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.
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.
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....
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
214 comments:
«Oldest ‹Older 201 – 214 of 214Dave said ... Contrary to expectations, the more updated the DayJet aircraft was, the more SDRs were filed on them
Posting from Rio de Janeiro Brazil...
Not contrary to my expectations. Of their fleet of 28, DJ mostly flew the 10 planes with the mods in 135 service - thus the SDRs came on those.
oh yes ...
i believe that one of the thing that's made EAC "so special" is the way it has been done ...
and one of the "fatal" attraction :
"trying to find some logic , where there isn't any !"
that is exactly what is so brilliant = most are trying to scale the thing with own sens of business-type ...
Mr Gad and his wisdom ...
most of us with some kind of more or less partial expertise ...
which drive to a simple conclusion :
logic and good-will was so absent that nothing seems to fit for "Normal business-wise" persons ...
leading to :
chaos is not a fruit of non-organized (even chaos has its own logic) , so it was something well planed to make others to believe :"it's so weird ... they must know what they are doing ...!"
(A.Hitler said about this :"if you have to lie , make it a big as possible , like this even if most know it can't , the lie is so enormous , trying to unveil it become a non-sens!)
curiously , if one analyze the whole story with this angle (planned from day 1) all the pieces of puzzle fall well together ...
the major flake in this story :
the Merry-Band (Ed+Roel+Vern) couldn't agree on a "minimum greed" to be kept till the end ...
if they could have sticked together (and without the finances crisis downturn , even if it is the finances crisis would enabled them to raise so much capital) the IPO would have been possible ...
investors would have had understood only too late that they bought an empty-shell , like in the "good-old-dot.com" times ...!
"There is much to be said for a small core team really baking the cake (probably several times) before trying to scale up;"
Absolutely right, but may not consider one benefit of scaling up prematurely: pre-empting competition. The risk, as demonstrated so graphically by EAC, is in not getting things right while scaling up. This compounds problems radically. One could argue that EAC made a deliberate decision to accept this risk, but miscalculated by quit a bit. If it had worked as EAC envisioned, they might well have been king of the hill in a significant new market. One problem with this approach is that you have to get it almost exactly right on the first try - not something that ordinary mortals are good at.
From Albuquerque Journal, 30 October 2008
"“Under the circumstances, Forecast International believes that securing new funding, while still possible, is unlikely,” says Douglas Royce, an aircraft analyst and editor with the firm.
The probable outcome is Eclipse running out of money and stopping production by the end of the first quarter in 2009."
gadfly
(Nothing new here . . . but sometimes the obvious is believed if found in print in a newspaper.)
Not contrary to my expectations. Of their fleet of 28, DJ mostly flew the 10 planes with the mods in 135 service - thus the SDRs came on those.
Baron as I said in my post I already took that into consideration. Almost all of DayJet's fleet had SDR's filed (not just those with NG) and in fact the aircraft with Performance Improvements (but not NG) averaged the most hours of any category. If only NG aircraft had SDRs filed that would have been the explanation that it was only those that were used in commercial service, but both NG and non-NG aircraft had SDRs filed so being used in commercial service isn't the explanation.
I wish you would have read my post more carefully as I raised certain issues. NG aircraft had problems with landing gear (it was only NG aircraft for instance that had flat tires for instance), so I wondered if NG was under-reporting true airspeed, which resulted in the landing gear being unknowingly treated more roughly by the pilots. I can gladly send you the spreadsheet that I have that breaks SDRs down by what type of equipment is installed and by how many hours flown. It for instance shows that both categories of original Avio aircraft averaged about 90 hours between SDR while NG aircraft averaged 60 hours between SDR.
Great mechanical designs usually are the product of a single mind. Couple with that, a small group of skilled, gifted machinists or technicians, who have developed an understanding of the “mind . . . the intent of the designer”, and that goes far to producing the proto-type. It is akin to “giving birth” . . . and only the beginning of a series of critical events.
When it’s time to produce the product, there is a need to already have a small team of machinists, technicians . . . skilled people who already have a “feel” for their chosen profession. There is no place for people fresh out of a tech school, turned loose in a factory. It takes time to develop a team of people that can work together, and work through the problems of a new product.
There appears to be an attitude that a person who puts in time in a school, gets an education, is suddenly qualified to make things. Even machining is not a science, but an “art”. Anyone who designs and builds tooling knows this. There must be in such people an understanding of the material . . . much as a musician understands the subtle characteristics of a fine piano, or violin. Books can be written about these things . . . but we’ll just say, “That’s the way it is!” . . . and let the reader chew on it.
Good supervisors are good teachers . . . and understand the absolute necessity of spending time with workers, and can judge character in selecting only those who can gain the needed skills . . . both supervisor and worker must be “teachable”. Supervision means exactly what the word implies . . . Super-Vision!
