people will be getting if they shell out over $1 million dollars. Eclipse can't justify why $500K was too low an offer. Roel had done so initially by saying retrofits would be included prior to the sale and that had also been said other times that retrofits would be included, but now Eclipse talks squirrel...I guess they're just nutters.

EclipsePilotOMSIV said...

I wonder if that is "the" jeff gordon of Nascar fame...

Deep Blue said...

BT: yes; however, he has stated that the "leases" are from investors that Linear cultivated; they do not appear to be traditional third-party institutional financings, but rather a syndication of local, individual high net worth investors that bought a E500 specifically for Linear and then "leased it" to them. They merely capitalized the equipment requirements of Linear's business plan, rather than providing risk working capital. Linear's "finance" rounds have consisted of individual E500 financing deals, with some very small working capital component.

At any rate, an investor in these aircraft has a nearly illiquid asset worth probably only distress liquidation value and to make matters worse, have little if any re-marketing channels. They're stuck with a dead money investment. Tax write off. That's probably about it; other than trading them in to someone like Cessna who may inflate the E500 value somewhat to get a deal done. But that assumes the "investor/lessor" is willing to poney up more cash and credit to get into a viable aircraft and out of the E500; some may just walk (like DJ did) and take their losses. Very unfortunate and difficult scenario.

Shane Price said...

Deep Blue,

..... but rather a syndication of local, individual high net worth investors that bought a E500 specifically for Linear and then "leased it" to them.

Hope that these 'investors' sort out which one of them is stuck with the 'hanger queen'. Word from thereabouts is that one of the 'fleet' has had the majority of the problems, and spends most of it's time getting sorted.

Hint, it's probably the one with the lowest hours....

Shane

Dave said...
This comment has been removed by the author.
Deep Blue said...

Dave:

The whole fractional market vis-a-vis the E500 is interesting. Best of luck to OurPlane, but their E500 "order" is not likely any more a viable one and they will have to replace it. The offer for the DayJet fleet is very speculative and risky; how would a company position that asset to fractional buyers?

But more intruiging is why for example, NetJets rejected the VLJ platform and offers down to the light jet category only; all the other major fractional players have apparently rejected the VLJ class as well. Fractional is perhaps the most important interface to the business aviation market, and it apparently doesn't see demand for VLJs in general (the P100/300 Mustang may have some frac orders, but still small).

There is a major financial institution that built up a portfolio of business jets: not one VLJ.

What do these guys know?

Dave said...

What do these guys know?

I think you were asking that kinda rhetorically, but I think Baron addressed this exact point a few articles ago. Commercially speaking there's much higher profit margins on larger aircraft. VLJs are good for private pilots who want a jet (which there's nothing at all wrong with having this market), but from a commercial fleet standpoint they really don't offer a good value.

Deep Blue said...

Dave:

I think your statement is actually quite understated in its implications.

If the VLJ class is strictly a private pilot GA play, that is one very small market. I'm wondering if the E500 and the coming s/e jets are really that stimulative in creating new pilot/owners; are really just Skyhawks/Beech Barons with jet engines (as far as market size of demand).

If there's no real corporate up take (there isn't); if there's no fractional market (there isn't); if there's no jet card, training or military application (there aren't); if air taxi is currently untenable (it is), then we have indeed a product with a market so small that EAC could sell but 50-100 per year, at best, in a robust economic environment.

And the Etirc speculation about uptake in Russia, Turkey, Middle East continues to defy the market's true buying behavior; in my experience, the buyers there are no different than US buyers: VLJs are too small, do not enough performance/range and really, the "ego" play there is somewhat magnified where cabin class is the core of the market. Just look at Gulfstream's recent order announcement for large class and its comments about "softness" in the G150/200 category.

Dave said...

If there's no real corporate up take (there isn't); if there's no fractional market (there isn't); if there's no jet card, training or military application (there aren't); if air taxi is currently untenable (it is), then we have indeed a product with a market so small that EAC could sell but 50-100 per year, at best, in a robust economic environment.

I'd say that Eclipse had it (and still does now) backwards with air taxis supposed to be the largest market followed by corporate and finally private pilots as an afterthought. I think Eclipse will find sporadic buyers for commercial/corporate, just it isn't much of a secondary/tertiary market. I'd put Eclipse's sustainable sales range at 50-150, which again there's nothing wrong with that except when you base your business on sales/production of 10 times that and cook the order books to get financing. DayJet at least acknowledged that they needed to change their business plan and look at flying on the weekends and having non-business customers. DayJet changed their business plan too late, but at least they expanded their market rather than doubled down on their original plan as Eclipse is doing now with two factories with a capacity of 2000 units per year.

eclipso said...

Dave said:

....two factories with a capacity of 2000 units per year.

Take it from someone who was there...ABQ NEVER had the capacity to produce 1000 planes a year...and never will

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

DB,

to be clear... "I'm wondering if the E500 and the coming s/e jets are really that stimulative in creating new pilot/owners; are really just Skyhawks/Beech Barons with jet engines (as far as market size of demand)."

THIS WOULD BE A HUGE MARKET

PROBLEM IS, the planes now cost over $2M... this is a far cry from a Skyhawk...

Skyhawk pricing enjoys the demand seen for the SR22 and the like... lots of planes per year.. lots.

$2M planes.... even $1.5M planes...

much smaller

Little hint - there are only around 20,000 planes worldwide with a value above $500,000 and below $3M or so.

This is all of them, ever produced at an estimated FMV using yesterdays (pre-market crash) valuations.

The VLJ market is pretty small.

IMO

Dave said...

Take it from someone who was there...ABQ NEVER had the capacity to produce 1000 planes a year...and never will

Their numbers have never added up. I believe for instance that they always knew that they couldn't build an aircraft in 600 hours plus paint and testing and that bears itself out with the number of employees they intended to hire. When their numbers from the get-go don't add up I see it as fraud rather than entrepreneurial optimism. Perhaps one of these days we'll get the whole story. On the production side the congressional hearings were very enlightening. I wonder how much Sabatini's retiring from the FAA had to do with what was uncovered during the hearings.

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

Eclipse is about to announce that they've solved the carbon problem on the jet engines by working jointly with P&W. A new device will be installed on the FPJ called the Bachman-Turner Overdrive in honor of the engineers who created it.

Orville said...

Glad to hear they're "takin care of business".

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

When good companies are selling for 25-cents on the dollar and nearly every home in America has lost at least 30-50% of it's value, what makes Eclipse think that they can get $1.4m+ for their Dayjets?

Every asset is being repriced right now to reflect weak future demand. It is just a matter of time before prices of jets go the same way as houses, stocks, etc. A year from now, I think we'll see jets priced at 50-cents on the dollar from where they are now.


I question the $1.4M pricing irrespective of the economy. Eclipse isn't even being clear what exactly is for sale. Depending on which way the wind is blowing the aircraft is either "as is," they will be treated like all the other fleet or they will be treated better than the rest of the fleet. Right now McConnell seems to be saying the $1.4M doesn't include retrofits and he wont say how much it would cost to get the aircraft up to spec. However, there are other aircraft out there for sale that include retrofits in the price...and the OnePLANE offer appears to be conditioned on getting the retrofits finished by the beginning of next year. Who would want to buy a non-Avio NG/non-FIKI/non-EASA/non-other retrofits aircraft when at least theoretically the other aircraft for sale now can get those retrofits at no charge and are first in line for retrofits based on how the wind is currently blowing at Eclipse? Even if the economy was booming, I don't see much demand for a buggy non-retrofitted "as is" former DayJet fleet aircraft priced at $1.4M.

Shane Price said...

Dave,

Please remove any ANN sourced material, or any links to that site from this blog.

It adds Zoom to my inbox, without adding value here.

Thanks...

Shane

Shane Price said...

Snippet time.

A reliable source tells me that DayJet agreed to pay (careful choice of words here) $850,000 for each FPJ.

It makes one understand why the chaps at FPJ Inc think $1.4 million is such a good price.

Because it's good for them, of course....

Shane

Joe Patroni said...

"....Bachman Turner Overdrive....."

Eclipse is trying to "Hold Back the Water" of cascading money problems, while producing an airplane that was advertised as "Not Fragile"

Vern's plan was "Lookin' out for #1", so he could "Roll on Down the Highway" and "Stay Alive"......instead he has to "Take it like a man" because "It's Over".

The position holders were inclined to "Let it Ride" (as far as their deposits were concerned), but are now realizing that they will actually be "Givin' it all Away", or hope they can sell their airplanes "Second Hand"

"It's Over"........

Sorry......couldn't resist :)

Dave said...

Please remove any ANN sourced material, or any links to that site from this blog.
It adds Zoom to my inbox, without adding value here.


I'm sorry about forgeting about quoting ANN, but I didn't realize there was any issue about linking.

Shane Price said...

Dave,

Thanks for doing that for me.

In the week I was burying my father Zoom emailed, calling me a thief.

Last thing I needed at the time, but typical of his 'style'.

I tend to avoid, where possible, any connection with buffoons. I venture to suggest you might adopt the same principle...

Shane

Turboprop_pilot said...

Shane:

Litigious buffoons especially

Turboprop_pilot

AvidPilot said...

Give zoom a few weeks - he may end up on our side once Eclipse stops paying their bill for the Frankenjet ad on ANN's website.

Dave said...

Litigious buffoons especially

We all owe Vern a debt of gratitude for all the free publicity he generated by suing bloggers. Vern's contribution to the blog really helped it take off.

baron95 said...

As to the EA500 engine situation, it is a very straightforward issue to me.

Jet engines do not have a set max power level - you can always trade durability for more power to a very large degree.

Most of you probably forgot that part of the "performance mods" on the EA500 (IIRC) was a FADEC change to permit higher power levels at high altitudes to achieve promised cruise speeds. You can be 100% sure that this increase eats directly into the engine temp margins.

So we find the engine struggling to maintain that elevated thrust level and full pressurization and heating bleed air up high. No surprise (to me) there.

As a consequence, carbon builds up. And band-aids come on line.

However, as good as PWC is, I'll guarantee you that they don't like it one bit how their engines are being asked to perform on this frame. When things start out this way - pushing an engine beyond the easy temp limits into the compromise temp limits - nothing good ever comes of it.

You are now finding the 200-hr type problems. Next year you'll be finding the 600-hr type problems and the year after that, you'll be finding out the really outgrageous HSI bill.

It is not surprise to me.

baron95 said...

And as I predicted, Piper is encountering substantial aircraft control problems with pwer level changes.

Now come reports that they can't get their automated trim system to compensate fast enough to make the plane fyabe and are looking at more exotic solutions such as thrust vectoring.

Good luck to them - Band-aid time again for piper, like all the springs and bob-weights that made the Cheyenne a widowmaker.

You can read some spin here, but the problems are serious enough to put the entire program in jeopardy.

http://www.flightglobal.com/articles/2008/10/23/317759/piper-ponders-back-to-the-future-thrust-augmentation-for.html

baron95 said...

And despite my early criticism of the D-Jet configuration, maybe they'll turn out to be better off having been conservative and centering the thrustline, despite all the weight and performance-robing S-turns in the intakes.

But Diamond has been particularly quiet about the D-jet recently - I have gotten no news/updates since the engine change decision.

Maybe some of our european friends can find out what goes on over there. Is the D-Jet ever going to "fly"? In customer's hands that is?

Turboprop_pilot said...

Baron:

You speak the truth about turbines- my TBM had three power settings- Max Cruise, Recommended Cruise and Long Range Cruise. Max cruise ran the engine at ~ 765, recc 745 degrees C. When I attended the P&W course, I asked the difference and they said "About $30,000 at hot section". When you run them hotter, reliability and life goes down and expenses go up.

The really bad decisions at Eclipse started the day Burt Rutan showed Vern the V Jet.

Turboprop_pilot

Turboprop_pilot said...

Baron:

When you look at the extra problems and complexities of a SE jet, a twin with engines on center line and all the redundancies that come with it as well as the elimination of the 61 kt stall, make the twin a better design choice.

TP

Deep Blue said...

B95:

Interesting comments about the PWC600 and smal turbines generally. It makes one wonder if there is something fundamentally "mis-engineered" there as well, along with the E500.

The 600 (versus 615) may turn out to be an engine with no market; (wonder if the Williams would have had the same technical problems).

At any rate, small turbine engineering may have a way to go until the constraints in thrust, temp, overhaul cycles and cost etc are solved.

I still maintain that we aren't witnessing any really new engineering breakthroughs in aviation.

Joe Patroni said...

"....small Turbines....."

As Stan B. mentioned in the earlier blog, turbine engines don't "scale down" very well. An engine that is 50% smaller is not 50% cheaper, nor is it's sfc 50% less (all other things being equal)

The "dinosaur, non-disruptive" way of doing things (since appox the 1980s) is to spec out an engine that is bigger than what is needed, then flat-rate it to some lower power level.

They do this to reduce hot section/overhaul costs (which they try to keep as low as possible, especially since most corporate airplanes are under some kind of Power By the Hour" plan), and to allow for the airframe to "gain weight" (for whatever reasons).

Example: the C-750 gained, as I recall, 600 lbs of gross weight simply by a FADEC and Flight Manual change, plus a couple of little structural reinforcements in the tailcone. 600 pounds doesn't sound like much, but (as I recall again) it allowed our airplane to fly with full fuel, and six passengers.

Airplanes gain weight over their production runs. The most extreme example I ever personally saw was one time when I was involved with comparing empty weights of an early (sub s/n 10) C-650 with one of the last "Citation III"s (post s/n 190 or thereabouts)......the newer airplane was 1500 pounds heavier than the old one (which had been compensated for by mods to increase the Gross weight over the years). The newer airplane was arguably a better airplane, but it did pay a price in the fact that a lot of the engine durability improvements (that the older, lighter airplane could take advantage of) were lost, because the engine had to work a lot harder on the heavier airplane.

