But....
Shortly after the ink dries, all depositors (other than the ConJet/E400 group, also see details below) will be formally told their contracts are worthless. The new cost price of the aircraft will rise, and no refunds will be paid. The price for the base aircraft will rise, probably to $2.5 million. Suppliers have been offered cents on the dollar and a small share in the company, if they agree to new vendor contracts. The City of Albuquerque will also want to discuss what Roel intends, as there are a number of reporters asking searching questions following the revelations in the bankruptcy court.
The E400 group have managed to get the judge to escrow $3.2 million of the cash due from the sale until the outcome of their claim hearing. At least this will give them time to dig up the audio/video records of Wedges speech at Oshkosh last year, when he stated the $100k deposits would be in escrow.
Al Mann continues to support the company and will at the very least raise the moral tone in the boardroom. He's well known in business for his ethical approach, especially towards staff. It was Al who made sure the payroll 'hiccup' last November was corrected as quickly as possible. It's just a pity that in this turkey, he was surrounded by sharp operators and dodgy computer salesmen.
So, if you are one of those who's serial number is lower than 296, and you have paid your deposit/progress payments, but have NOT been represented by a lawyer, contact me promptly and I'll email you the appropriate details. But be QUICK. You have until 12 noon ET tomorrow to agree to the 'deal' and get included in this part of the Court documents. The usual address will get me
eclipsecriticng@gmail.com
I'm sure this headline will be updated, by events if nothing else. Stay tuned to your favorite Very Cheap Jet, sorry that should read Very Costly Jet, blog.
Shane
353 comments:
«Oldest ‹Older 201 – 353 of 353ATman.
The 'last' FPJ, which will be delivered once the Chapter 11 sale closes at the end of the month, cost it's new owner $1,342,007
And fifty cents.
Plus the premium they paid to the original depositor, who placed his order in July 2002. As a matter of record, this initial deposit was $97,500, being 10% of the then purchase price.
Last week I talked to one of the 60%'ers, who told me he had paid a premium of $200,000 for a serial number in the mid 300's.
It's reasonable to make some assumptions as follows:-
1. That s/n 260 is the last FPJ that EAC will ever deliver.
2. Therefore this price of $1.34 million is the highest ever paid, after CPI adjustments.
3. That the premium was in the region of $200k.
It is my opinion that the net cost to the owners (excluding their legal fees) is in the region of $1.55 million.
Now, if you take off the $1.5 million of heartache and grief they've had, you're down to about what it's worth....
Shane
For the purists, does 260 count as a Nov 08 or Feb 09 delivery?
Hi Shane,
YIKES !!!!
(Make that SEVERAL YIKES !!!!)
1) I hope my comment "coming soon to a blog near you" was not interpreted as anything other than THIS very blog !!!
2) "When it reaches a point of diminishing return, that's when it's time to move on".
I sincerely hope that was NOT interpreted as meaning I might be moving on to another blog (as much mutual pain this may cause many of our viewers !!:), nor encouraging any other to do so!
(It was instead referring to the "diminishing return" in continued discussion of a particular topic, when one has said everything they have to say, but still hasn't convinced the other side. At that point, it's time to "move on" to another topic- and as I mentioned, it seems like the Eclipse story just seems to keep generating new ones. (Indeed, worthy of not only a movie, but of an entire "movie franchise" -I think the "Rocky" series only made it to a fifth movie, but I suspect the Eclipse series could go well beyond that).
The observation was offered to encourage and indeed solicit Bassmaster, and many others I suspect, to go ahead and post their opinions, and not be intimidated / annoyed / frustrated by the response it might elicit, and to defend their positions in response to rebuttals, both civil and perhaps not so civil, and then to be prepared to move along to our next topic with foreknowledge that not everyone will agree, no matter how right they feel they are (and indeed might, or might not, be).
(My personal latest "move on" has involved unions- I know Baron and I talked this to death -and everyone else on the blog curious and/or patient enough to read our banter- and while we have failed to convince each other, we have both "moved on" to other topics- disclaimer: not to say we won't go there again though! But we both realized we had reached the point of diminishing return in trying to persuade the other. I certainly hope Baron doesn't "move on" to any other blog- I certain don't intend to! :)
In particular, I was suggesting that others might consider the approach I've noted Ken is commendably astute at, regarding the "diminishing return" concept. He states his position, and subsequently defends it, but then "moves on" to await the next topic of interest when he's exhausted the points he has to make. With our various positions on the issues, we all need to recognize you can lead a horse to water, but can't make it drink- trying to do so results in a diminishing return of effort.
(BTW, I don't always agree with Ken (mostly I do regarding the airplane, maybe mostly not regarding old EAC, although I think we're in more agreement of late), but I appreciate his approach to disagreeing. (And note that like all of us, he too can get get a bit "snippy" as he did just before departing for his trip to Mexico; and this is not to single him out, as I consider him a commendable model of restraint- just to point out it is incumbent upon all of us to consider when we've said enough. (HA HA HA- imagine that coming from me, of all people- sorry!). Such an approach is good advice for all of us, I think).
3) In encouraging a more courteous and respectful attitude between bloggers, I hope that was in no way construed as a critique of the blog moderation (quite the opposite, I appreciate that we are free to make fools of ourselves, a liberty I frequently indulge in!!) I know this is a serious consideration for Shane, and I think he does an excellent job of "giving us enough rope to hang ourselves with", but yet still respectfully but promptly reins in improper discourse (tone if things get unpleasant, and content where appropriate).
4) YIKES AGAIN !!!
"I consider Karen DiPiazza and Rich Aboulafia both excellent sources, with good writing". I was narrowly referring to Adam's inquiry about the Charter X article, and I but failed to comment on the bigger picture here. I think I can mention this "in public", as it has been referred to before (but might have escaped the notice of those more narrowly reading for just aviation content); Shane is involved in professional publishing, and his professionalism shows in his excellent writing and editorial style here. I've said it before, and I believe it more every week; this blog is every bit the equal of Aviation Week- and I can think of no higher praise!
