Tuesday, November 25, 2008

The 11th Chapter

It's a fine bright day here in Ireland, and I thought it appropriate to post this little greeting on the blog. I know things have been somewhat gloomy recently, so enjoy this uniquely American holiday with your friends and family.
Best wishes to one and all.

UPDATED Wednesday 26th
Just so everyone is clear that customers, suppliers, depositors and yes, staff, are indeed 'skewered' by Chapter 11, herewith the email circulated by Mike McConnell yesterday:-

"Today, Eclipse Aviation started a new era in its relatively (feels like forever, ed) short existence. Eclipse filed for protection in a Delaware court under Chapter 11 of the U. S. Bankruptcy Code. The company is using Section 363 of the U.S. code to sell its assets and a lead bidder, an affiliate of ETIRC Aviation, has filed an offer to purchase the business out of reorganization. As part of this filing, there is sufficient debtor-in-possession (DIP) financing to allow the company to operate until the sale is finalized in January 2009. The process allows for the current company operating under protection to continue the manufacture and support of the Eclipse 500.
While this is an extraordinarily difficult thing to face, (NOT if you've planned it for a long time, ed) it was the best possible choice before the Board of Directors, the senior lenders and the executive management team.
The implications of this action are many and certainly complicated for everyone involved. While we have modeled many different scenarios, at this time, until the sale is finalized, the old company cannot disclose the final plans for things like production, suppliers and deliveries in 2008 and 2009.
This letter will attempt to outline the immediate scenarios for each constituency amongst the customer groups.

Customers who have taken delivery of their aircraft:
During the sale process, the new company intends to operate as a going concern to support the Continued Airworthiness of the fleet. However, there is a different path of interaction between customers and the company operating in reorganization.
Warranty - Warranties are no longer covered by the new company, post petition. Any and all maintenance work performed on aircraft will be on a time and materials basis during debtor-in-possession operations. The new company must decide if it will honor any part of past warranties. Any outstanding warranty claims submitted pre-petition will not be honored by Eclipse or the new company.
If your aircraft is currently in an Eclipse service center for maintenance, the new company will continue to work on it and return it to service, on a time and materials payment basis.
JetComplete® - JetComplete contract obligations are no longer being honored in this phase. It is too early to tell if a new aftermarket product will be offered by the new company. This means that Jeppessen and XM services (for the Garmin 496) will no longer be offered and paid by Eclipse on your behalf once your current subscriptions expire. Iridium services will be maintained by the new company for DSU purposes. Customers will be able to go directly to Jeppesen for service coverage so they are not grounded by out of date databases.
Pratt & Whitney Canada - Those with engine coverage as part of JetComplete will no longer have coverage through JetComplete or PWC under JetComplete. Please contact PWC for coverage in the Eagle Service Plan (ESP).
Spare parts - Debtor-in-possession financing will allow for spare parts to be supplied for continued airworthiness, providing the supplier is willing to continue providing parts to Eclipse while in reorganization. In the event a supplier is not willing to supply parts, the new company will be forced to find an alternate source.
Eclipse service centers - All Eclipse service centers will continue to operate while in debtor-in-possession for service, maintenance events and continued airworthiness.
Authorized service centers - At this time, Eclipse Aviation does not have any authorized service centers although a new service model could be implemented by the new company.
Post Delivery Commitments including modifications - Modification plans at the expense of Eclipse will not be honored in this phase of operations. Eclipse intends to sell services and/or the parts kits to all customers who request to have the final configuration installed on their aircraft. The new company will determine how to provide these mod services to the customer base after the sale.
The third party service centers that were intended to perform these mods will be given every chance to fulfill that opportunity for the new company and the Eclipse 500 customers.
Flight Training and maintenance training - Flight training will continue as planned including recurrency training but while in the debtor-in-possession phase, it is no longer part of the purchase price of the aircraft. The new company must determine what type of structure and inclusion in the delivered price can be maintained. Because JetComplete contracts are no longer valid, those requiring and scheduling recurrent training will pay the retail price of that service. Maintenance training classes will continue as required or requested.
TRANSLATION = You're shafted

Customers who have paid any deposit including the 60% deposit:
Those customers who have paid a deposit for an Eclipse 500 are unsecured creditors of Eclipse Aviation. If there is a way to offer consideration to those affected depositors, it will be reviewed for consideration but it is not known at this time if it will be assumed by the new company.
TRANSLATION = You're in bottom corner

Customer who have asked for a refund:
Customers who have asked for a refund are now an unsecured creditor of Eclipse Aviation.
TRANSLATION = You're toast