Then, there needs to be a close relationship, developed over time, between manufacturing and sales and customer . . . a two way street, among “teachable” people. Hey . . . these are just the basics . . . and even then there is no guarantee of success. But to ignore these basics is to guarantee disaster.
gadfly
(It appears to me that everything discussed above was violated by Eclipse . . . and that’s just for starters.)
WhyTech:
Agreed. Savvy point.
And EAC could have indeed been King of the Hill; and that's a position most investors want to see as well.
I suppose this only reinforces the fact that if you want to scale Mt. Everest, the environment is utterly unforgiving. Lot's of dead bodies to see on the way up (and especially, on the way down, ironically).
I suppose this only reinforces the fact that if you want to scale Mt. Everest, the environment is utterly unforgiving. Lot's of dead bodies to see on the way up (and especially, on the way down, ironically).
If you want to scale Mount Everest you have to get there in stages and see if you're ready to go to the next stage. Eclipse set themselves up without planning on stopping at any base camps and just jumping from 0 to 1000 almost instantly.
Dave et als..
a little bot of philosophy...
Imagine you wanted to scale Everest... well you wanted to set a meaningful record... cheapest expedition, fastest expedition, or highest tech expedition....
Keep thinking...
Keep thinking....
They are all different.
Now ook hard at EAC, and try to SEE the REASON for failure. One could blame Vern, but I don't.. he was a hellofva money raising mtherfker.
Final answer.. high tech scheme for low cost market.
hey tried to apply high tech to a low cost problem in amature industry... how sad is that>
$2B sad.
“and me so ?”
Fred,
For you, it was probably the French accent. ;-) In France do they think you have a German accent (not begin sarcastic; I recall you mentioning you started out in Germany)? My dad’s side of the family settled in Wisconsin from Germany in the 1830s (before Wisconsin was a state), but my grandpa still had a thick German accent when he died in 2000 (not that there’s anything wrong with that :-)).
“that said , thanks again Monsieur Gunner…”
I’d like to second that! Gunner saved us a heck of a lot of trouble (an understatement)! I support Eclipse’s rights within the law to enforce their NDAs. However, I don’t support the way they tried to do it. Additionally, I’d have more sympathy for Eclipse if they had lived up to the transparency that was promised by Vern long ago.
From bill e. goat:
“Agroth,
I took note of your posts also, and the infrequency of them. I hope you will be able to visit more often!”
Bill e. goat,
I appreciate the sentiment!
Andy Groth
agroth :
#I support Eclipse's rights within the law to enforce their NDAs#
yes , i do as well !
what i am against :
a bunch of mtherfker who pretends to have and to deserve all the rights of the world to the expense of all others !
i think the ones for the "list" have to be grateful to Monsieur Gunner , as much as i would have liked to have the pleasure of turning that negation of civil and international laws in such a messy downturn , that Vern and the few scumbags following him would have learned about what it is to be really ashamed !
if things remain fair , i am the first one to agree ...
when things starts to be unfair , i am the first to say"fckoff"
i never side with the one who have the most money ,never with the ones with the most strength, never side with a particular one for its origins ...for me to do it only for those points (alone or together) is trying to negate the recent world history :
Too many of my fellows raised an arm to the sky and turned their heads when too many others were tortured and gazed ...
Too many of my other fellow thought it was right to try to stay in Africa as a colonial power ...
Too many others believed that go fighting on the other side of world , was the best way to protect liberty at home (Iraq & Afghanistan )
all of this resorting ONLY of the political bullshit we all are fed with ...
and the desire for most to follow the crowd , if they are not directly in lines for being the ones who suffer from this action or inaction !
that is why what Monsieur Gunner has done has value ...
regardless of his interests , he was the one to stand-up in court to say : This is not fair and right !
(which is the true meaning of liberty within democracy , enable one to stand-up for the rights of others ! not to follow a bunch of mtherfckers because everybody else think it's cool !)
but i prefer to be with the ones who stand-up , even if they are doomed !
about a german accent : i don't have any , even if i was raised in Germany , home we were talking mostly french (kind of weird : out = German ; In = french ; guess it was a gift from parents !)...,then i have been living in so many countries that i suppose i have a weird accent in any language ! very often , others tell me that i speak with "multi-polar" habits (frenchs tells me that i speak french with a french accent but english habits , german thinks that i speak with french accent , russians thinks that i speak with a german one ... kinda lost with myself sometimes ... !;-)) )
New post up.
And yes, things are looking 'a bit like an Irish wake.'
Without, sadly, those essential elements of fond memories and celebration of the departed.
Shane
Dave said ... I wish you would have read my post more carefully as I raised certain issues.
I'm sorry - it was a drive by from an airline lounge.
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