Deep Blue said...

JP:

would you say that is true generally of the GA/Bizav OEM product line (Hawker, Gulst, Dassault) and is it also true generally for commercial? Is today's B737 heavier than the -100s? Thx.

airtaximan said...

DB,

industry-insider secret - the majors (dinos) OEMS know that early adopters will accpet "whatever", and they also gonculate the "upside" from PLE (product life extension) programs... and they so guild in "risk" margin.

The risk margine evaporates as learning occurs - normal from any program... there IS a curve.

So, a coo-el plane is marketed, and pre-sold... and there are a hundred or 300 takers. To make money on this "platform" improvemens must be made... this is really a comfort level regarding increased weight and thrust, due to "built-in" margins in the engines and aircraft design.

So while MTOW increases for marketing/sales purposes... the airplane justs adds fuel or pax - depending on the market... the OEM decides on Payload or Range.

This is not true is all cases, soemtimes a fix is needed to make a plane relevant ... for the future.

Anyhow, EAC shot its load - and max-ing out a design, demanding more thrust or thrust to the max, and the expense of "something" is just "amateur-hour".

Usually maxing out a design comes years into production, just to remain relevant... at EAC, it was a requirement to stretch everything and mod everything, just to meet the sales pitch.

Sad.

gadfly said...

‘Just for fun, let’s talk about some of the problems of “scaling down” a jet engine.

Heat is the problem. A material used in the turbine blades is a high-nickel alloy called “Rene metal” . . . listed as a “refractory” containing Ni, Co, Cr, Mo. It’s true nature is somewhat proprietary. Back in about 1972, the “gadfly” was privileged to design, and machine a complex seven-piece 7075 aluminum mold, to make the “wax” sprue mold tree, to connect and cast two critical stator ring sections for a GE jet engine . . . for whatever reason, my training in casting technology, beginning when I was only five or six years old, being trained in “shrink factors” in casting paid off . . . and the mold was correct the first time . . . “accident” or design . . . you judge.

Also, I was introduced at that time to the intricacies of the internal structure of investment cast blades for huge GE jet engines . . . a labyrinth of internal connecting columns . . . the size of large “pencil leads”, connecting and supporting the inner and outer surfaces of each blade, with the tapered “key”, called a “Christmas tree”, that locks each blade into the inner ring. And I successfully modified some rather expensive molds, for “wax flow”, etc., for the “lost wax” process . . . commonly called “investment casting” . . . a technology, by the way, going back to the time of Abraham in the Bible, and earlier. Surprised?

Well, this process comes with a cost. And today, the little company owned by the “gadfly” makes certain “perishable” tooling, that puts slots into the many sections that make up those earlier “rings”, to seal between the necessary expansion slots . . . much like the joints between sections of concrete on the freeway. Wafers of metal seal between those slots . . . so that the necessary cooling air is forced through countless holes, drilled by “laser”, but does not leak through the slots. Confused? . . . that’s OK! We’ll discuss it all some other time.

The basic problem here is that the “Rene” metal, the material of “blades”, rotor rings, and stator rings, has to be sealed and/or designed for the great temperature changes that take place every time an engine is started, run up to extremely high temperatures, and then brought down to ambient temperatures.

For you who understand simple metallurgy, you know that the greater the size, combined with huge temperature variations (unlike a car engine) the greater the clearances . . . and allowance for the change in expansion. And all this translates into greater costs, etc., etc.

But back to the little “toy” engines required for small jets . . . not meant to put them down, but to bring a “reality check” into the equation. An engine in which a man can stand up in the intake does not “scale down” with economy, nor does it need to.

The “gadfly” has stretched your brains almost too far this evening, but I love to help people understand the problems, so they may appreciate the answers. So let’s end this in consideration of what you have learned . . . scaling “down” is not necessary . . . because in coming down in size from jet engines that are measured in feet and meters, the needs are not as great. An engine that requires many blades, each costing thousands of dollars, and requiring multiple machining operations . . . each with a stack of certification papers that would easily choke a horse, may be combined into a single piece . . . or a sparse few, allowing a single support ring, and a different anchor ring . . . need I go on? But the bottom line comes down to a “throw-away” engine . . . good for maybe a thousand hours, or less, and (perish the thought) thrown away . . . passed on to the re-cycle-er of exotic metals . . . to be turned into a “six pack” of jet engines.

The “gadfly” predicts that engines in the future, will be purchased in quantity . . . almost with a “Costco” mentality . . . the “hour meter” will simply say, “CHANGE ENGINE WITHIN THE NEXT TEN HOURS” . . . and the software will simply shut down the aircraft if not accomplished. And in California, a certain refund value will be allowed for recycling. Mark my work! In fact, you might even find it economical to carry a few extra engines in the luggage compartment . . . sort of like a “spare tire”.

It will be a long time before the “big boys” have such a situation, but the toy jets of the near future must face this prospect.

gadfly

(Every morning when I come into work, I pass by a dozen engines, designed and built by my grandpa . . . most are over a hundred years old, and in running condition . . . and guaranteed for ten years . . . ‘says so, right in the manual’. But those days are over . . . a farmer, or a boat owner, no longer needs a “ten year plus engine” . . . neither does the owner of a small jet. He needs a reliable engine for a specific time frame . . . and when he gets to that point, he’ll either sell it, or expect the next step up in technology. I think it is most remarkable that my grandpa’s engines are still in demand by collectors . . . and I watched dozens of them running at the engine show in Lincoln, Nebraska, a couple summers ago . . . but even the Wright Brothers recognized that their first engine had to only accomplish a goal, and then they could go on to other things. When the small jet industry finally comes to terms with a “throw away” engine, and stops trying to mimic the airline industry, they will have overcome a major hurdle.)

gadfly said...

And let’s get another thing straight! The little jet has impressive performance . . . no one can deny it. Those that have flown it, find it “fun” (for the most part) . . . as long as everything works most of the time.

But there is a single thing that should scare the willikers out of any true pilot: It’s a flying brick . . . let those cute little engines conk out, and “Katy, bar the door!” . . . you’re in for the ride . . . possibly the last ride of your life.

A long, long time ago, I dropped out of school for a time . . . new marriage, wife sick, baby on the way . . . went to work at United Airlines, at O’Hare . . . big operation . . . huge operation . . . biggest in the free world back then. United had just bought out Capital Airlines . . . acquired a bunch of Vicker’s “Viscounts” (four engine turboprops . . . excellent aircraft . . . I’ve stood on the hood of a Clark tractor, many times, loading a last minute bag into the starboard luggage compartment, breathing JP-3 or 4 fumes, sometime past midnight, in sub-zero Chicago winter, with a last minute businessman climbing the stairs, and an unhappy first officer attempting to pull away from the gate), and some Sud “Caravelles” . . . the most beautiful aircraft, then . . . and maybe even today. Every seat on a Caravelle was “First Class”. And should the unthinkable happen, and both engines should “conk out”, the glide ratio at maximum distance and speed was 30:1 . . . think of it, a fully loaded commercial jet at eight miles in the sky, could do a “dead stick” glide of 240 miles. Now, that’s my kind of flying machine. Let’s see here . . . that was 1963 . . . and here we are discussing a thing that resembles a “flying brick”, 45 years later. Granted, a “fun brick” for some, but hardly something we can truly call a “flying machine” in full unashamed honesty.

gadfly

(About that time, Boeing flew in the very first 737, for a “round the world” demo trip, in United paint, and we all marveled at the Krueger flaps, leading edge slats, and two . . . and three layers of “Fowler” flaps . . . and the pilots referred to not “40 degrees of flaps”, but 40% wing dis-assembly, on final approach . . . those were the days when planes were planes . . . and I examined my Dad’s seat position locks on all the passenger seats, and the inertia harness system of my Dad’s in the cockpit . . . but I digress!)

gadfly said...

Whoops!

Mistake. I think "Capital Airlines" should be spelled "Capitol Airlines".

gadfly

('Hate that when it happens! At my age, it's still no excuse.)

(Hey, you . . . in the back row. Are you learning something? . . . 'Hope so. 'That's why we're here. Otherwise, dig a nice comfortable hole about six feet deep and pull up the covers.)

(A rut is a grave with the ends kicked out. Don't get in a rut!)

julius said...

airtaximan,

Usually maxing out a design comes years into production, just to remain relevant... at EAC, it was a requirement to stretch everything and mod everything, just to meet the sales pitch.


you think - talking in automotive terms - the FPJ design does not even allow any easy to handle "face lifts". Every little improvement will need a at least major TC or STC process.

Thus VR just tried to follow the "PRONTO" legacy - without having entrepreneurial views - trying to act like a COO.
His Frankstein jet was just a "shot over three lines" without hitting the goal (talking ice hockey).

And RP...he never proved that he could develop a company.


And Ken is aware of this situation when trying to get rid of his second FPJ - he wants to reduce the price for the 200 - 300 hours of fun!

Julius

Deep Blue said...

ATM:

Your somewhat cynical view about how airplanes are built is unfortunately all too true (it's ususally how businesses get built as well: big vision then reality/adjustment). One might say the B787 is a current role model for the gap between concept and final configuration. I don't think the engine side fares much better either in this regard (i.e. forecasts of SFC etc) given the airframe mods.

The VLJ class is likely fated to become the very jet that aleady exists: a light jet class aircraft.

For arguments sake, I find for example the Spectrum aircraft project (the S-33 and S-40, powered by the GE/Honda HF120)more interesting and credible as it is focused on significant weight reduction and resulting efficiencies, but without trying to "miniaturize" the cabin and engines; indeed, in the S40's case, it expands in size and performance to cabin class but with very impressive pro forma operating/cost numbers.

airtaximan said...

mt view:

Microsoft - over promise, under deliver.

Major OEMs, under promise, deliver... even if it takes 10 years to get there.

Engine companies... understand acceptance testing issues and reliability, and degradation and try to leave a margine (flat rating, etc...)

When an engine is maxed out on day-q... you can expect trouble.

Engine companies know, OEMs lack really good engine modeling tools, and rely on the engine company for performance numbers. The engine company can report what they want...basically. So they leave margin by over-specing the thrust requirement.

This wors out nicely, since engines are sold according to "pounds of thrust"...

A dumb parameter, whe you get to either extreme in size - large or small...

Just my opinion.

Bottm line - EAC blew its wad - over promised... now jerking the power plant for all its worth. Even tweaking the fadec, IMO... I have no clue, except for the unexpected "build up".

So, we have a kluge design, engine to the max, and claims of designed for high cycle reliability, which is complete stupidit, IF you understand anything wabout engine/aircraft design.

Spectrum MIGHT have a chance, BUT certifying new material technologies has proven difficult.

Also the planes are Low-riders, with no ramp presence, and the tarmac so close it will scare the sh&t out of passengers.. so for a taxi, I'd pass.

Bets of luck to Linden and Austin Bue, though... something tells me that (the failing/failed?) Grob already cracked the code on this idea... eventhough they did not pass along the cost savings... then again, neither did Spectrum.

Their move to a larger plane should tell you something, though. I bet they had limited demand for the smaller Spectrum... so why build the bigger one forst? Air taxi order?

I think so.... makes more sense, to me.

They should lower the price, or is the plastic plane too expensive?

Lower cost is all that's lacking these days... re-think... re-think...

Then again, EAC proved that forward pricing a plane to half its required sales price makes for a dumb business...

Joe Patroni said...

DB.....
Can't speak to what the airline boys philosophy is concerning powerplant selection. All I can speak to some of what what happening at the OEM I used to work for, plus what I'm seeing/hearing as a corporate DOM.

The engine OEMs in the corporate world want everyone to be on a PBH plan. They are being assisted in this regard by the fact that your airplane takes a hit on the resale market if it is not on one (typically the amount that you didn't spend on the PBH plan), and risk-aversion by operators (nothing like presenting the owner with a half-million dollar bill for unexpected engine maintenance to have them reconsider their aircraft and/or maintenance supervisor acquisition).

Unfortunately (depending on your perspective), the end game will be that ALL engine maintenance will be under some kind of control of the OEM.....no more shopping around for engine overhauls. The only competitive bidding that you will see is between shops selling labor for the engine R & R, and possibly the teardown labor. Parts will ONLY be available from the OEMs.

This initially started coming about in the early 90s with the engine and airframe OEMs trying to get a handle on some of the crap exchange parts (and the liability problems they created) that were being put on the market, then subsequently causing problems......not neccesarily mishaps (although there were some) , but having to deal with ADs, and P.O.'d AOG aircraft owners.....The report to the boss was never ".....the crap exchange part failed prematurely, causing the (name of aircraft here) to be AOG", it was always "Our (name of aircraft here) is AOG".

Only later did they rediscover that being the sole source supplier could be really lucrative.

The eventual goal of the engine OEMs is to have an engine last close to the life of the airframe.
New FADEC engines store trend data that is downloaded and sent in monthly. Eventually, they would like to have a system in place where the FADEC/engine controller is data linked in a manner where trend monitoring downloaded and reported (via wireless network/AFIS/Iridium/whatever), then direct the operator for corrective action.

The bad news to this (depending on your perspective) will be that the stored engine data will show all sins.....if you are in the habit of running up and into temp limits, etc., these "exceedances" will be Exhibit #1 when the OEM sends you a supplemental bill for "costs/wear/damage beyond normal wear limits".....whether you are on a PBH plan or not

Black Tulip said...

Halloween is near. The well-dressed trick-or-treater will be clad head-to-toe in Eclipse apparel (available from their online store) and a Vern Raburn mask. Truly frightening.

AvidPilot said...

It's here. Last week of October.