---------------------------------
The notion that any of my comments might be taken as critical of the blog was so alien to what my thinking, that I confess such a concept took almost all day to sink in (once again, demonstrating that perhaps I am a slow thinker- but I will try to be a better poster in the future to avoid any such impossible and erroneous impressions (The blog has, once again, improved my thought process- and it can use all the help I can get !!). I think we have a great bunch of participants, and Shane is a great host and moderator- I offer my sincerest apologies if my imprecise comments created any other impression!!
Karen Di Piazza and Rich Aboulafia well serve the aviation community as professional journalist and financial analyst, respectively (notably both "bucking the trend" and correctly discerning the facts in spite of a extensive PR campaign otherwise). And We don't say it as often as we should, but we all owe a big thank you to Stan, Shane, and Rich (Gunner); all three are noble men whom serve the aviation community with selflessness and modesty, who have worked hard to make sure the truth gets out, not out of vendetta or personal gain, but rather because they want to make aviation an even better place for friends and strangers alike.
While a slow thinker, over the months I have had the time to fully reflect on this- it is no understatement to say this blog, with the moderation and support of these THREE guys, has saved probably THREE THOUSAND families (prospective investors, customers, employees, suppliers, supplier's employees) from significant financial and emotional distress. REALLY. The blog has served society, both flying and non-flying, with far more respect than the old EAC ever did.
(I would encourage all to consider this, when we are tempted to make snippy posts devoid of content- I have a great reverence for the blog, and of the person and fine work of our moderator Shane, and as such the blog deserves a better effort than we sometimes put up. This was the sole intent of my recent posts. I apologize if my inarticulateness lead to any other conclusion!! YIKES !!!).
Goat,
I think you might have assumed comments I directed towards Bassmaster were intended for you!
Laziness on my part by not making two separate comments, for which I apologize.
You, however are 'guilty' of one assumption:-
Shane is involved in professional publishing
In a word, no.
My 'involvement' is WITH professional publishers and printers, who are kind enough to pay me for goods, services and advice I supply to them. I've never been paid for one word I've written, and I'm too long in the tooth to start trying now!
The credit for keeping a spotlight on this affair goes to Stan Blankenship who started asking questions of EAC, and to Rich Lucibella (a.k.a. Gunner) who defended us in our hour of need. All of 'you', who keep posting and making others look again, do most of the work and provide the content which makes the blog such a vibrant resource.
Me, I lob in a few comments from time to time, and try to move the 'headline posts' along at a regular pace.
As I said often enough, I really am just a simple Irish businessman.
Who 'smelled a rat' lurking down ABQ way...
Shane
Zed,
For the purists, does 260 count as a Nov 08 or Feb 09 delivery?
I vote for the first of April as our 'official' delivery date.
It just seems appropriate that EAC deliver it's very last FPJ....
....on April Fools Day
Shane
Wow, what a breath of fresh air!!!
A startup GA company that managed to deliver certified planes (jets nonetheless) in 4 consecutive years (and counting) - 2006, 2007, 2008, 2009.
How many companies in the whole world can claim that?
which company?
Over 9,250 “Doodle Bug Very Light Jets” (V1 “Vengence Weapons”, for those deficient in historical knowledge) were manufactured and launched between 1942 and 1945 . . . and successfully flown.
Would the folks at “Peenemünde” receive at least partial credit for having produced a successful jet aircraft . . . at least as complete, if not more so, than the little bird in ABQ?
Such talk is just as ridiculous as any that claims a complete, and safe “Very Light Jet” having yet been produced by Eclipse.
Let us keep the conversation on a level playing field. When, and “if”, the little jet of great cost and bravado is ever produced . . . in Albuquerque or elsewhere, many a critic will gladly applaud the effort. And wish them well.
Until such an event, all the talk in the world will not change the past . . . nor provide aircraft that do not yet exist.
gadfly
(Remember . . . for some of the critics, we would have rather spent our time declaring the benefits of owning and flying the little bird . . . and manufacturing parts under contract with an honest aircraft company. We do not gain anything by its ultimate demise.)
Hi Shane,
I'm greatly relieved I had not created the wrong impression!
And I do hope we can get some of the new posters (I suspect they are not new readers though) to more fully develop their propositions.
I think those opposed to the majority view are comfortable with their ideas, and don't want the frustration of getting into "shouting matches". I can understand that sentiment, after all, it is frustrating to not be agreed with, and even more so to have the feeling you are not even being listened to- just criticised.
But I encourage everyone to say what's on their mind, and not wait "for the right time"- life moves too fast for that. I have huge respect for Fred and Julius, I think they are very knowledgeable about international politics and global markets and finance, and the major players in those arenas, including Mr. Pieper.
I trust our new friend V2 does indeed have something astute to say, and Bassmaster has tantalized us with the offer of making some really solid contributions to our understanding of the new Eclipse company. I hope both of our new buds do indeed contribute!
Cheers for now,
Goat
-------------------------------
(BTW, thanks to Shane for sharing his interest in Eclipse over the years. I'm not sure if you've found "the right plane" for your mission profile, but I'm glad if you have avoided "the wrong one". Especially considering "the profile" of a couple of hundred depositors is a flattened bank account, for those with sn 290 and up...)
Baron,
I concur, it is an accomplishment for a startup to have 4 consecutive years of deliveries.
I think in Jan 2011 we might be able to celebrate Eclipse's victory in that regard!
(I didn't buy into the "Dec 31, 2006" delivery stunt, nor the 787 "roll out" stunt).
And while I agree it is impressive to make airplanes, especially clean-sheet twin jets, it is more important to make a profit. (That one- we'll have to see :)
Cheers,
Goat
I'm pretty happy that this mess has burned through something closer to $3 billion.I'm pretty happy that this mess has burned through something closer to $3 billion.I'm pretty happy that this mess has burned through something closer to $3 billion. X3 JUST TO MAKE IT CRYSTAL CLEAR!!! Glad YOU'RE happy funny guy! You're a real funny guy Mr Price. Lots of depositors are just hilariously partying to your tune BUCKO!