Eclipse 400 customers:
Customers who have asked for a refund are now an unsecured creditor of Eclipse Aviation.
Those customers that have not asked for a 400 refund are an unsecured creditor of Eclipse Aviation and must wait until the new company decides whether to honor those deposits. The new company will determine if the Single Engine Jet Concept is a viable aircraft for today’s market.
TRANLATION = You're were mugged, get over it

We truly understand that these are tremendously difficult times for you and for our employees. However, please be aware that there is not anything we are holding back from this communication so additional facts or answers will not be available from the teams staffing the phones.
The new company will continue the customer call events to update all customers on status and progress. The next one will be scheduled by the Customer care team.
Michael McConnell
Eclipse Aviation Corporation
President & General Manager
Customer Division

Filing details, thanks to Dave:-

Eclipse Aviation Corporation
Pronto Aircraft Corporation
2503 Clark Carr Loop, SE
Albuquerque, NM
a Corporation (including LLC and LLP)
Petition for Chapter 11

Estimated number of creditors, between 5,001 and 10,000
Estimated Assets, between $100,000,001 and $500 million
Estimated Liabilities (consolidated, book value), more than $1 billion

The petition is signed by Roel Peiper as CEO and dated today, 25th November 2008

Other details from the form include:-
1. There is a bankruptcy case concerning debtor's affiliate, general partner, or partnership pending in the District (Delaware)
2. The lawyers are Young Conaway Stargett & Taylor LLP of Wilmington DE.
3. The largest creditor, listed at $92.3 million, is Kings Road Investments Ltd. of Madision Ave. New York.
4. The total amount owed to bond holders (including Kings Road) is listed at $494.9 million.
5. The total amount owed to larger trade creditors ($2 million plus) is listed at $164.8 million.
6. The total amount owed to customers ($2 million plus) is listed at $29.7 million.

That's the 'topline' information, which I post to advise the widest possible audience.

Peg has left, and ETRIC have made the first bid to purchase the assets. The sale will need to complete in January of 2009, subject to other, higher bids. I'm sure we'll find out what ETRIC have offered, and where the funds are coming from to support the bid.

Al Mann and ETRIC have provided DIP (Debtor in Possession) financing of $12 million, with a facility up to $20 million.

The 'top three' for bond holders, trade creditors and customers (expressed in millions) are as follows:-
Bond holders
1. Kings Road Investments of Madison Ave New York for $92.3
2. KBK Master Fund of Crescent Court, Dallas for $84.9
3. Citadel Horizons of South Dearborn, Chicago for $53.4
Trade Creditors
1. Fuji Heavy Industries, Tochigi-ken, Japan for $31.8
2. Hampson Aerospace, Grand Prairie, Texas for $31.3, although we know the history here.
3. Pratt & Whitney Canada, Quebec, for $30.1
1. DayJet, Boca Raton, for $6.2, even though we'll never get to the bottom of this...
2. ATASAY-MyJet Aviation, Turkey, for $5.0
3. Triac, Nicosia, Cyprus for $4.3
Sundry amounts (above $2 million)
1. UT Finance, East Hart, CT, for $13.5 million, which is linked to DayJet
2. Irell & Manella LLP, Avenue of the Stars, Los Angeles, for $3.2 million of 'legal services'

Grand total
$706.1 million, and counting. Clearly there is a lot more to uncover. But it's a start.

Press Releases issued by EAC today

Eclipse Aviation Seeks Court Approval for Restructuring under 363 Sale
Procedures and Debtor in Possession Financing

Affiliate of ETIRC Aviation, VLJ maker's largest shareholder, announces
offer to purchase Eclipse

ALBUQUERQUE, NM - November 25, 2008 - Eclipse Aviation(r), manufacturer
of the world's first very light jet (VLJ), announced today that it is
seeking court approval for debtor-in-possession (DIP) financing and
procedures for the sale of substantially all of its assets under Section
363 of the U.S. Bankruptcy Code. The proposed sale will enable the
business to continue as an industry leader in the manufacture and sale
of VLJs with lower costs and reduced debt liabilities.

Eclipse filed for Chapter 11 protection in U.S. Bankruptcy Court in
Delaware this morning, simultaneously announcing an agreement for the
sale of its assets for a combination of cash, equity and debt to an
affiliate of ETIRC Aviation S.a.r.l., Luxembourg, subject to higher and
better offers. ETIRC Aviation, a principal driver of the VLJ industry
in Europe, is currently Eclipse's largest shareholder. ETIRC Aviation's
Chairman Roel Pieper has been the acting CEO of Eclipse since July 2008
and has served as Eclipse's Chairman since January 2008. The proposed
sale is subject to competitive bidding through a public auction, which
is expected to be completed and a sale finalized in January 2009.