Where is the new funding?

I wonder how many days EAC can keep their doors open with no money in the till.

EclipsePilotOMSIV said...

got pushed back to 1st week of November...

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

got pushed back to 1st week of November...

Perhaps that is right, but until I see it, I'm skeptical. EASA was supposed to already be here and the last statement from Eclipse was that was pushed back yet again. It seems that Eclipse is a day late and a dollar short. I do for instance expect Eclipse to announce EASA sooner or later, but I think along with it will come strings such as not being able to fly at 41,000 feet and/or requiring mods that Eclipse wont provide like FIKI certification doesn't do a lot of good unless you've already got Avio NG.

EclipsePilotOMSIV said...

Most definitely this is concerning, we are supposed to have word on NG 1.5 tomorrow. However Eclipse has to provide something to show they are getting on track. Words are words and promises are promises. We need results at this point I think.

fred said...

#We need results at this point I think.#

my poor dear , i am afraid that the point you are talking about is late since a few years , already ...!

Shane Price said...

Snippet time.

More staff leaving, from the 'middle layer' that really run the place. And know what's really going on...

Cash has almost run out. Only staff getting paid now, nothing left for suppliers.

OurPlanes are having second thoughts on thier offer for the DayJet aircraft. The gales of laughter they heard from friends in the industry were enough to give them pause.

Shane

Shane Price said...

Anyone able to answer this for me?

A string of owners have contacted me, with various remarks and suggestions. They are very polite and seek only to have a discussion.

But the thing I find a little weird is that, one and all, they end up saying the same thing, which boils down to the single idea.

'Everything will be all right, after the bankruptcy.'

How does this work, for suppliers?

Or staff?

Or investors, the banks and the State of New Mexico?

Just asking....

Shane

Black Tulip said...

"Everything will be all right..."

Don't most fairy tales end that way?

Dave said...

'Everything will be all right, after the bankruptcy.'
How does this work, for suppliers?
Or staff?
Or investors, the banks and the State of New Mexico?


Actually this is something Baron and I have been talking about for awhile on here and I think it is true to a degree (depending on where you sit).

Right now Eclipse has many liabilities ($600 million), which retrofits are currently a liability since Eclipse has agreed to do them for free. However, in BK the right to do retofits could be an asset as some new organization could pay for the right to provide retrofits/upgrades and parts/servicing. Given the size of the fleet, I see that as a distinct possibility.

Eclipse would become a shell of its former self, but whoever took over could have a modest but profitable business going.

This would result in:
* Much lower employment at Eclipse (but some employment)
* The FPJs without retrofits will drop in value like a rock to compensate for the costs to retrofit
* Investors will be burned (except perhaps for ETIRC, which I think only time will tell how preferential of treatment ETIRC got)
* FPJs will still fly indefinitely
* Suppliers may be happy to work with a new organization that they can take seriously and trust. A supplier could even end up being the buyer.

fred said...

Monsieur Shane :

isn't it what is called "lowering expectations" ?

a bit like when you see your doctor ... and he is telling you :

" i have to inform you of the terminal phase of cancer ,you're in ...but apart this : good news ; you haven't got the flu you were suspecting ...!"

it sounds exactly the same than usual , no one can doubt EAC is rushing into a concrete-wall without break , so instead of pretending "No , no BK in sight" they play it ( like usual ) in the "next Tuesday" mood , they just add with it "after BK" ...

i don't really know if the BK regulations can be that overstretched , even in USA ...

don't get me wrong :

in case of BK , what is going to be considered as "Asset" ?

a bunch of "old" planes that no one want to buy ?

a cert. that might not be worth the paper it's made of ?

really i don't see how can things can be stretched that far ....

fred said...

dave :

#A supplier could even end up being the buyer.#

in the current situation ...

that would be almost suicidal , or at least a good way to be sent to psy-treatment ...

i really don't see HOW some CEO (any different of Vern) could come with the idea , in front of his board with this :

"we've got burned of that much ! so we either write it off , or double the stake in hope of a future very unlikely potential return ..."

no the only "kind" i would see for such is "the owner's club" ...
but then everyone has to bear in mind that they bought the Fpj because it was cheap , in the first place ...

so i really doubt they could afford to do such a gamble , even if they would like to try ...

Dave said...

"we've got burned of that much ! so we either write it off , or double the stake in hope of a future very unlikely potential return ..."

It was the management of Eclipse who did that, which they would no longer be there. You have to separate out the value of servicing the fleet from the jerks who had previously run the company. I'm most definitely a critic of the Eclipse management, but that doesn't mean I don't see commercial opportunities involving Eclipse without them around.

TBMs_R_Us said...

Fred,

There are two types of BK filings that might occur: Chapter 7 or Chapter 11. For Chapter 7 the company is "liquidated". All of its assets are sold and the proceeds used to repay debt holders. "All of its assets" means just that, right down to the toilet paper. When Adam Aircraft filed for Chapter 7, all of its assets were purchased by a Russian investment firm for $10M. Something similar could happen with Eclipse.

For Chapter 11 BK, someone has to be willing to provide financing while the management of the company works out an arrangement with the debt holders. This does not look very likely for Eclipse because who would be stupid enough to provide this interim financing, given the magnitude of the liabilities the company has. Any such would-be financier would be much smarter to just let the company go into Chapter 7, and then purchase the entire thing without any liabilities at all from the bankruptcy trustee.

All of this will play out, quite possibly in the next few weeks. When Adam failed, they had told everyone that they needed new financing by the end of January (sound familiar?). It didn't happen. It was about a week into February when they shut down and filed BK. For Eclipse, the end of October looms, so November may be quite interesting.

Zed said...

Shane asked regarding bankruptcy …

Cash has almost run out. Only staff getting paid now, nothing left for suppliers.

and …

How does this work, for suppliers?


For current suppliers this is the final walk away signal. Mark the loss on your 2008 taxes and terminate your contracts by default (to escape the non-compete clauses without running the calendar). Consider suit as a founding member of the Unsecured Creditors Committee.

I have a friend, who has a friend (yeah, that’s it!) who is a supplier owed LOTS of money.

They are laying off their Eclipse related employees this week (Merry Christmas). His plan had been to factor accounts receivable to generate near-term cash, but are now finding that impossible since any due-diligence reveals the financial disaster at Eclipse.

Translate that as the factoring brokers will not risk unsecured money on Eclipse accounts receivables. The financial community’s assessment of Eclipse asset NPV (net present value) is a sad chapter in this horror story, even in these difficult times.

For future vendors/suppliers … as Dave pointed out (yes, I am agreeing with Dave), there is money to be made servicing the airplanes already delivered. If you can provide services profitably at low rates and without investing in tooling, certification, etc.

End result will be less innovation and fewer choices in GA aircraft systems moving forward. Getting burned for R&D, tooling, staff, and unpaid bills by Eclipse combined with the soon to be tougher certification processes will relegate many of the mid-tier innovators to other business areas.

In a decade it will be interesting to see if the disruptive technology actually was 1 step forward – 3 steps back for GA.

Deep Blue said...

I'm less optimistic than Dave and B95.

All signs from EAC indicate:

1. a Chapter 7 liquidation for creditors with very small recoveries, in many cases, none, as asset remarketing opportunities are minimal and therefore sale proceeds will be minimal(there could probably not be a Chapter 11 reorg and DIP [debtor in possession financing] because you need cash flow from operations to qualify; moreover, most commercial banks with DIP facilities are, as you can imagine, nearly shutdown in that department right now; and DIP is still debt and someone has to service the debt from operations or equity to cover losses; not likely).

2. ETIRC Aviation folds their tent in the middle of the night; RP et al head back home from ABQ

As for a "White Knight," that is possible, but not very likely. If an OEM (an owner's best bet),what OEM would need the E500/400? (I really doubt even a so-called Russian player needs/wants them) as it would also cannabalize their line and create enormous product liability risks given still unsettled and undiscovered certification and engineering flaws; the risks are huge.

In addition, the cost of taking on the current E500 fleet is breathtaking and given the highly irregular base of buyers and their credit profile, a very risky post-bankruptcy strategy for some "investor." There are so many unknowns in cert and engineering (and resulting product liability risks) and parts availability risks from suppliers, that even a well-funded buyout could stall out, dead in the water.

My prediction is that the entire venture collapses; EAC is sold off piecemeal to various "scavangers;" ETIRC disappears back into the EU; the current fleet and its various owners are left with a dead product with no support except nominally from the engine OEM, but that will be irrelevant as the airframe will have no support platform.

The E500 will only be a trade-in asset to another OEM who will then scrap them. It may survive here and there as an effective "experimental" private owner hobby jet, but that's about all, as it cannot conform to any commercial operation that otherwise might be able to adapt it to some use.

Look at the gang of market players (not suppliers) that have surrounded EAC from the start: none legitimate; would a reasonable person really think that suddenly now a professional, rationale, industrial organization will suddenly want to make a market with this product? Take on all the liability risks; invest hundreds of millions in tech conformity/risk; support infrastructure; training; AOG; MRO; finance; insurance; warranty; etc. Why not before; why not now?

Lastly, who right now is the big "killer" player involved with EAC that can wrestle this venture back to life? The founder was run off (or ran off); the Board is scattered, unorganized, unfunded and there only for optics; ETIRC is a shell company with a ghost order for airplanes; suppliers are alienated, in some cases financially stressed, in other cases, have exited entitrely (Hanpson); employees and managers are down to "last man on deck;" investors and banks are on the sidelines; the largest buyer, DayJet is BK; the financial markets are in some cases collapsed; there are no standing orders from any high-credit buyers (e.g. NetJets); etc.

Any investor considering any involvement with this enterprise would have to be inherently irrational.

Zed said...

Deep Blue said ...

Any investor considering any involvement with this enterprise would have to be inherently irrational.


That about sums up 2003-2008.

Deep Blue said...
This comment has been removed by the author.
Dave said...

BTW, if you want a "comparable" in the market place that points to the probably only outcome for EAC post-BK, take a look at the history of the Dornier 328 Jet.

I would expect the same thing to happen to a future buyer of Eclipse assets if they acted like AvCraft and tried to restart production. I'm saying there's probably a future there as a small servicer, not aircraft manufacturer.

Deep Blue said...

BTW, if you want a "comparable" in the market place that points to the only potential "recovery" outcome for EAC post-BK, take a look at the history of the Dornier 328 Jet.

Big financial backing (blue chip private equity firm Clayton Dubilier & Rice with nearly $2B put into the project); spec order from GECAS for the new 70-seat RJ project; Pratt Whitney engines (PWC3000); regional German Oberpfaffenhoffen government makes investment in local plant, tax holidays, loans (i.e. "New Mexico").

The Project failed. Clayton Dubilier's move? Walked away; GECAS order? Cancelled. PWC rescue? None. German government? Sat on the plant for a while to "protect" their investment, then walked.

Bankruptcy? Yes. Buyer? Some guy named "Ben Bartell," a telecom entrepreneur (sound familiar) that bought out some assets and put them in a shell called "Avcraft" (aka ETIRC) after a protracted legal battle, but with insufficient capital to really take over the complete industrial enterprise, pay suppliers, upgrade/finish fleet, and build a full industrial after-market.

Deal done over 8 years ago. Status today? A horrible purgatory of half-life; no real buyers; no market; no real, reliable support. Lots of hope, promise, hype. In reality, an abandoned aircraft, writhing and flailing in a slow, absurd death when it should have been put out of its misery, absent a real prime industrial owner.

Ben Bartell? Arrested in Germany for tax evasion stemming from shell transactions in Cayman Islands (aka Luxembourg) that were supposed to provide "tax-free" funds back to Germany; he promised to "re-start" the German factory and go into "high production." A European firm was supposed to provide "millions" in fresh operating capital, while the Myrtle Beach Air Force Redevelopment Base, along with Myrle beach and the Governor of SC invested in the new Avcraft "completion center" and welcomed Bartells to the State (aka Richardson).

BK in 2005 under administration; no airlne buyers; no corporate operators; employees/maintenance techs walked.

Deep Blue said...

Dave:

I respectfully don't think there's any such thing as a "small servicer."

There's no such thing as "small" with a fleet of 250 aircraft (or even 50-100): upgrades, warranty, MRO, training, AOG, parts, finance, insurance etc: it takes a whole supply chain/market to viably keep an aircraft servicable and in the market (and with a critical secondary market for liquidity, residual value and finance).

I do think your scenario could apply to a E500 "Club" where several owners create an effective cooperative and self-fund a hobby service function; but that's about it, IMO, like a "warbirds" gang at the local airport. Not a real business. Over time it could become like a more developed enthusiasts network, but I doubt it could ever be a true third-party investor that could realze a profitable stand-alone business (maybe an FBO that wants to give it some support?) but again, pretty grim economics and not a viable post-BK exit scenario.

Dave said...

I respectfully don't think there's any such thing as a "small servicer."

What I meant was small servicer rather than large manufacturer. Eclipse has talked for years about being huge and I'm saying if Eclipse survive, it will never be what they've talked about nor will it be the size they are now.

Dave said...

Just imagine if Peg bought Eclipse. There was a management buyout at one of Eclipse's suppliers. About all that would produce is comedy rhodium.

ColdWetMackarelofReality said...

I wonder if the no-supplier payout includes EASA which is a pay-to-play certification?

Basic TC is 227,000 Euro, and a DOA approval fee would be 22,500 Euro, DOA Surveillance fee would be 11,250 Euro, and if they need a Production Organization Approval that would depend on how big they report the backlog to be and how quickly they intend to turn it over, but based on the long held 1,000 per year that would be 900,000 Euro for Approval and 2,000,000 Euro for Surveillance - ALL exclusive of travel.