Baron95,
there is nothing wrong with your positive mental attitude! Perhaps I'm more pessimistic.I have to learn a bit!
I think the wedge did a poor job as he resp. EAC didn't manage to produce one single a/c to promised specifications within four production calendar years.
I think there are a lot of entrepreneurs who can build an incomplete jet within 8 years and sell a lot of them once they adopt
attitudes like those of the wedge, Madoff, the bosses of Freddie...( a long list).
Is it a sign of great entrepreneurship to sell something at prices below costs?
How are your educating your kids - they have to have only great success without looking at the methods they applied to reach their goal? I think there is no discussion!
Remember: "s/n 260 sales" was stopped because of ch 11, but Ken
got a replacement for his jet just for free (contraray to MM's statement on ch 11)!
The last year showed RP's and EAC's true faces.
(There is nothing wrong with the price increases in 2008 and ch 11 sec 363 sales - but see above!)
In 2009:
Why should EJAI pay the FIKI, AVIO NG 1.5 etc. for "old" fpjs?
Who is going to trust EJAI - where are the volunteers (naturally with cash) (pretty happy BassMaster, V2!)? EJAI needs you!
Julius
Four consecutive years of deliveries?
Come on guys. That is a pretty pathetic joke.
SN 1 "Delivered" on about 31.12.2006 but was finally "completed" (Tm Eclipse) and actually flown by the customer what, four months later?
Deliveries in 2009? What, S/N 260? which was about to taxi a few months ago, and got called back for BK. Maybe they will dribble out a couple more of the nearly "complete" planes on the line, but only by canabalising others on the line.
Eclipse, while feeding the furnace to the tune of ~$3 000 000 000, managed to convince about 250 people to take delivery of partially finished planes, over time frame of about 04/2007 through 08/2008. The delivery of production Eclipses was not four years, it was less than 18 months.
Lets compare the EA500 to one of GA's most successful BK comeback kids, the Money M20.
Mooney ................... Eclipse
Structure:
Riveted...................Stirfried
Avionics integration:
Nearly none...............Complete
Needs factory support for:
Basically nothing.........nearly everything
Badly designed systems needing frequent repetitive maintenance:
None......................Windscreen, Tyres, ??
Cost to add G400:
about $10K................Priceless
Cost to add SV:
About $70K................Priceless
Number of critical vendors who aren't delivering:
0.........................ISS+ ?
Likely number of AD's in 2009:
0.........................Some
Worthless factory IOU's on each delivery:
None......................FIKI/FMS/ A/P Function/AT....
Lame.
Avionics interation is a good thing for the pilot, and normally increases safety in an IFR environment, but it is a double edge sword, costing the earth to certify, and closing out the flexiblity of 3rd party upgrades.
I think the EA500 will cause a big backlash against full integration, Garmin's G1000 would appear to be a much safer level of integration for a GA Project. Let the airframe deal with flap warning, gear warning etc, and keep avionics separate.
Chances are, a 40 year old M20 will have SV and autothrottle functionality available before a 2008 EA500.
Freedoms...,
EAC wanted, must start production in 2006... It's EAC's fault!
Maybe EAC stopped production 2008 or 2009.
Anyhow EAC's production record is nothing a company should be proud of. And the BK is just a fact....
Your fine comparison is overwhelming for me but might be bean counting for the pretty happy BassMaster.
Julius
I think the comparision with GA's history of stop/start production, and multiple BK's will not work with the EA500.
You need no certification work to put the M20 (as an example) or any of the other clssic's back into production. The airframes were built in the thousands and were sorted/ finished/ reliable before BK.
Warranty was a financial issue on them. On the EA500, you have to have a competant TC holder as the likelhood of an AD requiring significant design work (such as a software certification) is nearly 100% in any year.
Any halway competant engineering firm could certify AMOC to any AD likely to occur on a Mooney.
The engine is completely separate from the A/C, (no FADEC in the central server nonsense) on the classics. Both both Lycoming and Conti offer well sorted products, and are backed by corporations with deep pockets.
Obvious PWC is not a concern for their part, but the dependance on the FADEC in the Server kills their independance.
The classics systems are simple and largely independant. You don't have the Px controller of the a 400 series Cessna integrated with the gear warning, the flap controller, the thrust lever resolver, the DME and the circuit breakers for the windshield heat.
The classics were designed with simple technologies, so any part can be swapped to a new vendor without any drama.
Look at a C500 with Williams retrofit, moving maps, PR-NAV, RVSM, EFIS all per STC. Integration has it's advantages (B777) , but EA500 is no poster child
That there is still not a single independant approved change on the EA500 shows what a disaster for the owners the sewn up integration is.
In 10 years, all EA500's will be in Museums, playgrounds, gate guards, and beer cans, with the exception of a couple of "diehardests" who will operated them like warbirds, canabalising the rest.
Hello Bassmaster,
I think the number $3B is mentioned with some frequency, by many including myself, because it is simply so- stunning.
I'm not sure if your concern is for the EAC-old gen; if so, I would welcome your comments on "what went wrong".
If your concern is for EJAI, I welcome your predictions on their approach to the criticl mass funding (or credit) required to "get rolling (flying)" again.
If your concern is for the depositors that were defrauded, I should think you would appreciate the warnings they received via the blog, under both Stan and Shane's hosting. If the blog kept even one from being cheated, I would say it has been at least a modest service to society.
Nobody is gloating about the depositors being swindled, least of all Shane.
"I think the number $3B is mentioned with some frequency, by many including myself, because it is simply so- stunning."
While stunning, the even more stunning number is the total dollars committed to this program, which includes not only the funds that EAC controlled directly (variously estimated at around $3B), but also the funds commited throughout the supply chain for development, working capital, tooling, etc. (Funds committed by P&W, Fuji, and hundreds of other suppliers.) My wild ass guess is that taking these into account might move the total into the $5B-$6B area.
Works out to $20,000,000 per airplane... and still not equipped for known ice.
Well put B.E.G!