"In the face of unprecedented economic challenges, it is clear that the
sale of the Eclipse business through the Chapter 11 process is the right
course of action to maximize the value of the business, secure its
future and protect the best interests of Eclipse's stakeholders,
including customers, suppliers, employees and creditors," said Roel
Pieper, CEO of Eclipse Aviation. "The successful sale will position the
business for aggressive global expansion, allowing the company to
fulfill its promise and solidify its position as the world's leading
manufacturer of VLJs."

Also announced today, a group of existing Eclipse shareholders and note
holders will provide Eclipse with post-petition, debtor-in-possession
(DIP) financing. This financing will provide Eclipse with sufficient
resources to continue normal business operations through the closing of
the sale. Eclipse has filed a motion with the Court to approve the
financing with a request for an expedited hearing to avoid business
interruption. Once approved, this financing along with other relief
requested from the Court, will position Eclipse to pay wages and
salaries, honor employee benefits, service customer aircraft and
continue manufacturing operations throughout the sale period.

New York-based Greenhill & Co., Inc., a leading independent investment
bank with proven expertise in mergers, acquisitions and restructurings,
has been retained as financial advisor to Eclipse Aviation. Inquiries
into the Eclipse Aviation sale process can be directed to Brad Robins,
Greenhill & Co., Inc. at 212-389-1567 or brobins@greenhill.com.


Eclipse Aviation Announces Departure of Peg Billson

VLJ leader activates search for new head of manufacturing

ALBUQUERQUE, NM - November 25, 2008 - Eclipse Aviation, manufacturer of
the world's first very light jet (VLJ), today announced that Peg Billson
has voluntarily left her position as president and general manager of
the company's Manufacturing Division to pursue other career

"We thank Peg for her contributions to Eclipse, and wish her the best as
she takes on new challenges," said Roel Pieper, CEO of Eclipse Aviation.

Ms. Billson's position will be replaced with interim manufacturing
oversight provided by Eclipse's senior supply chain, engineering,
production and flight operations leaders.

Clearly, this is going to be expanded as more information reaches the blog.


Thursday, November 20, 2008

A nuclear winter looms

The Wedge was at the VLJ Forum in West Palm Beach, FL, on Tuesday 11th November. He provided the ‘closing comments’ that day, and I’m happy to share with you a fuller transcript than has heretofore appeared in the media. Originally I had intended to run with the entire, but some of what he said was so indistinct it didn’t make the recording and parts were also rambling, to put it politely. I’m sure you will all find it most ‘amusing’.

“I’m surprised you’re all here. I had heard the VLJ revolution was over. I’m happy to be here.”

“A couple weeks ago, 10 days ago, I was in Amelia Island. I flew an Eclipse there. I was invited to Edsel Ford’s 60th birthday. Edsel said to me “This is the challenge. Our business depends on one thing--scale. It’s not about the car we build, it’s that we build it on a large enough scale. We have to get to that level that we break even. We know we’re making the right trucks. We know we got a great product in Europe. But for us to bring one of those cars to the States, we can’t just shut a factory down and start making Fiestas. It would be multi-billion dollar investment. Overnight we saw attitudes in America change. We've sold pickups for 60 years, and now we think we've lost all the customers who don’t use pickups for a living.”

He then moved onto what the transcript describes as being the ‘key discussion’ during the day.

“This is a business of scale and capital formation. I’m really good at that. I'm probably the only person in this room who has raised $1 billion in capital. Don’t know if that’s good or bad, but it’s a fact. How do you do this? Not a lot of ways right now. There's a lot of discussion about organic growth--that's a fancy way of saying you fund it yourself. I don’t want to take a drug from a drug company that used organic growth to develop that drug. This industry is time intensive, it's regulatory intensive, it's capital intensive. And it can’t be done by raising a million from family and friends. Piper said they can build a jet for $150 million. At Eclipse, we had to build the whole infrastructure from scratch. About half a billion was spent getting the aircraft through cert. Half of that, $250 million, was because we had to start over a couple times. There was the failure of the Williams engine. I praise P&W. I’ve been criticized in the media for saying the problems were due to vendors. I’ve never said that. If one vendor--in a chain--fails, that’s a big problem. Ask Boeing (about the 787).”

There you have it. He’s actually boasting about blowing a BILLION dollars of other people’s money, and now tries to rub their noses in it by saying he had to ‘start over’ several times. There were several remarks about Williams, and P&W. Needless to say, they were self serving and no longer relevant. The Wedge then moved back to his core premise:-

“This is a business of scale. If you say we’re going to produce 30 a year, that’s going to drive capability, cost. The thesis here that I’d like to explore is that it's time to change the definition of VLJ: Value Light Jet. That's the real theme. Now were finally talking about facts, not database speculation. We have real facts. "We have seen the dogs eat the dog food." Ed proved it this morning. Bill [Herp] talked about it. It is happening. The underlining theme is one thing: it’s about value. Most of their customers are not coming out of NetJets or the airlines. They're coming off the highways. How do you get these people off the highway? Offer them a better value. Offer a different set of values: time, convenience, safety. It will be different for every consumer. Truly on demand and customized.”