Not only is EASA Approval difficult to achieve technically, it is tough to pay for - figure $3M US per year to keep it, more if they need to maintain a Maintenance Organization Approval for repairs in EASA territory.

Hourly tasks are billed at 225 Euro and believe me, they can spend some hours under ideal situations - just imagine with the preemie jet.

ColdWetMackarelofReality said...

Deep Blue brings up one example, there is also the Fokker F-100 which survived bankruptcy, as did Fokker itself although under the Stork wing (pun intended).

The best alternative for people intent on continuing to operate the jet is to accomplish something similar to Renaisscance Commander for the Commander Turboprops (Twin Commander LLC) or Commander Premier Aircraft for the Commander single engine planes.

I put the odds on managing one of those type of comebacks at slim and none and totally dependent on Chapter 7 vs Chapter 11.

Shane Price said...

Just a reminder....

It's the OWNERS of the FPJ who think bankruptcy is the best option now.

Maybe I'm just a confused Paddy of limited IQ, but I still don't 'get' it.

How will this help them to enjoy their aircraft?

Shane

Dave said...

I put the odds on managing one of those type of comebacks at slim and none and totally dependent on Chapter 7 vs Chapter 11.

I guess with me I'm hopeful with Eclipse after it gets divorced from the current management, but it seems the longer it goes on under current management, the worse it gets for Eclipse. Every time Vern ranting about the huge volumes Eclipse was going to produce and sell and then Roel doubling Vern's numbers only made things worse in the long term. They might have done too much damage where all the kings horses and all the kings men wont be able to help.

gadfly said...

Words on the streets of Albuquerque:

If a certain person wins the election, businessmen in the (505) area code are no longer willing to let someone in Washington “share the wealth” . . . and the problems of a little jet company, with all the handouts from the top dog, and his “toadies”, in New Mexico, will seem like a gentle “zephyr” (a “light breeze” to those in Rio Linda) compared to the financial wind-storm, coming soon to your area.

Small business, including a major distributer of high-end machinery, is tired of the nonsense . . . being taxed out of existence. Job loss in ABQ, once considered immune to the overall economy (NM gets back $2 for every $1 paid in federal taxes . . . the highest in the nation), is possibly in for a major adjustment to reality. The attitude is that small business exists to provide jobs. And although it does do that, that’s not the driving force. And most people fail to understand the basics.

It is my prediction, that in the near future, the little jet factory will be a minor pimple on the memory of Albuquerque and New Mexico history . . . with far greater problems confronting the manufacturing community in the valley of the Rio Grande.

Over the next few months, expect to hear the most outlandish excuses and shifting of blame . . . but, please, don’t express surprise. You have been fore-warned.

gadfly (aka: “Joe, the small business owner”)

(‘Wonder who is going to provide all the wealth, and create the jobs, to be spread around among the “less fortunate”? Oh, that’s right! . . . spread the wealth, regardless of jobs . . . that would assume that people actually want to work for wealth.)

Dave said...

It's the OWNERS of the FPJ who think bankruptcy is the best option now.
Maybe I'm just a confused Paddy of limited IQ, but I still don't 'get' it.
How will this help them to enjoy their aircraft?


The owners are apparently siding with Baron and I in regards to Eclipse's post-BK future. I believe the owners feel that if someone new came along recognizing that the only business Eclipse has is servicing rather than talking about IPOs and vast production and sales rates that there will be some degree of normalcy. Most of the owners are probably OK with paying for retrofits since they didn't pay the current $2M+ price.

Of those currently involved with Eclipse, the current owners are the only ones I see as potentially coming out OK. I see everyone else as getting burned.

Dave said...

Over the next few months, expect to hear the most outlandish excuses and shifting of blame . . . but, please, don’t express surprise. You have been fore-warned.

We've seen previews of that already with Chavez being SHOCKED that Eclipse was downsizing and Richardson flying to Washington for Eclipse even though Eclipse said the hearing wasn't about Eclipse.

Black Tulip said...

Shane,

It means the owners have progressed to the third stage of grief: bargaining. This was preceded by denial and anger, and will be followed by depression and acceptance.

I agree with Deep Blue’s assessment; liabilities far outstrip assets. A type-specific club for owners and enthusiasts is the way to go. I see a big hangar in Southern California containing a vintage Jaguar, Mercedes, Stearman and Eclipse. On sunny Sundays each gets taken out for a ride.

Dave said...

Roel Pieper anagram:
Eerier Plop

Peg Billson anagram:
Bill Sponge

Mike McConnell:
Conmen Lick Elm

baron95 said...

You guys are missing the obvious example of how BK works.

Piper filled for BK. New Piper takes over TC, PC tooling, etc. ALL debt and ALL liability for previous products gets erased.

New Piper starts a new with most of the income in the early years being making parts are high prices for the existing fleet. Little by little New Piper starts to produce again at volumes that are about 1/10th of previous production volumes.

In Eclipse's case it is the same. Equity investors, creditors (including vendors and depositors) end up with nothing. Some entity puts some money in to make parts service the fleet and (maybe) slowly produce again. Vendors that have invested in tooling and SW can decide to sell some components for some $$$ or sell nothing for no-$$$.

Also note that the FAA has a charter interest in keeping existing FAA-certified planes (e.g. EA500) airworthy and flying by alternative means. If no-one else steps in, the FAA will take over the TC and grant PMAs for making one-off parts needed to keep the airframe going. Engines should not be a prob. Avionics seem to be mostly a bunch of CTOS pieces running Eclipse SW - once mature, it should be serviceable.

So, if Eclipse gets to Avio NG1.5 with G400s, FIKI, EASA certified, future support for the fleet is almost assured. Question is how much it will cost and how much downtime will be there.

Joe Patroni said...

Deep Blue has pretty much called it...the liability issues far outweigh the possible profits.

When the lawsuits start flying, anyone with any involvement with the FPJ and a semi-solid balance sheet is going to be on the hit parade, and will be on the possible hit parade for 18 years (per GARA).

Also note that GARA has a "fraud" exception, meaning no end to the liability exposure......but I'm sure that no plantiff's attorney could EVER make the case that "fraud" (allegedly) occurred at Eclipse (sarcasm off).

I'm sure the supplier's attorneys could make the case that their future liability exposure far exceeds the price they could get for engineering/prints/tooling during a fire sale.

All it would take is one of the major vendors to make that call.

So basically, the current owners are screwed, IMO......even the ones with aircraft having the mods/upgrades. I have some sympathy for them; but on the other hand, my cynical side says that they should have known better.

As much as I would like to own a 1967 Corvette coupe, I would be very suspicious of anyone offering to sell one at half the going price.

gadfly said...

Dark Blossom

“I see a big hangar in Southern California containing a vintage Jaguar, Mercedes, Stearman and Eclipse. On sunny Sundays each gets taken out for a ride.”

You’ve got the picture . . . almost! Being a native of Orange County, I’ve seen vintage Jaguars, Mercedes, (on the PCH . . . Pacific Coast Highway) and even a Stearman, “dusting tomatoes, along Main Street in Santa Ana, on a foggy morning”, doing things no aircraft should be able to do, climbing vertically up over high-tension lines and apartments at each end of the fields” . . . but taking a ride in a vintage Eclipse? You have got to be kidding . . . tweaking my imagination beyond limits. By then, all those little “aluminum eating critters” will have digested the last remnants of everything but the stator and rotor stages of the PWC engines . . . and maybe the Michelin tires.

There is a limit as to how much a person can imagine. ‘Think it’s time to go get a “Double-Double-Animal-Style” burger and fries at “In-N-Out” over on Irvine Blvd. near SNA . . . that, and a cup of coffee, and I’ll return to reality. Unfortunately, it’s 850 miles between here and there.

gadfly

(‘Ever see some of the collection of Tallmantz Aviation? . . . now, that’s a trip back into reality. Frank Tallman and Paul Mantz . . . remember “The Flight of the Phoenix” and “It’s a Mad, Mad, Mad, Mad World”? Even though both men died in inexcusable accidents (Tallman, 1978 & Mantz, 1965), their flying experiences are far more believable than the “future” of the Eclipse.)

just zis guy, ya know? said...
This comment has been removed by the author.
gadfly said...

Whoops! . . . Not Irvine Blvd, but Campus Drive . . . across from the Irvine Campus. 'Just about now, a Southern California sun is going low in the sky . . . an orange red ball, the smell of Eucalyptus trees and orange blossoms . . . but I doubt a single E500 to be seen anywhere . . . they're rather fussy about allowing anything but "real airplanes" going in and out of John Wayne Airport. But who knows . . . anything is possible, once.

gadfly

(Climbing to altitude should not be a problem, but flying west out over the ocean to clear traffic . . . and returning back over the coast might be a problem, if they are not certified to fly very far over water. Does this thing "float"?)

Dave said...

Shane Price: Cheap Siren

Actually I think that is a pretty accurate description. EAC/EACNG have been sending out warning signals. You don't have to pay $500 to get some report in order to get notice, but all you need is an internet connection and you don't need to pay a subscription or even sign up to read. Now we will see what happens with those who ignored the siren call. I don't for instance see a pretty picture with the NM SIC.

AvidPilot said...

Bankruptcy is pretty much a given.

I think the only question that remains for E500 owners is whether the tax loss of their business- aircraft-turned-boat-anchor will be be greater under an Obama or a McCain administration.

Plastic_Planes said...

Speaking of BK, I just heard from a former employee of mine that AAI, the Adam Aircraft reincarnation, just went bust. Again. So much for the Russian money.

Frankly (as a former employee of the old company) I didn't think the new company had a chance. The A700 was an overweight pig, severly hampered by short range as well. It was a big and comfy plane, but it needed to be scrapped and redesigned in a more conventional manner. Not to mention, many of the new management team came from Sino, another company with limited luck in bringing a new plane to market.

Oh well, at least they hadn't made anything more than a few promises - no sales took place in the few months they were working. Hate to see it happen again, though.

Plastic_Planes

Plastic_Planes said...

Did I also mention it's a rough time to be in the GA biz right now?

The dead:
- Grob
- AAI (A700Jet)


On life support:
- Sino Swearingen (Emivest)
- E-Clips
- Diamond ("I'm really feeling much better now")

Sick:
- Cirrus (three day work week and an indefinite hold on the SRS)
- Piper (The P-Jet needs some major work)

The missing?:
- Spectrum Aeronautical
- Excel (Sport Jet)
- ...

Feel free to add to teh list.

P_P

Dave said...

Bankruptcy is pretty much a given.
I think the only question that remains for E500 owners is whether the tax loss of their business- aircraft-turned-boat-anchor will be be greater under an Obama or a McCain administration.


I think we have to define by what we think BK would entail, like I'm very curious as to what exactly ETIRC would walk away with. Theoretically at least Eclipse could go under but the FPJ could be made in Russia. There's the matter of secured creditors as to what assets are secured versus what would be part of the regular BK estate. I for instance see the Russian Eclipse factory being as successful (meaning bleeding red ink) as the ABQ factory, but I don't think it is outside the realm of possibility that it will happen. I in fact think investors would be more likely to fund a Russian Eclipse with EASA (and perhaps someone would pay to complete EASA) with ETIRC than deal directly with Eclipse with all the liabilities in the US.

Black Tulip said...

Gadfly,

While living in, and flying out of San Diego, I saw the Tallmantz collection at Orange County. The B-25 camera ship looked really neat with big sweeping windscreens installed in the nose and tail for Cinerama cameras. Too bad Frank Tallman went scud-running a decade later in an Aztec.

bill e. goat said...

"Sometimes, it pays to be unpopular"

(I'm not so sure our illustrious Mr. Raburn would be agreeing with that sentiment right about now...).

I thought I'd get back in while there's still time.

Not that I expect anything, ah, untoward to be happening, er, anytime, ah, soon...

AvidPilot said...

I'm willing to bet anyone a cheap beer that not one complete Eclipse jet will be built in Russia within the next 5 years (if ever).

Dave said...

I'm willing to bet anyone a cheap beer that not one complete Eclipse jet will be built in Russia within the next 5 years (if ever).

That may well be true, but consider how much was spent in ABQ for the same result. I don't think the Russian plant will be successful, but it doesn't mean that ETIRC couldn't find ways to keep the lights on for years...as has happened in ABQ. ETIRC may be able to find funding to keep it going simply by playing off Russian national pride and a desire to outdo the US.

gadfly said...

Dark Blossom

Every now and then, I come across a B&W photo of that old B25, that I took through the chain-link fence around 1959 . . . and always wished that it were restored to the original military version.

Hey . . . the "Goat" is back!

gadfly

(Who left the gate open? . . . what's going on, a "class reunion"?)

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

If anagrams mean anything, mine suggests that I'll soon be hired as CEO of the Greater Albuquerque Incomplete Aircraft Works:

"I evade vendor"

My first act as CEO will be to issue a press release describing Eclipse's prospects, and my plans for its future ( also an anagram ):

"Dead. Revive? No."

Next up: Eclipse haiku.

Pay at the first window,
DI

eclipse_deep_throat said...

Gadfly said:
Small business, including a major distributer of high-end machinery, is tired of the nonsense... being taxed out of existence. Job loss in ABQ, once considered immune to the overall economy (NM gets back $2 for every $1 paid in federal taxes... the highest in the nation), is possibly in for a major adjustment to reality. The attitude is that small business exists to provide jobs. And although it does do that, that’s not the driving force. And most people fail to understand the basics.