Since this blog has been running, no deposit holder (unsecured investor/ flight test pilot - choose your term) has a valid excuse for their stupidity of signing over money.
It amazes me how many people haven't yet worked out that a half hour in google belongs to due diligence for anything.
Even if I buy a toaster, I'll google the local electronics store to see what they have, then google the models which seem interesting.
What kind of moron transfers hundreds of thousands of dollars to a half-arsed company which has spent years dicking them around, just because they offer a one time, limited, special offer, pay us now and we promise we'll avoid bankrupcy and give you a big discount.
Cognitive disonance at it's extreme! If I just believe, then I can fly.
The valid business model for the VLJ is OTS technology, production rate based on the owner/pilot (use the PC-12/meridian and TBM 700 delivery numbers), production line scaleable for the recession, take the fleet orders as cream on top.
I am guessing that the real demand for the EA-500 at $2.5 is about 20/ year. (Bizaare, but there are people like Ken who will buy it for the same price as a Mustang, because it uses 20% less fuel, and then they will fly max cruise at FL370, burning up much of saving to save 10 minutes.) They'll take a huge resale value hit, to save $10K/ year in fuel costs.
At that production rate, I would guess EJAI would need to invest about 50 million (normally, lets call it $500 million EAC dollars) to redesign the A/C for profitable production at that rate.
In the course of that project they will descover that the space behind panel, and the avionics racks do not allow for the use of COTS equipment, and they will end up with a seat lesss.
MassBlaster … sorry, BassMaster –
A little story if I may, plus an aside for the blog at the end of this post.
Are you familiar with the comedian Gallagher?
He asserts that America is a country of settlers.
These explorers surveyed the landscape, and when the felt content, they settled there.
Some settled in San Diego, some Minnesota, and some in aptly named places like Dunmoving, California.
Over time, we see that some of these settlers made good decision, and others less so. But in the end, what they have is exactly what they settled for.
=
Fast forward to Eclipse …
Lord knows, and this blog has well remembered, that there are LOTS of options when buying an airplane.
These buyers surveyed the landscape, and when the felt content, they settled there.
Some settled in Wichita, some in Vero Beach, and some in the aptly parodied Land of Entrapment.
Over time, we see that some of these settlers made good decision, and others less so. But in the end, what they have is exactly what they settled for.
=
We are so happy that you know more about EAI or EJAI than anyone on the blog.
We have a few senior EAC folks who post on occasion, as well as a few senior folks at the critical vendors.
If you know more than those folks, then you are really up there. Congratulations.
Over time we will find your claims accurate, or less so.
For now, we enjoy the semi-daily doses of vitriol, or “SOB” as you call it.
Something brought you here. Hope that you find it.
//
Jerry Gallagher, the comedian’s brother is a former Navy pilot, and has been the spin syllabus instructor at the Navy Test Pilot School for nearly two decades. I have observed Jerry doing a 14 turn near-flat inverted spin in a T-2, and then go do it again, and again. Maybe that’s why he has a hair style similar to his more famous “Sledge-O-Matic” swinging sibling.
"My wild ass guess is that taking these into account might move the total into the $5B-$6B area."
In the interest of a balanced perspective, I note that Obama's stimulus program proposes to spend almost this much on contraceptives. Lots more screwing to come!
WT,
ROTFLMAO
The following is part of an email I received, and in my opinion accurately describes the current VLJ market:
Current Economic/Credit Market Update: The Federal Reserve/Banking System: The banking system whether it is called The Fed, The Central Banks, Private Group of Banking Cartel or whatever, it is all the same. The few families “at the top,” control the “borrowing and issue of currency,” for the global economies. Since they have decided to “shut the credit system down and make no mistake about it (they control it and invent it out of thin air),” and since I have no crystal ball and do not know when they will “turn it on again,” we are going to continue to see investors, buyers, speculators of aircraft positions from the Eclipse Jet, Diamond D*Jet, Cessna Mustang, Embraer Phenom 100/300, Honda Jet, Piper Jet, all the way up to the Gulfstream 550 level, “ continue to struggle in getting “credit to purchase aircraft at any level.” Many billion dollar “Fortune 500 Companies” as well are being affected by this banking crisis. How bad will this get? Only time will tell… My advice: “Sellers put your best offer on the table right now and minimize your loss…or think about trading up for a later position.”
Current Buyers of Aircraft/Aircraft Positions: The current market over the past (2) months is showing Premiums at/or below $50k, ZERO, and/or reimbursement of most of the Seller’s Deposits. The market is “what it is,” as is the real estate market. Credit and funding being “turned off” is the sole reason in my most humble opinion. Not to mention many speculators having bought 2,3,4,5 aircraft positions giving a “false sense of market demand.” Until these credit markets get “turned on,” we will continue to see this trend, maybe worse. Although not many, there are few “cash buyers” making offers. And of course, these “cash buyers” want the best deals. They are savvy and thus the reason they have “cash funds” not requiring any type of financing anyway. Aircraft Sellers, like the Sellers in the Real Estate markets, that are moving units or properties are giving “incredible incentives.” In the Aircraft Market, that means offering a discount off of the Deposits Paid to date by each Seller. The last aircraft we have SOLD was a Feb. 2009 Delivery, $2.75m base, Phenom 100 closed on Dec. 29th, 2008 at “par” with ZERO Premium, $550k Deposit Reimbursement, Seller had about $95k in options selected and this particular aircraft had the Embraer Phenom 100 “Company” Exterior Paint Scheme (Highly Desirable) with the Agate Interior. There has been some activity this week showing that since the Presidential Inauguration has been completed, that more interested parties are surfacing, but again, wanting “a deal.” My advice: “Buyers, put LOI’s out there offering your exact terms backed by funded escrow…” Sellers, be open to all offers…”
FreedomJamStarts said... Lets compare the EA500 to one of GA's most successful BK comeback kids, the Money M20.
Freedom, that was an excellent post re the support risks for the M20 (particularly the latest M20Rs) and EA500. While both EJAI and Mooney have about the same risk of being liquidated in 2009, the risks for on-going support of an M20R are tiny compared to an EA500.