The only thing that Ed proved was how to go bankrupt in under a year. Mind you, he did have help from his ‘friends’ at EAC, so it was not a solo effort. Despite the visible proof that there is no ‘air taxi’ market of sufficient size to drive real volume, The Wedge refuses to drop the shovel he’s using to dig the hole he’s in and continues.

“I’d like to see VLJs and air taxis---VLJs are an enabler. Any one of a number of airplanes will work. VLJs bring a new dimension. Here’s a little secret the Eclispe 500 is the airplane I wanted. A ‘turbofan’ Duke. What I wanted was a jet that was like a Duke. That’s what the Eclipse started out as. The ultimate owner pilot aircraft. It is still the core of who Eclipse is selling to, especially since the demise of DayJet. Don’t associate air taxi and VLJs. Air taxi can thrive and succeed without VLJ, and VLJs can survive without air taxis.”

Drivel, pure drivel. I can’t make sense of what he’s saying, and I don’t think he can either. Is it that DayJet shows you can’t run a small scale taxi operation, or that the whole idea is a distraction and the real market is the ‘owner pilot’? And then, for no reason I can fathom, he is recorded as saying next:-

“I was involved in early stages of development of PowerPoint: I have made 2 promises to myself: I quit shaving. I don’t use PowerPoint anymore.”

I don’t know why he said this, or the link between facial hair and presenting ideas, but he said it. As usual, he can’t avoid a direct lie. PowerPoint was bought by Microsoft from a Macintosh developer in 1987. The Wedge left Microsoft in 1982…

“We were convinced (old partner, college roommate) we could sell computers to people just like Pacific Stereos sells to people. Thought it would take 6 months. It took 10 years. That industry is 12 times faster than aviation industry. I look at the VLJ industry and say it’s not going as fast as I would have liked. I want things to happen 10 faster than physics says it can. We’ve got 400 airplanes 260 Eclipse. Cessna 250. The safety record is phenomenal. People said, “It’s going to be the next doctor killer, the next Bonanza.” They say to the owner-pilot, “You’re a good pilot, except you’re not professional. Screw you asshole.” Cirrus killed lots of people. After 2 years Eclipse has 2 accidents, both runway overruns. Cessna and Eclipse take a different attitude toward training. I think we’re doing pretty good. People out there don’t want us to succeed. This is an industry that eats its young. Capital formation very difficult. It’s difficult because it requires a lot. It can’t be done in your garage. It requires lots of capital, lots of patience. It’s fraught with people whose comment to anything new is “It can’t be done. It hasn’t been done, so it shouldn’t be done” or “Well if it could have been done, we would have used King Airs.” Bullshit. The airplane doesn’t make a flip bit of difference.”

Now now, lets keep the language clean around here. The Wedge gets back into paranoid mode:-

“It’s a willingness to take risks. Entrepreneurship. This industry has lost its spirit of entrepreneurship, and it’s phenomenally sad. This is an industry, if it doesn’t change attitude, its approach to innovation, disruption [is in real trouble] Early 2001, Russ Meyer--who I admire, he made Cessna what it is---Russ is a great man. Russ sought out two off my largest investors to tell them it was stupid of them to invest. “It won’t work” It didn’t help my cause, someone of his magnitude, credibility, stature, to seek out investors and board members to say don’t do this. That’s what I’m talking about.”

See, everyone was out to ‘get’ him, all them dinosaurs from the existing aviation community. There are evil men everywhere, bent on browbeating a saint who never lifted a feather to any of his competitors. Shame on them. The problem with his views on these matters is very simple, and may indeed indicate a deeper psychosis. Everyone else is wrong, because The Wedge is always right. There are a range of medical conditions and personality disorders which we could consider, but this is an aviation blog, not a medical one.

“What am I going to do next? I don’t know. I’m an entrepreneur. I know how to take risks and I’m proud of that. It’s not the first failure in my life, and probably won’t be the last. But we need capital, and the future of capital is pretty bleak. I think we’re in for a tough period. We’ve been drunk on credit for a decade. But that’s a free economy. This isn’t new news.”

Probably the most sensible thing he said for a long time. Are you listening Roel? This chap claims to know more about the market than anyone else, and he says the future is bleak.