This may be extremely redundant, but I really take issue with these things. Yeah, I attended the Obama rally here on Sat., but I have no dilusions that Obama will turn America into a Utopia for anyone. The great US of A has always had a "mixed" economy. The Horatio Alger rags-to-riches stories are my favorite, telling the masses that it is your Christian **DUTY** to be wealthy in order to do good works. God "wants" you to be wealthy. How is this possible for blue-collar grunts today when wages, adjusted for inflation, have *dropped* since the 1970's? How come unions have been destroyed AND STILL small businesses complain even in Albuquerque? Two of my buddies work for Devore Aviation here in town, and the prick running the show tells them "we like to do things on the cheap here." No chance in hell they can make more than $12/hour there. One of the guys used to work locally for GE Aircraft Engines and made about $90k in his best year. That is a bitter pill to swallow even if the guy inflated his earnings to me...

I'm sure the robber barons of the early industrial age had no problem building the railroads with cheap Chinese labor. Ah, where are men like Corneilus Vanderbilt, Andrew Carnegie, or JP Morgan today? Those were the good old days of pure, true, honest, self-made-man capitalism. No pesky federal government. No, the Govt would never GIVE land to the railroads, eh? No, the govt would never allow the railroads to have a monopoly and screw farmers trying to get their crops to market. No, that could never happen in America. Bullshit. I think a reference to a recent book (which I have not yet read) is relevant here: let's all get a copy of The Way We Never Were. There are so many myths that continue to propel this fantasy that things were so much better in the past. It wasn't. Businessmen of the past were not saints; the common-man always had to fight for every penny he earned; Government wasn't concerned with the middle class until relatively recently; the Church was fighting to stay relevant vis-a-vis the new secular value systems instead of caring for the poor or advancing the teachings of Christ...

I think that both parties have sold out their soul decades ago. There is a mathematical 'convergence' to the middle and no major difference between the parties. Only someone like Perot was able to throw a wrench into things back in 1992. Good thing there is no chance in hell for Nader or some other fringe candidate this year. And in NM, corrupt Democrats have run this place since way before I moved here. I too wonder why the masses don't vote for real change. The answer: they are about as fat and happy as they want to be. Tom Udall will win the Senate seat held by retiring Republican Pete Domenici. Richardson whill have a complete lock on New Mexico politics and the local political machine. Any chance the state Attorney General will launch an investigation on EAC? I think not. Perhaps the only thing we can hope for with Obama is a new FAA administration that is not a cozy orgy between Govt and Big Business. And maybe I can find a nice stable job with the IRS even if I make less money...

Small biz owners are no different than big biz. I'm sure someone else can make the arguement that their margins have been squeezed too since 1970. But why have pity on them when they demonstrate a 'kick the dog' syndrome and take it out on those lower on the food chain? Perhaps we can find a way to ensure skilled labor can earn a decent wage, with health insurance and a pension, without having to resort to real European style Socialism.

Gadfly, what is your take on all the guys on strike at the Boeing factory? Their job skills don't really translate into other fields. Hence, the people who make that choice to work there are not interchangeable commodities. I am not saying that Taco Bell workers should make $20/hour, but even they need to get something more than just $300/week. Health insurance would be nice. I don't want a sick person making a burrito for me... or an 80-yr old machinist building an airplane b/c she can't afford to retire...

E.D.T.

agroth said...

"Feel free to add to teh list."

ATG Javelin if nobody mentioned it.

agroth said...

". . . what's going on, a 'class reunion'?"

Gad,

I'll play the guy that nobody remembers because he barely participated in activities.

:-)

How I ended up on the “Roll of Honor” is beyond me.

FWIW, it's work (company startup) rather than the lawsuit that kept me from my prolific one post per-quarter. ;-)

agroth said...

"Not to mention, many of the new management team came from Sino, another company with limited luck in bringing a new plane to market."

PP,

I talked with the sales director for Spectrum at NBAA 2006 (he had just come from Sino). When he asked if he could sign me up for an S-33 (now Independence), I told him I wanted to see a bunch of them flying and an established service center network first—and jokingly added that I realized he couldn’t understand my hesitancy given that he had just come from the successful 20-year rollout of the SJ30. :-)

Turboprop_pilot said...

Welcome back, BEG. We should keep a lookout for Gunner and Stan.

It's not a party- the patient is in the ICU with a DNR form pinned to his chest, and everyone is arriving for the wake.

One of my regrets is that Vern, et al, will say: "We proved the concept, were truly disruptive, and would have shown all the dinosaurs, but the world wide credit problems made it impossible."

Bigger regret: That Vern and Ed are not sharing a cell with Bubba, next door to Shilling and Kozlowski.

Turboprop_pilot

fred said...

hey , billy ...
welcome back !

here it's still the same ...

we learn spanish the New-Mexican way ;-)
for your liking some of the weird of this idiom :

Liabilities = Mucho-mucho ...
Assets = Nada ...
Cash = Ques aco ?
Trust = Cabrone !
Reliability = AyAyAye
Owner (die hard) = Big Cojones
Owner (Gullible) = Que passa aqui?

you see , nothing has really changed around here ....;-))

Dave said...

So what's the status of the VLJ Center of Excellence?:
A central focus of the VLJ Center of Excellence will be the development of an education program and curriculum, in cooperation with the FAA, leading aeronautical universities, WorkForce Florida, Inc., and Florida’s Agency for Workforce Innovation to prepare students for careers at on-demand service providers. Construction is scheduled to begin in 2007 and, when online in 2008, will be capable of training 2,000 students a year.
DayJet to Launch World’s First “Per-Seat, On-Demand”
Jet Service in Southeastern United States


So how's this working out?:
To date and including options, DayJet has ordered 307 Eclipse 500s during the first two years of the aircraft's production. Eclipse estimates it will produce more than 1,100 aircraft during the two years, making DayJet responsible for some 28 percent of Eclipse Aviation's airframe production.
DayJet Edges Closer To Launch

fred said...

dave :

i cannot refrain from admiring you ... really , i swear i (sorry KennyBoy! I) not taking the piss-out ...

you spend so much energy trying to make some sens , finding some logic ...

admirable ! still it is a bit worthless , from Day One , sens was a sad joke , missing (in french , for connoisseurs : "aux Gabonais absents" !)

fred said...

#How I ended up on the "Roll of Honor" is beyond me. #

and me so ?

being thousands of miles away , when supposed to have "inside factory" knowledge ...

this is where I am a bit sad that the law-case was dropped , could have been such a joke to go California on EAC expenses ...! ;-))

(that said , thanks again Monsieur Gunner , as going to USA to see a flat-faced rat as vern ... yuukk !)

Dave said...

you spend so much energy trying to make some sens , finding some logic ...

I was being sarcastic in my last post. I was showing how ridiculous DayJet's (as well as Eclipse) claims were.

Dave said...

Does anyone know anything about the mechanical attitude indicators that were installed on the DayJet and Linear FPJ fleet? I ask because in Eclipse DayJet firesale the non-Avio NG aircraft all have the mechanical attitude indicators. After seeing that mentioned in the firesale I found this ealier article from Karen Di Piazza: Linear Air to Operate Eclipse Jets and More Caravans
Ed has said that he couldn't use the non-Avio NG fleet in revenue operation (even though they have the mechnical attitude indicators), yet Linear Air says they could. I'm trying to understand the background of the mechanical attitude indicator (particularly after Eclipse and DayJet ranted incessantly about being all-digital) as well as the seemingly contradictory information as to whether or not non-Avio NG aircraft could be used for revenue operation...was it that Linear Air operates under different regulations than DayJet did? If so, I thought that DayJet would be under easier regulations rather than more strenuous regulations than Linear.

mountainhigh said...

P_P,

It may seem as if Excel-Jet is missing, but not so. They just aren't spending on advertising, although they were at Oshkosh. They are using all their resources building the aircraft. By using their resources on the product instead of massive PR, staff, etc. before necessary, they are in a position to outlast most others. Their business model is diametrically opposed to the many "cash arsonists" out there.

I think Baron asked about the D-Jet status. P_P is correct, major problems. Word out of Canada is that the Feds even have concerns...seeing as how they have put some major funding into Diamond and the D-Jet program.

Shane Price said...

Word reaches me that there has been an 'incident' in Spain.

Seems another pilot broke his gear, trying to stop 'long' on a 'short' runway. That's what EAC will be claiming, anyway.

When will these pilots learn that the FPJ does NOT have thrust reversers?

Or anti lock brakes?

Or robust tires?

I'm mean, everyone knows the FPJ has to be treated with kid gloves, when landing.

Or taking off.

Or in flight.

Or....

Well, you get the message.

Shane

Dave said...

Word reaches me that there has been an 'incident' in Spain.
Seems another pilot broke his gear, trying to stop 'long' on a 'short' runway. That's what EAC will be claiming, anyway.


Will this fall within the jurisdiction of the FAA/NTSB? What is that going to do for getting EASA? Was it a Taxijet or was it the plane that was auctioned off on eBay to the Danish entrepreneur?

Dave said...

Forecast Predicts Eclipse 500 Shutdown This forecast is separate from Teal Group's and is instead from Forecast International

Beedriver said...

when BK happens there is a business model out there to keep the existing airplanes flying. Just before piper went BK the Aerostar type certificates etc were purchased by an independent company. this company now named Aerostar Aircraft has the ability to modify build parts etc and keep the Aerostar fleet flying and from and owner's point of view it has gone well. we have gotten good service and have very few instances of AOG.
the big problem here is that Aerostar aircraft bought the rights to a functioning aircraft with all the pieces working and even FIKI done and certified. who ever bought the pieces or even if the type club bought it, would need to complete the airplanes and perhaps change the control systems so that they are more conventional and install G1000 or such.
while it is a business model that could work it would be expensive for the existing owners to get the airplanes up to snuff and would require a lot of engineering. whether they would ever be able to put the airplane back in production is a real question.

Beedriver said...

There are some more pending disasters in the aircraft world. Diamond and Thielert are in big trouble.

Apparently there are more than 150 Diamond DA42 Twinstars grounded. see www.dieselair.com for the latest information.
They are really having problems with the Thielert engines with no parts available and incredibly short lived engines when they do run.

Frank Thielert will probably be in jail sometime because of printing fake invoices in order to support an IPO .the engine at best goes 300 hours between major gearbox rebuilds. Complicating the problem I bet, is the fact that the predator UAV uses the 1.7 liter engine from thielert. I wonder what the US Airforce is going to do with no engines.

baron95 said...

I wonder what the US Airforce is going to do with no engines.
Beedriver said ...


Not a problem to the US armed forces (by the way decision on who will be operating the Predator - USAF or US-Army is up in the air). The cost of a thierlert engine is a rounding error to the current unit fly-away cost of the predator.

Not so for DA-40tdi and DA42TDI. I do believe the answer for those are clearly on the Austral engine.

Turn-And-Burn said...

I think Baron asked about the D-Jet status. P_P is correct, major problems. Word out of Canada is that the Feds even have concerns...seeing as how they have put some major funding into Diamond and the D-Jet program.

Looks like Gunner really knows how to pick 'em. First Eclipse, then Diamond, then Excel's 51%. I'm glad I don't have THREE deposits with Diamond. >:-),)

julius said...

dave,

Forecast Predicts Eclipse 500 Shutdown This forecast is separate from Teal Group's and is instead from Forecast International



after this new forecast every ECA employee will have to ask himself why he is still with EAC.
Suppliers and banks will become real nervous when passing parts/money to EAC.
Typically the forecast wasn't based on the assumption that deposit holders are now very angry and insist on immediately getting their refund.

RP now must show how many M$ or rabbits are in his chapeau claque.
Only hard facts may motivate any employee, subblier or investor.

Julius

Dave said...

RP now must show how many M$ or rabbits are in his chapeau claque.
Only hard facts may motivate any employee, subblier or investor.


You mean the guy who spent a week sailing and then ducked out of the congressional hearings because he had more pressing matters than Eclipse?

bill e. goat said...

Well, it's good to be back among friends here on the blog. Some I don't agree with, but it's still fun to be back in the fray, and I can tolerate an opposing opinion or two, and I've learned to acknowledge the intelligence, and yes, the sincerity, of those I disagree with, so I'm willing to push ill manners aside and chalk them up to excess enthusiasm, and solicit others to extend the same graciousness to me, as they have kindly done in the past.

bill e. goat said...

That being said, T&B, do you have your head up yo## ### !?!

(Oops!! It looks like the recently implanted congeniality chip in my head just kicked in, albeit a bit later than optimal- sorry :).

bill e. goat said...

(That really WAS an attempt at humor).

Seriously, no offense intended to our chum T&B. I appreciate whatever comments he has to contribute. But to wish others financial misfortune is more tacky than my poor attempt at humor above.

I think all of us even wish the best for the owners- all the owners- of Eclipse 500's; for their financial satisfaction, and the safe and happy enjoyment of their airplane. (And in fact, of all aircraft on order, regardless of manufacturer).

If T&B is one such owner, the same good wishes most certainly are extended to you too.

I appreciate the owner's, and advocates, posting here- I wish we had more of them. I can understand their frustration at being outnumbered, and at times seemingly shouted down, and their understandable smugness in being right on occasion (okay, sometimes many occassions, sometimes not so many).

But I appeal to our better sensibilities in not wishing each other ill will.

(And if I'm over the top, or below the belt, then I appeal to Shane to delete my good natured, but perhaps ill-executed, poke at T&B, with my sincere appologies. For him being an ------------- opps, there goes that dang chip again!!)

:)

bill e. goat said...

Gadfly,
Thanks for the welcome back. Regarding who left the gate open, well, all I can say is...there are some positive aspects of prison overpopulation and early release.

Think Catch and Release.
Except for Vern.
Let's just think Catch.

Regarding a class reunion- what class- it's me !
:)
----------------------------

Avid Pilot
Regarding speculation of "Not one complete Eclipse will be built in Russia in the next 5 years"

I'd say the critical time frame is the next 24 months- if it doesn't happen within that time frame, I don't think it ever will.