Virtually ALL the risk difference is in the avionics/flight-deck integration. And ALL of the deficiencies from original promises to final config of the EA500 (as Gad makes it impossible to forget) are in the avionics function.
And the is the sad part. Eclipse produced a better than expected airframe (aerodynamically much better than C510), speed/climb-rate much better than expected, survived an engine swap which improved the plane, but in the end, failed miserably in the avionics.
The biggest failure of the Eclipse management team, IMHO, was not to have done with the avionics what they did with the engines. When the initial design/supplier proved unworkable and a COTS alternative emerged (G1000), Eclipse should have done a full swap.
Had they done that, they'd have a Phenom-Prodigy class flight deck, with much reduce support risk for the owners if they went TU.
How does EAJI recovers from that.
They MUST:
1 - Create a COTS/LRU part/supplier list for the avionics.
2 - They must escrow and/or negotiate binary and source code support for the NG1.5 software with one or more outside vendors.
3 - Ideally they'd try to sell/spin-off the whole suite to a vendor that would improve it and market it to other frames. E.g. a Russian, Indian, Brazilian, Israeli avionics wanna be with govmt backing.
Odds?
1 - 75%
2 - 25%
3 - 5%
Longtime reader...first post...
Baron, I assume your recent post celebrating deliveries by a start up was celebrating Eclipse's "success".
As a vendor who supplied TSO'd product and never got paid, and never will get paid, this concept that Eclipse should get credit for selling hardware gets my goat. How can anyone claim that Eclipse made a success of their business of selling something when they didn't legally own the parts that went into it, and escaped having to own up to their fraud by ch 11?
Bob
WhyTech said.... My wild ass guess is that taking these into account might move the total into the $5B-$6B area.
$6B. WOW!!!! You just exceeded Boeing's development costs for the 777.
That must have been the largest stimulus package for the GA industry in history!!!! Can you imagine how many engineers, technicians, assembly line workers fed their families on that kind of money.
HINT: That number in enough to pay the salaries (fully burdened) of approximately 720,000 person-months, 60,000 person-years, 6,000 person-decades.
WOW. What a great service Eclipse did for the GA workers of America (and Japan and Canada).
"WOW. What a great service Eclipse did for the GA workers of America (and Japan and Canada)."
Is that you, Ken?
I think it is a myth that credit is not available to individual buyers. If you have average or better credit, this is probably the best time in decades to borrow money.
Toyota Financial, GMAC, and the like, Mortgage companies are making tons of loans now. Mortgage refinancings are running at or near record levels. So loans are absolutely being made and at post-war record low interest rates.
But Avid pilot is correct. Buyers are DEMANDING a deal. Not a deal of the year or a deal of the decade, but the deal of the century.
Want to sell to the American consumer? Better come up with the deal of the century and fast, or you will be driven out of business.
I got a 25% price discount and 33% better lease terms on a very desirable vehicle this month. I'd need AT LEAST that if I were to buy a plane. That means a $600K price break on a C510.
WhyTech, if $6B was spent, it was most certainly paid mainly (90% or so) in salaries.
So Eclipse caused some $5.5B in salaries to be paid over the years. That is a lot of people on the payroll, don't you think.
Try removing that much money from a small industry like GA design and manufacturing.
It seems that the burn estimate continues to grow, sort of like Pinocchio’s nose, and that only the truth will “right size” it.
We know that EAC had roughly $650M in secured notes. They raised around $350M in deposits. That gets us to $1B, and is supportable by actual court records. There was certainly significant private equity at play as well, probably in the ~$500M range.
Not to cause another stir, but before we glom onto a new $6B figure, what are the supportable sources that get us there?
"if $6B was spent, it was most certainly paid mainly (90% or so) in salaries."
Well, maybe, or maybe not. I am thinking about all dollars committed as a result of the EA 500 / EA 400 program. Salaries would certainly be a significant part of this, especially if you traverse all the layers of the suppy chain: direct suppliers to EAC, suppliers to suppliers, etc. I am also talking about working capital, fixed assets, etc. Any kind of economic commitment anywhere in the world that was made as a result of the Eclipse program. If EAC directly drove $3B, the notion that the all the other entities involved did another $2B-$3B is not unthinkable.
I did say "wild ass guess" and "might" be in the area of $5B-$6B. My guess is as good as yours unless you have specific info to the contrary.
hi every body.....we just wanna know one thing...
BARON it seems that you know a lot of things about eclipse, here in europe, we can see that "all" you predict about eclipse come true, but since a couple of days you are insinuating the liquidation or closure of eclipse.....and we are it afraid....
Do you think that the things can go out well for Eclipse this year?? Many pilots here wait that the project works,,If not we dont understand why they bought it.....Thank you very much for your opinion
Spilot, please sir/madam, note that:
1 - I know virtually NOTHING first hand about Eclipse.
2 - Everything I post here is purely for entertainment value, and rarely do I spend any time trying to be accurate, as my bad spelling will attest to.
3 - I'm generally trying to provide a counterpoint to the vitriolic anti-Eclipse main currents on this blog, in the interest of advancing GA progress, which requires risk takers like Vern, Eclipse, etc.
So please, do NOT make any decisions based on anything I write here.
Having said that, I can answer your questions as follows.
A - Someone RP/Mann decided to invest approximately $40M in hard cash (DIP + $28M), form another company Eclipse Jet Aviation, to acquire Eclipse assets free and clear.
B - These people had access to ALL available inside info on Eclipse and access to ALL info related to raising additional funds from Russia and elsewhere, before putting up the hard cash.
C - These folks also engaged in SOME negotiation with vendors, suppliers, owners and depositors, including putting a firm deal on the table to complete an additional 20-odd planes. That deal was accepted by ALL, but one, of the depositors.
You add all that together, and the logical conclusion is that:
- EJAI intents to complete 20+ planes with parts mostly on hand.
- Service/Upgrade the existing fleet for a fee.