“We have never had financial global systems so completely interwoven. It’s really scary. Problem is that we have an increasingly uneducated electorate. I still think the best comment: Warren Buffet---time to be fearful when everyone’s greedy, be greedy when everyone else is fearful. Intense fear right now. I’m very concerned about attitudes. I don’t share Ed’s pessimistic view. We’ll emerge differently, but not necessarily right away.”

Ed was clearly better informed than The Wedge. If anything the short term outlook is getting worse.

“Where will I end up? Where the capital takes me. Green tech is very hot right now. Am I going to start a nuclear power company? That has it’s own set of regulatory complications. I don’t know. When I do, I’ll let you know.”

There you go. Watch out fellas, he is thinking of going nuclear. Clear out those old bomb shelters and lay in a stock of food. The Wedge wants to go out in a real blaze of glory.

“People have asked me if I’m going to be the next Secretary of Transportation. No way in all of God’s green earth. If I were to go to DC, I only wonder how long it would be before I blew up and went postal. No. I’m not politically connected enough. I didn’t vote for Obama. One article said I was a member of Obama’s aviation staff. No. I feel like Sarah Plain. No I’m not going to be the Secretary of Transportation or the next FAA administrator. I’m not going to be involved in government. I’ve watched that town suck the life out of [people]. Not a good place. It is a profoundly and decidedly negative place to exist.”

As far as I remember, the only one promoting The Wedge for Washington was Black Tulip! Does he not have one nice thing to say of your national capital? I think the monuments are quite nice, and I understand some of the food can be very pleasant. But no, he’s feeling negative about it. I wonder if it’s because of the FAA? Ah, here we go, a fully fledged rant:-

“We are in for a tough haul with the FAA. We’re going into the dark ages. It is all politically motivated. 100 percent political. The Congressional hearings on Eclipse had to do with unions. I am the only one who has the courage to stand up and say this. They’ve had it out [in - ed?] for Hickey and Sabatini. Their cronies, led by Oberstar, sucked up to them. They planted stories with USA Today. It’s all politics. The FAA is unfortunately subject to this. One way to describe it, there are people in government that think the government is the only one capable of doing what’s right and correct. They believe that from a regulatory standpoint, the only people who can truly enforce are government.”

Really? So, EAC were correct and the FAA were wrong? Does that mean that the TC and PC were delivered after political pressure was applied? Lets see how he squares that one.

“We did face challenges with certification. We chose to do a lot of things differently. Eclipse 500 never had an electrical failure. People said we couldn’t build digital electrical system, and now Bombardier is duplicating that system for the Lear 85. John Hickey --who I have more respect for---his comment was to me, “Look Vern, our guys in the field are not the best engineers. We have those people, but you have to remember, the safest word for bureaucrat is no. They’re only good at approving things they’ve seen before.”

So the FAA people in the field have no idea what they are doing. Therefore, they were not qualified to issue the certifications. So the FAA HQ people did it for them. But the FAA are not political. Hang on, The Wedge said they were. I’m confused…

“80 percent of Eclipses are not in air taxi. One of the good things about my departure from the company [I got an Eclipse]. I flew on average 25 hours in the last three months. I just go. Put as much gas in as I can, go as long as I can. The airplane has 300 hours. It just runs. Just get in, start and go. Part of the problem is that I know too much about the airplane. Every time I land somewhere—I was at AOPA talking to Ed Bolen and Phil Boyer--two owners came up to me and thanked me for the airplane. One of the schizophrenic problems that Eclipse has. There is the 5 percent asshole quotient, but owners love them. It does exactly what it says. We screwed up on some things, and some vendors screwed up. There were some problems. But it’s an exceptional airplane. With a good tailwind, you can get 10 miles per gallon. At one airport, an old B17 pilot came up to me and said how the great airplane was. He didn’t know who I was. When I hear things like that, it makes all this worth it.”

This is called MBWA. Steve Jobs did it at Apple before John Scully fired him. It’s short for Management By Walking Around. As far as The Wedge is concerned, everything in the garden is rosy because people he bumps into tell him it is.

(Asked from the floor about the future of Eclipse) “I don’t know. I have zero association with the company today. That is partially their choice, partially my choice. I made decision, some on the board wanted me to stay, I knew it would be like going from captain of the ship to third officer or worse. When I’m not happy, I’m destructive. With my personality, I couldn’t handle that. I’m not good at being Number 2.”