(And ah, I wonder if they can build bowling balls or something with that stir fry line over there...?)
----------------------------

Dave Ivendorne
In doing some catch up reading, I've noticed your intelligent posts.

(But I'm not offended anyway :).
-----------------------------

Agroth,
I took note of your posts also, and the infrequency of them. I hope you will be able to visit more often!
------------------------------

Turboprop_Pilot,
You mention it's a shame Vern and Ed aren't sharing a cell with Bubba-

I think it would be interesting to be a fly on the wall of a cell holding both Vern and Ed. Interesting to speculate whether they'd recriminate, or commiserate, during their forced cohabitation.

(No doubt there would be a LOT of flies on those walls!)
--------------------------

Fred,
It's good to be back. I can't speak Canadian, but I get the hang of what you're saying.
:)
Say, who IS the king of Canada, anyway?
----------------------------

Dave,
"So what's the status of the VLJ Center of Excellence"?

I think their cash incinerator finally got clogged up.
-----------------------------

Fred mentions a big thank you to Gunner- I second that, heartily. More to come on that soon.
-----------------------------

Julius,
"Every EAC employee will have to ask himself why he is still with EAC".

Well, you see, it really does take both of them. One to turn the lights on, the other to turn the lights off.

(Too bad Vern never saw the light, or ETIRC could have offered him a job he could handle).

S-E-R-I-O-U-S-L-Y;
I certainly do not wish those plucky (plucked?, ph---ed?, oops, that congeniality chip again) and long-suffering employees ANY ill will at all, but I do have to wonder, given the relatively dire financial straits Eclipse is in (okay, WAY dire): HOW MANY ARE REALLY LEFT ??

I just DO NOT see EAC, or any struggling company, aircraft or otherwise, being able to hang on to 1000+ employees, while delivering zilch for months.

That would be a recipe for certain finacial disaster.

(Oh. Sorry, I forgot. Vern already demonstrated that).

I do wonder- how many are really left? Does the ABQ Journal ever do any investigative reporting, or the television stations there? Gadfly- any "reality checks" on this "1000+" stuff?

Note: I really hope (and am reasonably confident that), if necessary, everyone there can find an appealing arrangement somewhere- in ABQ if their heart desires, or in one of the numerous other aircraft companies across the land that -so far anyway- are generally enjoying good financial health.
-----------------------------

Eclipse_Deep_Throat,
I appreciate your leanings.
I won't torment others with a lengthy discussion of why I agree.

Just with this lengthy post.
------------------------------

9Z,
I'm glad you're back- in scanning some postings from months ago, it sounded like you might have been AWOL (or, A w/L, for a good reason). Glad you're back.
------------------------------

Turn and Burn

(That monicker sounds rather like a bitter Mr. Raburn- except I'd consider it a bit more appropriate to use the handle "Spin and Incinerate"):

My My! Tsk Tsk! Cheer up!

Don't let A--'s like me get you down! (That chip again!:)
-----------------------------

To the many others whom I've relished reading:

Don't think you got off lucky- it's just that my laptop battery is abou

Dave Ivedorne said...

bill e. goat wrote:
Dave Ivendorne
In doing some catch up reading, I've noticed your intelligent posts.


If you noticed that they're intelligent, your congeniality chip is causing interference with your basic cognitive skills. :-)

(But I'm not offended anyway :).

I'll try harder then...

Glad to have you back - yours were some of the most incisive and interesting posts, and I look forward to a fresh supply of them.

Would you like the combo?
DI

eclipse_deep_throat said...

FYI:
Looks like Adam Aircraft is about to get flushed down the commode:

October 28, 2008

A700 Certification Shelved Email this article |Print this article

By Russ Niles, Editor-in-Chief

Six months after buying the assets of Adam Aircraft for just $10 million, AAI Acquisitions is all but pulling the pin on a bid to revive the A700 very light jet program. The company announced Tuesday it's suspending the certification program on the A700 and canceling plans to hire hundreds of workers at Centennial Airport in Englewood, Colo. "The company has had a strategic readjustment," spokesman Jan D'Angelo told The Denver Business Journal. Centennial Airport spokesman Robert Olislagers was a little more pointed. "That's out the door right now," Olislagers said. "We already went through this drill with Adam Aircraft. It's obviously very unfortunate. It appears that AAI is getting caught up in the credit crunch out there. It's a worldwide problem."

Adam went bankrupt in January after pouring hundreds of millions of development money into the in-line twin A500 and the A700. AAI is a Russian equity company that includes an air taxi company called Dexter among its $3 billion in holdings. In May, at EBACE in Geneva, Dexter announced the purchase of 20 Cessna Mustangs, which was then a direct competitor of the A700.

http://www.avweb.com/avwebbiz/news/A700CertificationShelved_199080-1.html

Orville said...

The company has had a strategic readjustment

When are corporations going to stop sugar-coating everything with stupid words and phrases?

Just say, "We're out of business - we failed".

In other news - Piper is having an Engineering Job Fair in Duluth, Thursday, 10/30.

Dave said...

When are corporations going to stop sugar-coating everything with stupid words and phrases?

Dead Parrot

Deep Blue said...

Concerning the various Blog positions on order books, the UBS publicly available report came out yesterday; biggest decline (12% in activity) is in the light jet category.

“We believe the deterioration in our survey combined with the increase in available for-sale aircraft and decline in flight activity presage what we think will be a significant slowing in new aircraft order activity."

Unfortunately for the VLJ class, I think the squeeze is even more pronounced than in the LJ category.

Dassault, Gulfstream, Canadair, seem much better positioned in the large/transcon sector than GA players in VLJ/LJ. Even the mid-size cabin is suffering significantly more than large class; players like Hawker Beech seem vulnerable and exposed as well. Hawker's CEO made a rather dire public announcement recently.

As for EAC, this structural up-hill battle presents a nearly impossible investment scenario; EU is less dramatic and LJs fit well in short haul there, but finance sector is just as upside down; there is huge competition from Cessna, Lear, secondary and fractional, and otherwise, rail/airline has saturated city pairs.

Russia? Can you really imagine an E500 functioning in a Russian winter? (Can any pilots out there honestly say you'd launch out of a Ural mountain location with it?). That environment is strictly for "industrial grade" rugged, almost special purpose aircraft(there's a reason why there are effectively no VLJs in Alaska as well, and probably never will be, unless someone builds a Pt 25 all-weather, system redundant, STOL jet).

The poor E500 would freeze to death; then parts, AOG, MRO, avionics, training, ATC? In Russia? A Russian winter would put the E500 through a true engineering stress test and the nearly nonexistant civil after-market would be exposed as the immature, undeveloped, inexperienced sector that it is (Aerflot still struggles to get its indigenous Soviet and even western fleet properly serviced).

The Middle East? Sand, debris, heat. Don't see it in that extreme environment either (check out the wear on military, even civil support fleet there; equipment coming back here as nearly junk).

Turkey? That about says it all for any operator there.

China? They're going all internal and building everything they need.

India? No infrastructure; heat, humidity; intense convection; no civil GA after-market. LCC carriers own 90% of the air travel market.

Dave said...

We believe the deterioration in our survey combined with the increase in available for-sale aircraft

Eclipse is totally cannabalizing itself with the used aircraft out there. Right now nearly 1/3 (approximately 80 aircraft) of the delivered fleet is for sale going by Controller plus the DayJet sale. I have already taken out listings of the aircraft listings for sale that haven't been delivered yet.

fred said...

deep-blue

about the russian winter :

the most tricky thing (IMO) would be to land after taking-off ...

russians are used to land on runway with a few Cms of ice or snow (sometimes both) ...

if Fpj is that difficult to put back on the "cow's floor" i wonder what it could be in such winter conditions ...

may be we should have a name for winter ???

i propose flying coffin ! ;-))

Dave said...

Now that we can tie N numbers to the retrofit status of the DayJet aircraft along with having SDR up again, I've been able to do some more number crunching and I'm also left with a few questions. First off I have to say that my number crunching excludes N126DJ, N160DJ and N163DJ (more on that later).

Contrary to expectations, the more updated the DayJet aircraft was, the more SDRs were filed on them. The ones lacking both Avio NG as well as the Performance Improvement retrofit averaged 2.7 SDRs, PI only averaged 3.25 and those with PI/NG averaged 4.82.

I then cross-checked this by looking at the average hours per aircraft in each category against the average SDRs per aircraft in each category and again the results were contrary to expected. The aircraft without anything or only the PIs both averaged around 92 hours between each SDR but those with PI/NG dropped to only 60 hours between each SDR. To answer a question before it is asked, the PI only aircraft actually averaged more hours per aircraft than the PI/NG aircraft, so PI/NG having more wear-and-tear than the other categories doesn't explain it.

Now here is something extremely interesting. All of the DayJet tire blowing happened with PI/NG aircraft. Just as a matter of odds, you would at least think one tire out of seven would blow with the two categories that don't have NG. Perhaps despite all Eclipse's claims that it was the pilots fault for this and that, it might point to a more fundamental error in NG. Pilots might be given the wrong information with NG. I noticed a large number of JASC codes that only impacted the NG fleet. All these happened at least twice and didn't impact any non-NG DayJet aircraft: 2133, 3230, 3244, 3246 and 3417. Almost all of those categories relate to the wheels and brakes, so it would seem that either NG has a deeper problem resulting in pilots landing rougher or NG aircraft had problems in aircraft quality elsewhere (such as a change in manufacturing processes between the non-NG and the NG aircraft).

Now questions on my own research:
* Why doesn't N126DJ show up on any of the SDRs? This was the first DJ aircraft delivered and Ed had publicly stated long ago about how buggy the early deliveries were.
* Why does Eclipse say they've got 28 aircraft for sale but only individually list 27 when looking at the detail in each category?
* Why do N160DJ and N163DJ not show up for sale on the Eclipse website?

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

I gather even the weather is being unkind to FPJ Inc.

Seems some of the ex DayJet birds suffered some weather damage last Sunday.

I presume these repairs will be duly noted by FPJ Inc when the aircraft are offered to prospective victims, sorry, customers.

Shane

Orville said...

Seems some of the ex DayJet birds suffered some weather damage last Sunday.

Those repairs can be done at the same time as all the retrofits - which should be any day now - seeing as how there are reported to be 1,000 people standing around in ABQ looking for something to do.

Next...?

gadfly said...

Shane and/or orville,

". . . weather damage last Sunday."

What, where, . . . what kind of damage? The weather in Albuquerque was windy the other day, but hadn't heard of anything significant at ABQ.

gadfly

Jake Pliskin said...

... the predator UAV uses the 1.7 liter engine from thielert.


really? i thought it was a rotax 914

fred said...

9Z

#It seems manufacturers and resellers, like many home sellers, still think it is 2005 #

as well as i agree the waking-up is going to be painful , it is not all ...

a colleague told me that he is in talk of buying a penthouse in N.Y. (something brand-new straight from developer ) ...

he went to see the thing , had a talk with agent , it was the usual stuff ( how glamorous , how good investment [?] , how exclusive ...)

when the agent had finished her speech , he told her that he would buy the flat for half proposed price ... cash , as soon as they want and payed for in the country and currency they want

developer said "we have to talk ..."

surely : some understood it's time to save the chips still on table ... some just ask for new cards ...!

fred said...

Mr Gad :

stop preventing the Merry-Band to blame anything for the poor state of "theirs" things ... ! ;-))

Afterburner said...

Jake,

The MQ-1 Predator uses the Rotax 914F turbocharged powerplant.

The MQ-1C (Sky) Warrior uses the Thielert Centurion 2.0 powerplant.

-burner

Dave said...

Though this is about Adam, the same probably holds true of Eclipse:
At AAI, based at Centennial Airport south of Denver, only a handful of employees remain, according to the Rocky Mountain News. The newspaper quotes Jan D’Angelo, a company spokesperson whose job was among those eliminated, as saying that the Russian investors that control AAI decided to scale back because of the global financial turmoil and the dramatic hits taken recently in the Russian stock market. “I think the investors are probably regrouping to figure out their options, and I’m sure they’ll update the world once they figure that out” is how D’Angelo puts it. Adam Aircraft filed for Chapter 7 bankruptcy in February.
AirportBusiness Blog:The Very Light Jet Era Has Come and Gone
Though the title of the article says VLJs are over, the article goes on to say that Cessna has a sustainable future in the VLJs.

gadfly said...

Mr. fred

You may have missunderstood: I'm asking for information . . . no criticism meant in any way.

gadfly

Shane Price said...

Gad,

Don't know exactly where they were parked up. I understand that the damage was wind related, and happened on Sunday night/Monday morning.

The purpose of the comment was in part to try and extract more detailed information!

Shane

gadfly said...

Winds in the ABQ area can vary greatly between neighboring locations. The winds on our side of the mountain can be brutal, while hardly a breeze in Albuquerque, yet another time, Albuquerque seems to be moving east, carried by the wind, while the "east mountain area" is calm.

Eclipse Aviation sits atop a steep rise at the west end of ABQ . . . open to severe winds, if coming from the west or southwest.

Many years ago, I watched a series of small black tornadoes, "marching" west to east, right down the center of the main runway. We also get severe "dust devils", that can pick up trash cans, lifting them hundreds of feet straight up. So, it is quite likely that wind damage has ocurred in the last few days. Some events of the International Hot Air Balloon Fiesta were canceled because of the high winds . . . and there was a death, and a serious injury to two people aboard one of the balloons . . . in this morning's news, the survivor's condition was changed from critical to serious.

But recently, the news is strangely quiet about things at Eclipse. Almost as if there is a news blackout until after the election.

gadfly

gadfly said...