- Put additional funds and/or seek additional investments to produce planes at what I anticipate is a 50/year rate for the next 2 years or so.
I think we need to wait another 6 months or so to see how they start performing on the 3 points above. That will give us a clear indication of the direction of EJAI. But I think there is a better than average chance the company will soldier on another 2 years or so in any event.
After that, it really depends on how they perform, how the economy performs and how the competition (DJet, CirrusJet) performs.
All in all, I see NO COMPELLING REASON for anyone to order a new EA500 at this time. I see a compelling reason to complete a deal with additional funds in escrow for delivery of an EA500 NG1.5/EASA final config if you have a 60% progress payment done.
Regards,
Zed
I think there is confusion evolving....
The 'Statement of Affairs' lists a billion raised AND (almost) the same billion 'spent'.
What's unclear is how much liability was created during this process.
Or how badly suppliers were burned.
Certain supports provided by New Mexico (and others) are listed as 'property held for another' but not listed as liabilities.
But the money was still spent.
In absolute terms EAC raised a billion and spent that amount.
To my simple mind, that's a billion lost by the original investors/depositors and a billion squandered by EAC.
Put it another way. It would be reasonable to speculate that an individual who raised a billion dollars in 2000 would, with some astute advice, have turned that into more than a billion by 2009.
EAC managed the exact opposite. They took a billion, and have nothing to show for it.
If anything, I suspect we are looking at a negative value on what remains. They still need to re certify their PC. They still have to provide details of how this 'coupon' idea will work. They still have to deliver an aircraft that meets EASA certification. They, in short, have a load of incomplete aircraft, any one of which might show up a fundamental flaw which grounds the entire fleet.
How do you value that type of 'negative equity'?
Short answer, you can't. But WhyTech also has a point. How many suppliers are nursing losses in EAC running into the millions? That's what we don't see, and likely never will.
Just my two cents worth...
Shane
OBAMA ADMINISTRATION ANNOUNCES AID PACKAGE FOR ECLIPSE AVIATION
Washington, DC – January 26, 2009 – President Barrack Obama announced another targeted rescue package today, this one aimed at Eclipse Aviation. The President said, “I hesitate to use the word ‘bailout’ in connection with an aircraft company, but we are setting aside significant funds for Eclipse.”
“Specifically this aid will be part of our plan to reduce the birth rate to decrease state and federal spending. We are confident in the Eclipse Aviation program because we have documented a number of marriage failures due to controversy over the aircraft. In the marriages that have survived, we know that there are frequent bedtime arguments which end in the couple brusquely turning away from each other and facing the wall.”
The President concluded, “We think of this as our most sophisticated contraception program. After so much talk about stimulus programs, it is nice to offer a balance with a plan to reduce stimulation.”
BassMaster said:
I know more about EJAI than anyone on this blog.
hmmmm....didn't Wedge say he was going fishing?
A new milestone : 2,721,730
At the accepted standard of 1 gram per note, the price of an Eclipse 500 is now approaching it's weight in one-dollar bills.
MTOW = 5,995#
454 grams/pound
“… After so much talk about stimulus programs, it is nice to offer a balance with a plan to reduce stimulation.”
BlackTulip, I think that quote got dicked up. Contraception doesn’t counter the stimulated package, it just helps deal with the outcomes.
Zed,
An excellent observation. I stand corrected.
"What kind of moron transfers hundreds of thousands of dollars to a half-arsed company which has spent years dicking them around, just because they offer a one time, limited, special offer, pay us now and we promise we'll avoid bankrupcy and give you a big discount."
Well, on second thought, I imagine "this" to be a very small group of early adopters with no regard for risk.
So, IMAGINE HOW BIG THE VLJ MARKET REALLY MIGHT BE?
Oh wait - the plane is now $2.XM. We KNOW how big it is... its the Mustang market.
for the record,
EAC did not really deliver any planes in 2006...
AND, now EaC is gone, so EAC will never deliver ANY planes in 2009.
If anyone delivers planes from now on, it will be the newco.
So, 2 years of deliveries, for $3-$6 billion spent.
Vern was the master - this IS quite a feat, unprescedented, I believe
COMPETITION TIME!
In a (semi) sincere effort to calculate TOTAL losses in EAC, I'm running yet another of my world famous competitions.
The rules are simple, the prize the (usual) pint of Guinness.
Which, of course, has to claimed in my favorite pub.
This one is called...
What was the most EAC ever got for one FPJ?
Now, as I know the answer (reliable source, as usual) you lot have an opportunity to earn yourselves a pint of the black stuff.
So, away you go! Post your informed guesses on the blog, or (if you're really serious) email me at the usual address. You have until Friday, at noon (GMT)
Shane
Hi Shane,
"What was the most EAC ever got for one FPJ"?
TWO gas caps??
.)
Shane
This reminds me of the story of the machinist apprentice that was asked, “How many thousandth’s in an inch?!” “Well”, he said, “‘don’t rightly know, but there must be a million of ‘em!”
Whatever your answer, if the books are rightly balanced, the little incomplete jet may rub shoulders with the most expensive aircraft ever built. And if a person could sell the thing for what it’s been said to be worth . . . we could pull the country, and half of Europe, out of the present depression in a fortnight.
Why, just think how much it’s already contributed to the wealth and well-being of “general aviation” . . . all that money spent on wages!
We’ve got a bunch of politicians on our side of the pond that have it figured out . . . ‘just keep spending (having a product doesn’t much matter any more)!
gadfly
(‘Problem is . . . the politicians have a key to the printing press . . . and won’t share it.)
What was the most EAC ever got for one FPJ?
Please be more specific. Do you mean EAC as the old company or either old/new, and by "got" do you mean payments received for an already delivered plane or contracted price?
I am a little pissed
"This one is called...
What was the most EAC ever got for one FPJ?"
TM Airtaximan
;)
Baron,
this is a search, pure and simple for the highest price ever paid, all things considered for an EA50... IMO.