Ask anyone Wedge. You were crap at being ‘Number 1’…

“Why have I been vilified? That’s a tough question. I watched it happen to one of my best friends: Bill Gates. We were playing golf one day, when he was going through all that shit with DOJ. People were saying, “This is a bad, evil person” Bill said to me, “All I thought I was doing was making life easier for people.” I talked to him recently about what happened it to me. The reason I got fired was simple, I pissed off the investors. I stood up to them, didn’t want to do what they wanted to do. When you’re CEO, your job is to lead, to decide. Board approves or disapproves. If they don’t like it, they have one choice: accept it or fire you. I didn’t leave, I got fired. I was going in a direction that the investors didn’t want to go. So they fired me. When it isn’t working, you fire the coach. Why I was vilified? I don’t know. It’s because I’m such a warm, fuzzy person.”

Name dropping was always one of his minor sins, so we’ll let that one go. But false modesty never looks pretty on the Curriculum Vitae.

“I’ve been scoured in the blogosphere, all by people who are “idiots and cowards.” (to quote Sarah Palin) They do it through anonymity. I’ve never shied away from saying “You’re an idiot.” You look at these postings, and they’re all by people who are anonymous. They’re cockroaches trying to hide under rocks.”

Hello, Mr. Wedge, your favorite cockroach here. Are you ‘name calling’ for a reason? Is it because Rich Lucibella stood up to your SLAPP suit and put you back in your box? Do you think, like I do, that the exposure you provided this blog was one of the bad decisions that got you fired? What exactly is your problem with the First Amendment to the Constitution of the United States anyway? I’ve a load of questions, as do a considerable number of reporters I know. Care to answer any of them? Or have you crawled under a rock, grown a beard (it doesn’t suit you, by the way) and hope people forget how you burned a self-confessed ‘billion dollars’ of other peoples’ money? You know where to find me if you want to unburden your tortured soul.

“Eclipse is a FOQA-approved agency. We used that data to identify problems. The Midway throttle problem: massively misreported. It was a failure mode we did not anticipate. When you really slam on the throttles-it took 45 lbs of push. One of the problems Eclipse foisted on itself, engineers happier than a pig in mud that they have so much precision. In the case of the Eclipse, that fault condition--not a failure--latched in 200 milliseconds. We did research turns out on Cessnas FADEC 2 seconds-6 seconds. They latch 50X slower than Eclipse. So the Eclipse did what it was designed to do. Turns into a big deal with NTSB. Emergency press release. By the time it was released--by the way, we had already done that. Sturgell asked Mark R. (NTSB) --WTF?? Mark said, “You know that’s how the game is played.” That’s a direct quote. But when I say it’s all politics, people say I’m a jerk. Personal vilification: something needs to be changed.”

Yes Mr. Wedge, it’s clearly everyone else’s fault. You had no personal responsibility for any of it. People in aviation will be happy to work with you again, I’m sure. As I will, the next time you start to rip people off. And the time after that. And after that. I know you fancy dabbling with nuclear power, but remember that most scientist agree with the following. After you trigger your ‘nuclear winter’ the first life to reappear will be the cockroach.

I’ll be waiting for you.

Shane Price
Proud custodian of Stan’s legacy.
November 2008

Thursday, November 13, 2008

Sadly, it looks like the end.

This is not a post I was looking forward to. I've experienced grief myself recently and know at first hand the pain and loss the staff at EAC, along with suppliers and customers, must feel at this time. My thoughts and best wishes go out to all those affected by todays' events.

First confirmed reports were from KBO-TV reproduced below. 

Eclipse employees unpaid for last two weeks
The employees of Eclipse Aviation learned this morning that they won’t be receiving their paychecks for the last two weeks of labor. Employees at the Albuquerque manufacturing facility say that they were called into a meeting early this morning and told they would not be receiving paychecks. They were handed a sheet of paper with a toll-free phone number to call to see if they would be paid. No reason, apparently, was given for the action.

Employees leaving the early morning meeting expressed anger, frustration and uncertainty before speeding out of the facility's parking lot. Among the concerns they voiced: What would become of their vacation and what would become of their retirement investments.
Employees were told that they could come and go from the workplace throughout the day but many immediately emptied their desks and left. Some employees attending the meeting say that company officials told them that they stayed up into the early morning hours trying to find a way to assure the workers would be paid but were unable to do so.

A critical vendor to EAC has also confirmed to me they are 'pulling the plug'. The knock on effect of this could lead to an early grounding of the remaining FPJ's, and serious efforts will be required to get them flying again. This is a direct consequence of the high level of integration in the design.

A few interesting reactions to the news over the past few hours.:-

1. Peg is clearly relieved that the end has come. The following hit the inbox from a 'reliable source' today:-
"My partner works at a coffee outlet close to the EAC campus. He knows Peg, who was there this morning laughing up a storm, apparently without a care in the world. She was with a guy, but they were acting like teenagers. Public displays of affection and all that. Really weird for a 'professional' woman in her 40s..."