The following is simply my own opinion, based only on my own observations . . . so “consider the source”, and don’t get your liver in a quiver:

Eclipse claimed many great things . . . and the political party in power fell for it, “hook, line, and sinker” (mostly the sinker part). Our governor, if you have seen his pictures lately, looks like someone who sleeps under bridges . . . and hitchhikes along “Old Highway 66" . . . but looks like he has not lacked for calories (think of a short but same diameter Al Gore, with a “southwestern” touch) . . . and he put great stock in the future of Eclipse . . . well, he “invested our taxpayers’ stock” in the thing, as did the local politicians in Albuquerque. “Our Governor” is considering the possibility of gaining some favor from the “messiah”, (should he be elected on November 4th) . . . possibly a federal position in the next administration. Bottom line: He may “shave” before the end of the year (that was in the morning news on KKOB) . . . and in the mean time, do anything and everything to ignore that Eclipse ever existed . . . that would be a total embarrassment, should the public somehow remember his involvement in the use of tax money to buy favor through the little bird factory. (‘Not to worry . . . the public is almost devoid of memory . . . unless a person happened to have worked at Eclipse . . . and they probably haven’t lived in New Mexico long enough to vote.)

Well, you can add these impressions to your own take on the future, or demise of Eclipse . . . I’m sure that the folks who are in charge at Eclipse will find a “plethora” of excuses, and blame, to weasel out of their own culpability in this fiasco . . . a royal smorgasbord of material . . . in preparation for the next financial/political opportunity.

gadfly

(Just remember the source of these comments, and don’t take too much stock in what I said.)

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

9Z,

On the positive side, this will represent one of the greatest opportunities the world has ever seen for people who still have cash.

that's true - but when is the time to invest, to buy a new car...
In Germany people are carrying more money to the banks instead of buying something/ investing into something.

Perhaps we are going back to a good ROI of less than 10% (or 8% in the financial sector) and keep in mind that the RIO is somehow linked to the prime rate, which is now at 1% (FED today).

If you heat up water in the nonsealed pot, you will find less in the pot after cooling down...
Ask your wife or conduct some research with MIT, Harvard, or CALTEC...

Furthermore Gadfly informed us about the impact of humidity on light wight "soft" sealed (AL) structures!
So there is some real loss after the collapse of the bubble (dot com, real estate... Mr. Greenspan!).

Sorry, I digress.

RP continues his little poker game in/with ABQ because he has some commitments in Russia. Who will give up first - he or the ULY-band?
There must be a reason why the so called top brass is still sitting on their chairs in the offices.
Has Ms. M. Billson any self-respect?

Julius

fred said...

Mr Gad ...

i was just making so fun of theirs statement !

if they would blame that there wasn't enough water in the fire = i wouldn't surprised ...!

so when they blame a "micro-climate effect" , it's about the same ...

i am quite sure that if you would be theirs neighbor , you wouldn't have noticed this "strong wind" that damaged the Fpj ...

just a way to blame something , after blaming everybody , who's going to be next in "blame line" ?
god , himself ?

fred said...

Guten tag , Herr Julius !

i think you're right !

we have touched the limits of liberal capitalism ... (don't get me wrong : i am neither for or against !just mentioning that in anything one always have to be looking for the good measure = most of times : average !)

what we are experiencing now is just the visible effect of long-term ROI VS fast-buck-now !

in the same way that the saying "always much harder to remain one of the best than becoming the best "

the limits being what peoples can expect without too much BS VS what they are dreaming about or the dream they've been sold ...
(look at stocks : most peoples want to buy them cheap with returns in the 2 digits ...=impossible , you can try , but if you do you have to bear in mind a simple fact : "a star shining twice the average is a star which is going to last only half the average !" any other expectation is pure marketing , BS or self-blindness !)

about "Old" Europe ...
never forget that we have, on this side , completely different habits of consumption :

if you exclude U.K. (where debts and credit situation is even worse than in USA ) European are having problems because of their savings habits (specially true for France : 2nd most saving country in world : average savings is 14/16% of income, first being Japan : over 17%)

where US economy is credit-addicted an average US citizen has spent in the last few years an average of 1$13 for each $ earned !(don't worry U.K. is much worse : first time buyers in London area are spending an average of 93%+ earnings to pay-back all credits, mortgages and the like, they are already further in the process ! )

so as for your remarks about Bubble-Greenspan :
you're definitely right ! i still don't know what was the major flake with that guy : was he a complete schmuck in his job ? or has he been just too weak to say NO to the pressure coming from White-House ?

time will say the end of the story , but don't forget that the guy(Volker) who cured , in the past, USA from its evil (credit-spending) had pictures of him burned in public places by populace as soon as things got better ...

this one is going to be tougher to overcome (the collaterals have still to collapse with the Edge-funds who made them , which is the story behind the latest surge of $ in value... those are worth tens of Trillions , the bad thing = nothing is going to save them , the only "good" choice would be to warn peoples that it can be even worse than now ...)

julius said...

Bonjour M. Fred,

la situation est tres defficile.

You remember there had been jokes about the US economy like this:
There are more lawyers than engineers in U.S.
I think the value of the service sector of an economy has been overestimated.

Why are so many people "living on credit cards". I think it's not only a question of an attidude.
There is a cut in the society (U.S. , UK). Now the glue (fincial products) has lost it's important flexibility.

Reading Gadfly post about a N.M. clochard, I do not anticipated any statements of our uncompleted bird hatchery before 5th of November.

Ken et al. have lost their buyers.
Real $ are needed - not anticipated chances of potential value increases.

If dust devils are typical for this time of season in ABQ or were forcasted, the insurance companies might be reluctant to pay.

What about sailing in the Aegaeis right now? Too late, too fresh
(southern winds, 15 knots)?

Julius

fred said...

you know julius , when i was in Wall-Street i had a colleague (a guy from Iowa or Idaho , cannot remember ) who was always saying this :

"a new sucker is born every minute , my job is to sell him things i wouldn't buy myself ,even with a gun on the forehead !"

future is going to be tough ...
conditions of living will be not as it was thought to be ...

lots of illusions have to be wasted first !

as for the Fpj , I see 2 important dates in near future :

1° president election , i believe that whatever is the result , i am confident it is going to be presented as NOT being exactly what was expected ....

2°the Finance Meeting in Washington on the 15th November , the predominance of the US economy is already "something of the past" the meeting is going to try to re-build the World financial system (which has been destroyed at 95% by US administration )

i personally see conditions MUCH tougher in finances matters ...
(specially since whatever they want to do , US are in a very difficult situation ... so really in a very unfavorable position to dictate anything ...)

because what did happen is simple to understand = Auto-regulation of market is a chimer ! it doesn't prevent itself to have a few scums to try to rip-off everybody else ... so it is doomed to fail !

the last bank crisis is a perfect example ...

the whole story of Fpj look exactly the same to me :

a Merry-Band of thief ,scammers , greedy scums made a few dream about something improbable ...

just for the sake of making a quick fast-buck-now ( the reason of aiming at IPO)

anything between the moment they opened their mouths on the project , the first time and the time when most will have forgotten (real or faked) is only to be considered as "the little scripture of the story" ... nothing else !

julius said...

Fred,
the last bank crisis is a perfect example ...

the whole story of Fpj look exactly the same to



that's a good comparison.

"auto-regulation of the market" =
rating agencies + "Chinese Walls" at banks + US GA(A)P + M. Clochard(s) + Mr. Greenspan + Mr. Paulson +...

Unfortunately there is nothing to laugh at. Nearly everybody, who has to lose anything, will lose something!

I agree to 1 and 2.
But I am not sure if the next president will tell his people that 8 years in the lap of luxery and wars must finish and must be paid.

At a prime rate of 1% there are no reasons to send any money to U. S. unless you start cherry picking (of companies).

Julius

P.S. What J. Bush? He was involved in his brother's election (remember FL!) and in fostering the FLP.
That was not a perfect performance as a Gov. of FL!

fred said...

yes , julius ...
that is the sad part of the story !

everyone will be touched in his own way ... to recover from this it's going to last a long time , in some case up to one generation !

it is very sad for the ones who have been tricked into this by the greed of some others ...
for the ones that up to not long ago , where laughing , amused by their luck , and thinking so highly of themselves , it isn't sad , they are still very lucky that no one has thought of feeding them with their own lies until they suffocate ...!

i feel that in near future , fundamentals are going to be back in fashion , some are going to have to understand that bills and unpaid duties are ALWAYS to be faced one way or another ...!

as for the fed's rate : this is madness ...

in a country where problem N°1 is credit-addiction , to have a rate much lower than inflation is pure madness , but a very good indication on the level of competency ...

fighting fire with fire is seldom successful :
so we are back to "old" basics ...
excess Credit=>Inflation of monetary mass=>Inflation of everything=> Irrational behavior of expectations=>Crack => Recession => Deflation !

it has always been the same , everywhere and for everybody !

airsafetyman said...

"P.S. What J. Bush? He was involved in his brother's election (remember FL!) and in fostering the FLP.
That was not a perfect performance as a Gov. of FL!"

Julius, just to show how far the rot goes: "August 12, 2004 - ALBUQUERQUE, NM. On Wednesday, August 11, President George W. Bush visited Eclipse Aviation, describing Eclipse as "a vibrant company" and Eclipse Aviation President and CEO, Vern Raburn, as a man "with a grand vision.""

Dave said...

Eclipse Aviation President and CEO, Vern Raburn, as a man "with a grand vision."

Vern did - of IPO riches based on a business model he knew wouldn't work and an infliated order book to make it appear as if it was working.

fred said...

the IPO project was not aimed at anything else than having Mr anybody to put as much money as he could ...just to happy to believe the lies and up to the moment everybody would have had to be confronted with reality : the plane is unreliable , the business is shit , the orderbook is fake ...

then facing reality : what should i do with my Fpj ? a lawn mover ? a boat anchor ?
or
are stock-certificate good to do anything else than a fire ? (no , even the paper they are made of is shit ...!)

where is the problem , then ?

EAC should have understood that they had either to try the IPO-plot much earlier or to keep on dreaming about the wonders of their product but never try to make it !

fred said...

airsafety :

i am not that sure it is rotten ...

no , more something like

"anything to keep the illusion alive ..!"

AvidPilot said...

Roel is still claiming that there are over 1,000 firm orders remaining.

If true, that means that there are 950-990 position holders that are going to lose 100% of what they paid to Eclipse.

I think by this time next year EAC will be a fading memory.

fred said...

avid :

no , not next year at same date ...

i can predict with a 99% confidence that very soon the ones who were the most active supporter , are going to be the very ones to ask the responsible to be burned in public place ...

then everybody will fake to have not known or already forgotten (in fear of being taken for gullible retards who can be sold anything)

fred said...

remember what is written on page3 of C.I.A. training book :

"i am sorry , i cannot recall any of the events you're talking about" ;-)

airsafetyman said...

Fred,

You have no idea of the rot. "Kenny Boy" Lay of Enron was the biggest contributor to George Bush. Jeb Bush, as governor of Florida, pressured the Florida Teachers Union to buy Enron stock as Enron was tanking. The union lost over $300 million dollars. Jeb was/is buddies with Big Ed of DayJet, who gets a state tax break for his charter service that is practically identical to every other air charter service in Florida - that don't get tax breaks. Then Jeb gets his brother, the Prez, to say a few kind words over at the New Mexico headquarters of the related enterprise, Eclipse.

Dave said...

Roel is still claiming that there are over 1,000 firm orders remaining.
If true, that means that there are 950-990 position holders that are going to lose 100% of what they paid to Eclipse.


Approximately 1/3 of those orders are his own orders. Roel hasn't shown that he can pay $600M for the aircraft. I'd be highly suspect of Roel's claims as even if many of those ordering wanted to receive the aircraft, I don't think many of them can financially. Look at DayJet and their 1400 unit order. At best they could have paid for 100 aircraft with the $140M in debt financing or only 7% of their order. DayJet ended up with less than 3% of their order. So Roel's claims of 1000+ units on order is highly suspect unless Roel can demonstrate those buyers are ready, willing and able to pay for their aircraft.

Dave said...

You have no idea of the rot. "Kenny Boy" Lay of Enron was the biggest contributor to George Bush. Jeb Bush, as governor of Florida, pressured the Florida Teachers Union to buy Enron stock as Enron was tanking. The union lost over $300 million dollars. Jeb was/is buddies with Big Ed of DayJet, who gets a state tax break for his charter service that is practically identical to every other air charter service in Florida - that don't get tax breaks. Then Jeb gets his brother, the Prez, to say a few kind words over at the New Mexico headquarters of the related enterprise, Eclipse.

All I can say is that it is a good think Eclipse never had an IPO or else the damage could have been far worse than it is going to be.

airsafetyman said...

Dave,

Amen. Also with pressure from the Prez and the Gov, my hat is off to the FAA worker bees who stood up when it counted, even though they were trashed. I don't know what Sabatini recieved for corrupting the process, but watching him destroy his own reputation in the Congressional hearings was truly sickening.

fred said...

airsafety :

i believe we call the same with 2 different names ...

off-course it is some kind of rot , but where i would put some nuance :

the whole thing that you take as a reference was not meant to be rotten for the sake of it ...

more something "coming with" the state of running affairs in the last (8 to be exact) ...

any of the "events" where aimed at keep the illusion alive ("we are the best" ; "they sweat , we consume!" etc... being the illusion)

probably the same that the "funny way" GW Bush is acting , very good to have most americans to believe : "he is like us , he makes mistakes and love to have a beer with friends ..." where i believe it is totally fake , only a way to make the electors to "feel" closer ...

so it is not exactly rotten , in my view , more something carefully planned !

fred said...

#So Roel's claims of 1000+ units on order is highly suspect unless Roel can demonstrate those buyers are ready, willing and able to pay for their aircraft.#

so we are back to basics ...

value of something = what BUYERS are able and willing to pay for !

in the case of Fpj : there isn't any buyers ...

i let you draw conclusions about value , then ...