Its a lot like the Darwin Awards for Aviation..
anyway, I would include all gonculations, including the prices it will cost to upgrade, repair, retrofit, FIKI, ladida, the plaes, IF anyone actually invests (loose term) money to bring the plane up to snuff.
So, pls itemize:
- Deposit (and or deposit premium paid)
- all progress payments
- amount paid on "delivery"
- amount owing for extras (now at your cost) should you agree to buy them like the famous 6th seat.......
- FIKI cost (now at your cost)
- any and all mods or fixes, IF you had to pay for them
***I would even like to see anyone who has a tail, who will agree to pay for all the messes involved, AND gonculate the final price.
- itemize but deduct any non-cash items, such as "coupons"
-include the promised but foregone interest promised if yur plane took more than X months beyond the interest trigger date - this is now, GONE
- do we wish to account for Lost Warrantees, and Lost Benefits from JetINcomplete? Perhaps not.
This is great - just what I wanted to see - thanks Baron and Shane.
Aha!
I thought this little competition would stir the minds.
But, in a effort to provide a little clarity I will state the following:-
1. EAC is 'Eclipse Aviation Corporation', not to be confused with any company intended to make a profit, or with EAI (EclipseJet Aviation International) the 'new' company. Also not to be confused with (well, you know how this line ends)
2. Money, or other cash consideration, must have passed directly from the victim (sorry, 'customer') to EAC. Do not pass Go, do not Collect $200. Or a completed aircraft per your original contract.
3. 'Most', means the highest amount of dollars actually spent on ONE aircraft. Some of the marks (sorry, depositors) paid over $2 million NOT to receive a single FPJ. Or ConJet. These people DO NOT COUNT. They are merely statistics who will form the core of a very worthy PhD study at some Eastern University next semester. No, to qualify, the money must actually have been exchanged for a single FPJ, delivered with a CoA.
So, don't get smart with me and claim that Al Mann's FPJ cost him half a billion dollars....
Even if some would claim it did!
Shane
Shane, I do not think it wise to limit the contest to EAC clients, and EAC deliveries. I for one would LOVE to know what the MAXIMUM amount ever paid for a EA50.
until now all things considered,
in the future under new (duress) eerrrrr, company name, management, foreign ownership - whatever....
What is the maximum level of insanity, so to speak?
IOW, if some idiot ponies up another $1M plus plus on top of all his deposits and progress payments, and then pays for upgrades, extras, etc... lets see, HOW MUCH PAIN a person will withstand.
Goat,
TWO gas caps?
I like the way that warped mind of yours works!
I'm declaring you winner of the 'snappiest response' sub section, and will happily buy you SEVERAL pints on the happy occasion we meet.
This of course opens the field for other 'sub sections' which I'll declare as the mood takes me.
Ah, the small joys of being a blog custodian.
You can make the 'rules' up as you go along.
ATman,
Another good idea for a 'sub section' winner. We will have to find the one buyer who blew the most money, dollar amount. Hint, I'm told 'early delivery' premiums headed into the half million dollar region at one time.
How about the 'depositor who lost the most', total, FPJ and ConJet?
'Aircraft broker with the most clients who's pockets are now empty'
The list could go on, forever...
Shane
Shane speculated:
Put it another way. It would be reasonable to speculate that an individual who raised a billion dollars in 2000 would, with some astute advice, have turned that into more than a billion by 2009.
An individual who purchased "beer" with that money could have obtained 200 million twelve packs of Milwaukee's Best ( hence my use of quotes around the term 'beer' ). This would provide the individual with 68,000 gallons of "beer" to drink, every day for that time period. They would have ended up with 2.4 billion empty cans, which if returned in a "5 cent deposit state" ( why does Iowa ring a bell? ) would yield $120 million at the end of this exercise.
Since the "nonstop pissing away" aspect of such a scheme fits the Wedge to a tee, the question remains: what did he do with the residual $120 Mil?
Would you like extra Angry Sauce for your Whopper?
DI
TANGO UNIFORM
Some of you may not understand the meaning of the above title. In other words you have not been around aviation long enough to have heard the term, or you may not be "Country" enough to understand what it means. Not to offend anyone so I won't explain the true meaning.
If you don't get it you are probably one of the depositors or an owner or someone that has not smelled the the end of the VLJ movement. Sort of like having diarrhea or wetting your pants, getting a warm feeling but just can't understand where the smell is coming from.
The smell is coming from Ontario. Duluth, Vero, and some place in the Carolinas'
I will put this in language that I hope most will understand.
The arguments about 2% fuel flow verses FL370 or 410 and "you don't get it" because you don't own one and it is the best thing since sliced bread are interesting. But I can buy a loaf of bread and still slice it myself. Point being...if it does not work or if it was a scam before and it still does not work and the other 4 VLJ types in the mill all have development problems. Hand me a knife and the loaf and I will slice it myself.
We all have wants and needs. Markets have wants and needs. The market does not need, nor will it accept a single engine jet flying around at 350 Knots. So all 4 of the newbies in the S.E. jet market think they can sell 200 or 500 a year? The Koolaid ain't that good folks.
First one down. Cirrus, next Diamond, Piper close behind, last but with the most buck$ to waste Honda. There will never be another EAI/FPJ produced and delivered in ABQ to an American customer.
I personally saw N500CD sitting on a ramp this weekend and wondered if the owner/pilot really knew what he had spent his money on. Will he still be flying it in 6 months? Maybe. In 12 months? I doubt it.
My previous posts have hinted at the fact that people get what they deserve be it buying an airplane or any other product sold by pitch men in the $1000 suits that talk about the square wheel concept.
I still beleive that some people should not be allowed to own an airplane. But that is subjective and is not gouverned by any federal regulation. So as it has in the past, it will go on in the future.
Oh and as for the above statement. I have flown with some of them and refused to sign off a Flight Review as per 14CFR 61.56.
BTDT
Forgot to add this to my last post.
And some people should not be allowed to build airplanes.
BTDT
Thanks Shane. The answer is $1.375M + options in $2008 US$.
BTDT, very "country" commentary - entertaining even. But....