2. Several reputable journalists would like to talk to those of you affected by these events. If you are prepared to go on the record, send your name, a phone number and what relationship you had with EAC to eclipsecriticng@gmail.com

3. I've been asked the question, several times today, so I want to state that suppliers and customers are welcome to post to the blog or contact me at the above address should you want to establish contact with each other. I've already preformed this service a number of times in the past....

4. All is not lost. I suspect that we will see several operations opening up which will offer services, in a number of ways. The following quote, from William Feather and provided by an 'ex Eclipser' is worth remembering at this time.
"Something that has always puzzled me all my life is why, when I am in special need of help, the good deed is usually done by somebody on whom I have no claim." 

Clearly the situation will evolve rapidly. I'll do my best to keep up with events over the next few days.

UPDATED Friday 14th 21.00hrs GMT

From: Scott Dannenberg
Sent: Friday, November 14, 2008 12:21PM
To: _All Enterprise
Subject: Payroll status update

Fellow Eclipsers,

We are extremely happy to report that funding has been obtained that will allow all past due payroll to be in your bank account no later than Tuesday, November 18, 2008. Money may be deposited in your account on Monday. Please continue to check your bank accounts.

For those that get physical checks, please call the payroll department on Monday to arrange to get your check.

We look forward to all of us returning to work on Monday, November 17.

Employee benefits including health and dental remain intact and available.

Management continues to work diligently on a longer term financial solution for our business.

We sincerely apologize for the distress this has caused you. Thank you for your continued support and loyalty.

Executive Management Team

This was forwarded to my in the past hour. Lets hope that it is genuine and the start of a 'good news' story. As I noted yesterday, I expect this situation to change, rapidly, over the next few days. Stay tuned.....


Tuesday, November 11, 2008

Circling the wagons

First I'm glad to report that Black Tulip has been active again. You can enjoy the latest missive below.

Second a general statement on the 'state of the nation' at EAC. Needless to say I've had multiple inputs, from within and without the company over the past couple of weeks. It's now time to reduce these to a form with we can all discuss.

Finally, I commend those who've stood up for the company on this blog. It's hard to defend the indefensible at the best of times, but with the rather bleak economic outlook right now it must be causing sleepless nights. I sincerely hope that the outcome meets some of your needs, even if I doubt that the structures currently in place will continue.

Current position at EAC
1. Training activity has tailed off. Recently a group were sent home during a course, without convincing explanations being offered. We also know from the Eclipse Flyer that owners are being encouraged to pay for extra pilots.

2. While AvioNG 1.5 has been certified, for all practical purposes it's not available to current owners as it's installation can require extensive works. The 28 ex DayJet aircraft seem to be getting priority in this regard.

3. Significant numbers of senior staff are in the job market, looking for alternative employment. Stop leaving those updated resumes on the printers, please, its' demoralizing the troops. And stop passing your personal cell phone number around 'just in case'. You know who you are, and if you're not sure, contact me and I'll let you know....

4. Last post I mentioned the 'FOQA' software that hides inside Avio and feeds data back to the spooks in EAC. Seems some pilots have been very naughty (acrobatics, anyone...) and have been getting nasty letters from ABQ, which is all in the name of safety you understand. Oh, and stop running into reserve fuel, it's bound to get you a ticking off. Or flying overweight. Or ruining your tires or.... Remember, you are not paranoid, Big Brother IS watching you.

5. I mentioned the following on the last thread, but no one seemed to pay much attention. It's significant in that it's the first time I'm aware of that a customer has sued having already flogged off his FPJ and realized a true loss. Clearly this suit joins those seeking return of their deposit, which also grind their way through the courts.
Atlantic Marina Holdings LLC v. Eclipse Aviation Corporation 11/3/2008
"Unfair Trade Practices. Defendant was negligent in its sale and manufacture of a $1.8 million jet aircraft that was delivered to the plaintiff with several deficiencies that were never adequately resolved. After pouring an additional $128,000 in the aircraft, the plaintiff sold it at a substantial loss."

We move, on a lighter note, to the latest from Black Tulip.


Albuquerque, NM - November 11, 2008 – President-elect Barack Obama met with employees and reporters today at Eclipse Aviation headquarters. In a surprise visit Obama announced, “Eclipse Aviation will be the poster child of my new administration. In the past you may have heard the phrase ‘too big to fail’. From now on that is obsolete. The byword of my Presidency will be ‘too good to fail’.”

“I know a winning business strategy when I see one, and Eclipse has it. If the company had not been unfairly treated and betrayed, it would a powerhouse in New Mexico, providing thousands of good-paying union jobs. I reject the idea that Darwinism has brought Eclipse down. Survival of the fittest is going to be replaced by hope and change for the next four years.”