Joe Patroni said...

"....my hat is off to the FAA worker bees......"

That's what's great about the being a low tier underpaid worker bee @ the FAA (or in aviation maintenance)......you can tell people the truth, and you are almost GUARANTEED to get a better job in some other industry if someone is stupid enough to fire you.

Nobody is getting paid enough to take the chance of "pencil-whipping" crap.

Dave said...

Eclipse in the news today:
Montreal Gazette:Reports of Eclipse's demise premature: landing-gear maker
Astronics Corporation Reports Sales Increase 7% for Third Quarter 2008 (no thanks to Eclipse)
AVWeb:Analysts Grim On Eclipse Future

gadfly said...

Since Eclipse will soon be a footnote in aviation wannabe history, wouldn’t it be great if they could donate at least one single example of a complete bird, dedicated to the taxpayers of New Mexico . . . stuffed and mounted (so to speak) . . . what “could-o-been” had promises been kept? (Sure, they can “fake” the avionics, etc., . . . the average tourist won’t have a clue . . . and bronzed “Michelin” tires will never go flat.)

Shucks . . . they could put it next to a bronze statue of the governor in the plaza in Santa Fe . . . but someone would probably steal the statue (of the governor, that is) and sell it for “scrap” . . . that much bronze would bring a fairly big price on the black-market for "crack".

But the stuffed and mounted bird would provide a great roosting area for the local pigeons . . . and a nesting place for the bats (we have plenty of them in New Mexico, especially in Santa Fe). In time, it might blend into the historic nature of the place.

gadfly

(But as it stands, it wouldn’t be legal . . . MIKI . . . Mounted In Known Icing . . . Santa Fe at over 7,000 feet gets mighty cold and icy every winter.)

Dave said...

In looking more at Harold Poling, is he just a figurehead at Eclipse? Looking at what other boards he's on, it doesn't look like he's on any that are what you'd expect for a former Fortune 500 CEO of a very well-known brand. For instance one board that he's on is for a company called Hyperdynamics, which is a company that started out selling computer hardware and now they're in the oil exploration business. They've got only a couple dozen employees. I've got nothing against small publicly traded companies, just I'd expect him to get on boards of larger, more prominent companies. Like he's on a regional PGA board, but not the main PGA board - the former CEO of a big three auto company should be able to get themselves onto prominent, well-respected boards unless there's something wrong.

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

9Z

Let’s see . . . Eclipse has already laid the egg . . . and with the stir-fry stuff, all the crowing about how great they are, and everything else you’d expect in a coop, there has got to be a chicken in there, somewhere.

gadfly

(‘Pardon the yoke!)

Dave said...

A good article on the industry overall:
AOPA:Credit crunch felt by GA manufacturers
Eclipse/DayJet have used the credit crunch as an excuse, but if you've got a bad business plan and you aren't nimble enough to change it fast enough (let alone double down on it in the case of Eclipse), there's no getting around it.

Dave said...

Alana McCarraher, a spokeswoman for Albuquerque-based Eclipse, said the company was aware of the report, but would have no comment.

"We're in the middle of a financing round right now, but we're still optimistic," she added.

Ending production of the Eclipse 500 wouldn't be good news for the $8 million maintenance facility at Albany International Airport. The service center, built near the airport in Colonie with $1.6 million in state assistance, opened in February. About two dozen people work there. The building is owned by the Albany County Airport Authority.

"We have every confidence in Eclipse Aviation and its management, and that it will maintain its commitment to continue to produce an outstanding aircraft, now and into the future," said airport spokesman Doug Myers.

Times Union:Plane firm's future bleak
How long has Eclipse said they're in the middle of a financing round? By now they should be at the tail end. That explains why analysts are saying they're going under.

Deep Blue said...

Dave: concerning your comment on EAC board member from Ford.

I think we all tend to overestimate the abilities and judgment of executives. Polling was an employee, like every one else there.

It is rare in my experience to find a corporate executive with any entrepreneurial instincts, let alone any real tangible business judgment outside the organization there were part of. Moreover, they tend to be extremely risk averse. Most are employees in the extreme. Few of them become actual risk taking investors and by the time they they retire, have never learned how to adapt in a new venture.

The only thing I ever found them effective in was calling in a favor from their old employer or from one of their prime suppliers. That alone can be be very helpful, but that's about it ends.

Dave said...

Dave: concerning your comment on EAC board member from Ford.
I think we all tend to overestimate the abilities and judgment of executives. Polling was an employee, like every one else there.


I guess I didn't sufficiently nuance what I was saying. What I mean is that I would just expect the average retired high profile Fortune 500 CEO to get on pretigious boards unless there was something wrong. I believe when he first retired from Ford he got himself on prestigious boards, but now he's only on the boards of less prestigious organizations as far as I can tell. I just wouldn't expect the former CEO of Ford to get himself on a board of a company that only employees a couple dozen people, unless he was founder (which Poling isn't the founder).

x said...

Gainesville Airport issues a "Notice of Cure" to DayJet on hanger lease, and contracts to release the hanger to a new tennant (University Air) effective Nov. 1.

Sic Transit Gloria

Dave said...

Gainesville Airport issues a "Notice of Cure" to DayJet on hanger lease, and contracts to release the hanger to a new tennant (University Air) effective Nov. 1.

Following up on that:
Mr. Penksa reported that DayJet issued a press release on September 19, 2008 stating that it has ceased
operations. He stated that all aircraft have been returned to Eclipse Aviation. Mr. Penksa reported that
DayJet will continue to pursue financing options and to-date has not declared bankruptcy. He reported
that University Air Center is interested in leasing the DayJet hangar. Mr. Penksa reported that a Notice of
Cure was sent to DayJet for unpaid rent.

GRA October Board Meeting Agenda
The new DayJet tenant will pay $2.80 per square foot.

Airport CEO Allan Penksa said DayJet owes about $7,600 in rent for August and September. He said he tried to contact the company about its intentions but had not heard from them as of Monday afternoon. The lease would be up Jan. 1.

The airport has not received any official notice from DayJet, but got wind of the shutdown when an unspecified number of the company's Eclipse 500 planes flew into Gainesville on Friday and were taken to the Eclipse Aviation hangar, Penksa said. DayJet had operated 28 of the Eclipse 500 planes.

"The fact that the airplanes went back to Eclipse doesn't bode well," he said.

Gainesville Sun:DayJet grounds fleet, eliminates most jobs

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

With Eclipse likely to collapse soon, that will still leave Cirrus, Djet and Piper in the single-engine category, with the next jump being to the Mustang/Phenom

With Eclipse going under, I would expect the costs to other manufacturers to rise as there wont be as much volume as before at their suppliers. If Eclipse would have just built their first factory for between 50 and 150 units per year everyone in the aviation industry would have been better off, but now with the carnage everyone is going to be worse off.

EclipsePilotOMSIV said...

Again, this is just a rumor, but you know how rumors on this blog tend to be more right than wrong. ;-)


BUUULLLLLLLLSHHHHIIIIIIIIITTTTTT!!!!!

airsafetyman said...

""We have every confidence in Eclipse Aviation and its management, and that it will maintain its commitment to continue to produce an outstanding aircraft, now and into the future," said [Albany] airport spokesman Doug Myers."

What planet is this guy on?

Shadow said...

Doug Meyers's philosophy: I reject your reality and substitute my own.

Turboprop_pilot said...

EclipsePilotOMSIV

I'll call you on your BS- we're been right and will be right on the final demise of Eclips

Turboprop_pilot

fred said...

airsafety :

#What planet is this guy on?#

oh yes ...! i wouldn't mind to share a bit of the stuff that guy must be smoking ... ;-)

EclipsePilotOMSIV :

PLEASE ! stop being so constructive with your remark ...
or we will have some doubts about your "supporter" status !!!

an other RUMOR :

the dead line for Etirc to show ability to run a plant build for them by the Russian state bank
is closing very soon ...

Roel if you read : good bye in Russky is " Dosvidania" ; if you are in a hurry (in case some moujik are running after you to show you how nice is to be thrown into a frozen lake in the middle of winter ) a simple "poka" is enough ... ;-))

Dave said...

the dead line for Etirc to show ability to run a plant build for them by the Russian state bank
is closing very soon


Yet Eclipse claims to have already pocketed the money from that deal.

Orville said...

Vern's on the move - to Brookhaven, MS

Dave said...

Vern's on the move - to Brookhaven, MS

Perhaps he's looking for Bernie Ebbers. Maybe Vern will be able to visit him at Ebber's new location.

julius said...

eclipsepilotomsiv,

Again, this is just a rumor, but you know how rumors on this blog tend to be more right than wrong. ;-)

B....


that's life ....change your trousers, wash your hands afterwards!
Take it positively - you have learnt something new for you!

Julius

Dave said...

One upside of a drawn out BK would be that it could impact the re-election of Mayor Chavez. The closer to election-time this happens, the harder it will be for him to pretend that Eclipse never existed (which seems to be what the Florida politicians are doing about DayJet).

WhyTech said...

"The only thing I ever found them effective in was calling in a favor from their old employer or from one of their prime suppliers. That alone can be be very helpful, but that's about it ends."

100% consistent with my experience on around 40 boards over 20+ years. I might add that a high profile CEO on the board may bring some measure of respectability/credibility to a young company (IOW, window dressing).

Dave said...

Tesla sounding like Eclipse (except they've got a larger order book!):
ValleyWag:Tesla Motors has $9 million in the bank, may not deliver cars
All these guys should return the customer deposits.

gadfly said...

There is so much that could be said to anyone who ever set out with a great idea, and didn’t understand that the distance between “great idea” to “final delivery” is often measured in “light years”. The idea must be firmly married to a knowledge of manufacturing, and a great respect for marketing . . . with complete honesty and candor about the entire precarious relationship of all involved. And until that basic premise is fully understood and established, very few if any employees should be hired to make it all come together.

Thousands of inventors have said, “I thought of that back in . . . and they stole my idea.” Big whoop! Invention is more that having a “great idea” in the middle of the night, or during a morning shower.

But all this is now past history with the little bird from ABQ. Presently, I think that Shane could better explain an Irish Wake . . . the “guest of honor” standing in the corner, in his coffin . . . with all his friends and enemies, standing around, drinking their “suds” . . . discussing the attributes of the recently departed, as if the departed could hear a word of what was being said.

Me thinks that it won’t turn out with a happy ending, like in the classic film, “Waking Ned Devine” . . . but rather as if the small village did not win the Irish Lottery. The only other simile of which I can think in terms of the movie is the “busybody” being launched into the ocean, in the “phone booth” . . . a most hilarious event, but you’ll have to put that scene into your own terms (I have my own version).

For some of you, you may think there is still life in the thing . . . but me thinks it’s all over but the shouting . . . or weeping . . . or eulogizing about what “could have been”.

gadfly

(Yep . . . this whole thing is looking more and more like an Irish Wake.)

eclipse_deep_throat said...

while i agree that EAC is on borrowed time ....i find it particularly interesting to see now **18** open positions listed on their web site. click on The Company and then Career. could this be like the "disinformation" the CIA is known for? could EAC be so clever to blow more smoke up our collective asses???

i've been watching the Career section for some time now. just this past week many new positions have been listed. today its the Pilot, Production Flight Test that appears to be new. hmmmmm. don't ya think pilots have a tendency to chat amongst themselves at the bar after hours? there must be a few tech savvy pilots who are not bashful in blogging about getting screwed by EAC, no?? maybe one or two that will add to the sentiment on Charter X about being scared to death when flying the FPJ. seriously, i think it is downright comical for EAC to think they will be able to hire anyone until they can publically confirm they are flush with cash. maybe they hope to find someone who's been in a cave the last 3 years ....i'm reminded of that Sat Nite Live skit recently where the lawyer is trying to find juror's for the recent OJ Simpson trial. and even the alien that just crash landed his spaceship 5 minutes ago had heard of OJ Simpson...

and for those inclined to click on some of the links on the Career page: note the position for the Manufacturing Engineer. at the very top it says "This position will start sometime in Q1 2009." LMFAO!! i know the airlines can fudge arrival and departure times by +/- 15 minutes ...but +/- 2 months is kinda funny, even for an OEM. maybe this is a new chapter in Japanese lean production: just in time labor!

~Trick or Treat~

E.D.T.

Dave Ivedorne said...

(Yep . . . this whole thing is looking more and more like an Irish Wake.)

That reminds me:
What's the difference between an Irish wedding and an Irish wake?

One less drunk at the wake.

( ducks & runs )

Shaken or stirred?
DI

fred said...

EDT :

about job-position : to put "online" it takes about 5 seconds and cost nearly nothing ...

as for the "3 last years in a cave.."
this is an other illogical move from Eac and the die-hards ...

i explain : often it is not really the "inside true" value of the things you are sold which make the difference but the way it is sold to you ...
(think of clothes : how can someone explain that the same thing , made in the same plant in China with the same staff can be sold 3 times more in a particular shop ??? or even if Palin has spent 150.000$ in fancy clothing , is she any better ? )

so this is , in my view , where the "Russian part" of the story take all its flavor ...
i don't believe that the Russian were chosen for more/less competent ; more/less cheap labor ; more/less whatever ...

but ONLY because in the plot , it could have been presented to Die-Hards believers as :
"those Russky bastards ... phewww , anyway they don't even understand english ...!!"

that one of the hard-followers hasn't shown-up with such statement is already a major flake ...

because i feel the whole story about this was a kind of black-mailing the US customers ...

before it became obvious(even for die-hards like KennyBoy and Mirage-i-remain-amused) the whole EAc Bizz-plan was unsustainable for too many reasons ...!

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