Obama continued, “It is the robber barons of Wall Street that have denied the wrench twisters of Main Street their well-deserved success. The former will see their assets reallocated, so the latter can succeed. My first act as President will be the creation of the Corporate Restoration Action Program.”

“I intend to spread the Corporate Restoration Action Program far and wide. I will create a new government cabinet to dispense the funds. Note that cabinet heads, formerly called Secretaries, will now be referred to as Ministers. I haven’t picked the Minister of Transportation yet but I know she will have a particular affinity to Eclipse Aviation.”

Obama concluded, “Well, it is time to get back on Air Force Zero Point Nine and head back up North. I want you all to keep the faith. Several hundred million dollars each for Eclipse, DayJet and Pogo should not be a problem.”

As usual, I'll remind our readers that the tulip mania peaked in the Netherlands during the 1630s. The black tulip was the most sought after, until found to be biologically impossible.


Saturday, November 1, 2008

It could all be over by Tuesday!

It's not been a good week for VLJ companies. Adam (Mk II) and Grob are both flatlined, the promised EASA certificate failed to materialize and another forecaster joined the Teal Group in predicting the end for EAC. 'President' Mike continues to fill the ether with the nonsense they call The Eclipse Flyer. Except they can't afford to print it now, so they will only email a PDF in future.

Speaking of that august publication, it has a few interesting titbits in the latest issue. Normally only available to owners or position holders, several public spirited individuals have shared their copies with me. Thanks to one and all...

The first page carries an 'ad'. Since hardly any new owners are taking delivery, the flight simulators are empty. Why not take them up on their offer, as it's probably the last chance you'll get. As a by product, FPJ Inc will collect some cash. Well, if I'm honest, I'm told it's the ONLY source of cash left...

We currently have excess simulator training capacity. If you have a second or third pilot associated with your aircraft who has been unable to attend training due to past training constraints, we can now address these needs through the end of 2008.

The 'spy in the cab' industry-leading Flight Operational Quality Assurance (FOQA) program which was such a hit with owners has now been formally released. It seems that people continue to abuse the FPJ, especially while landing. Read the EAC spin of their 'discoveries' yourself...

We evaluated 13,770 flights from October 2007 to September 2008. Approximately 1,075 events, or only 7.8%, were highlighted during this time. Unstable approaches constitute the largest number of operational risk events, followed by excessive bank angle at low altitude and exceeding maximum ramp weight.

Must be reassuring to know that your every move is being recorded for later download and analysis by those crack people at EAC. No wonder the owners are praying for bankruptcy, to clear the records of how badly they've landed.

Or how overweight their wives are...

But there's more good news! Those "Random Transponder Code changes" and the ever popular "Random Autopilot pre-select changes" join the "Random Comm/Nav Surveillance (CNS) switching" on the 'eliminated' list. Phew, that's a relief, so as soon as the AvioNG 1.5 software/hardware updates are approved, you will all rest easier. Hang on, you need to get these done by EAC. Which will be in an order dictated by the way the wind blows on Saturn in a month with 'z' in it.

Or something like that.

So, keep a careful watch on your transponder, autopilot and all those other 'random' bits that keep your life interesting while aloft in your FPJ.

Finally (from the Flyer, anyway) the following advice, which confirms what several here already knew:-

Static Port Moisture - If you park your plane in rain or high humidity environments, cover your static ports to prevent moisture from accumulating in the static lines. Custom static port covers are on order and will be available at the Company Store in the coming month. Until covers are available, you can use low-adhesive painter’s masking tape to cover the ports. Be sure to remove the tape or covers prior to your next flight.

This statement surely begs the question, why did they locate the ports so badly, in the first place?

Meanwhile, word reaches me that several of the 'senior leadership' continue to hunt for new jobs, which will be hard with EAC on their CV's. The looming cash crisis is made worse by strict bank limits, which could be breached early next week. What this means is that the company has agreements with it's banks, stipulating certain targets. Once, for instance, the minimum cash at the bank is reached, the bank reserves the right to refuse payments. I've got some advice for those of you who's EAC expenses cheques bounced in August. Expect similar treatment next week.

Several owners have contacted me with concerns for the immediate future. A number are in the middle of preparing to file suit (under various headings) in an effort to either a) get their aircraft upgraded or b) their money back. These efforts may lead to something, as I'm aware that Frankenjet depositors have been able to extract cash. However, the long suffering FPJ position holders are being told that nothing will change unless the promised 'UBS funding round' is successful.

Something which seems highly unlikely at this stage.

Keep your eyes open for events at our very own FPJ 'enterprise'. Once your election is out of the way I expect events to move rapidly. I hope, for the sake of the workers, that these 'moves' are positive. Sadly, I think not.