What the heck were you trying to say? Was that your way of explaining to us, city folk, that a cow dies with its utters pointed up?
And you thought that would offend people, how?
Baron -
Are you uptown or downtown?
Cow?
Well Baron at least you got it.
Just trying to be civil and not get anyones' undies in a bundle.
But the point of the post is still the same.
And as an aside. I am not the worlds greatest pilot. In fact I don't know who is the worlds greatest pilot. I have meet some that come close.
But they all flew planes that they respected and knew that if they messed up the aircraft would bite them.
I will just leave it at that.
Have a new hat with DGAS on it. Found out it could man several things.
Darn Good Air Show
But at my age. Don't Give A Shit fits it about right.
As I have said before. Everyone know more about aviation and airplanes than I do.
Except for one thing. I COULD have put a deposit on a EA500 in 2004 but the smell was overpowering.
BTDT
Zed, he said "country", I said cow ;)
I prefer to think about live, slender Brazilian girls with firm mammary glands pointing into outer space when I think about TU, but hey, to each man or woman his or her fantasy.
But to answer your question, my town only has "main street" and other - no uptown, downtown ;)
2. Money, or other cash consideration, must have passed directly from the victim (sorry, 'customer') to EAC.
Didn't EAC auction off an early S/N ( say, maybe #0038? ) a while back ( hmmmm ... August 10th 2007, perhaps? ) for slightly above the then current list price? $1,833,945.00, if I recall correctly?
That's my guess.
Would you like the combo?
DI
And Kudos to Citigroup, reportedly using $50M out of its bailout money to buy a brand new Falcon 7X.
I hope BoA tops it by taking in G550 with a simultaneous new order for a G650.
That is right - CEOs/Chairmen - size does matter.
And Kudos to Citigroup, reportedly using $50M out of its bailout money to buy a brand new Falcon 7X.
And how does that put liquidity in the securities market? I didn't realize that Dassault was an asset of Citigroup's nor that it was troubled. Nice that our taxpayer dollars are going to the French so that the execs can travel in luxury. I thought the idea was to get our economy going, not France. Maybe it will help the french with whatever subprime mortgage problems they have, but I don't see it helping much for those who TARP was supposed to actually benefit.
Since they found someone to pay about $900K in October (or so),
I bet they found someone willing to pay $2.375 Million.
I'm sure I am not the only one who hears Cheech and Chongs "Pedro's request" from the album sleeping beauty (at least I think this was "Taste it") sketch in connection with this outfit.
Baron ...
i love your last joke :
"deliver for the last 4 years ..."
i repeat , i love this joke ...
it would be perfect if ONLY one would have been complete !
i love as well your theory about credit ...
yes credit is still around ...
the problem : since the banks have been caught pants-down lending huge money to the ones who had absolutely no chance to pay it back ...
(comforting in such manner the "idea" that USA is such a wonderful country ... making hips of money and managing to put the overall-risks on some others ...yes , it is what it is ... some call it Subprime !)
so after this poop (and incidentally NOT putting Madoff behind bars , after all ... it is only 50 B$ ! BTW , how to explain that a beggar stealing foods goes to jail ?) the credit-score has been reviewed in such a way that 90% fail !
(which is perfectly normal : with a saving average ratio negative or if you prefer each time someone average living in the US is(was) making ONE $ , they were (are) spending an average of ONE $ AND 14 cts ... do you believe it can last for ever ?)
so you see ...
you consider that credit is booming , and that credit firms are lending record amount ...
i see that as a return to reality :
when peoples have to play with credits to make ends meet = it is a problem ...
when peoples (in term of Real $) are having average wages on the decline for the last decade , at some point it is a problem ...
when hundreds of B$ are wasted in form of loans to Banks : it is a problem ( where the subprime should have been purely and simply written off ... off-course in such a scenario top-brass wouldn't have their Hundreds Millions $ bonuses !)
so , you see the Russian who bought the British Newspaper , RP playing with 28 Millions$ or credits booming ...
it is not really what matter ...
important : what is going to be done with it ! and what about tomorrow ?
in the case of the flying-joke , the main problem remain = Cannot be SOLD at PROFITS !
(which is perfectly normal : with a saving average ratio negative or if you prefer each time someone average living in the US is(was) making ONE $ , they were (are) spending an average of ONE $ AND 14 cts ... do you believe it can last for ever ?)
Fred,
Yes indeed! When an entire nation stops saving and instead borrows against fictitious "home equity" to consume instead; and when that same nation stops manufacturing and exporting, substituting "services" (which cannot be exported) instead, something has to give eventually.
Ironically, I saw yesterday that former US Treasury secretary Paulson said that the Chinese helped cause the international financial crisis by "over saving". What a joke! Those chickens will come home to roost. If the Chinese unpeg the yuan from the dollar, the US public won't be able to purchase their flat screen TVs at WalMart anymore, but the Chinese standard of living would soar, since they actually make things instead of just consuming things. And, if the Chinese, decide that holding US Treasury notes is not the best investment for them, then runaway inflation will hit the US as all of those dollars flood the currency markets.
Incidentally, I know for a fact that one can get financing on a jet aircraft in the US right now, with excellent credit and the standard of not needing to borrow (could be a cash buyer instead). But, that is a pretty small audience. EAI had better hope to find buyers in Europe if there is to be any restart of production (another joke).
Thanks for the thoughtful post.
Citigroup has canned their acceptance of a Dassault 7X business jet. Rather than forgo biz jets altogehter Citigroup needs to recalibrate their selection in line with their current financial condition. I think a somewhat SMALLER twin-engine jet would be in order. One that is on the cutting edge of DISRUPTIVE TECHNOLOGY. Since no corporate pilot in his right mind would fly the one I envision we might have to canvas the universe of current owners to come up with a suitable pilot. Only one will be necessary, as two pilots are so PASSE in our brave new world. Citigroup needs a pilot bereft of the kind of safety-mindedness that the old-style corporate pilots have. They need a real "GETTER DONE" mentality type pilot. Let me think a minute...
Sorry, I have to delete that post. I wouldn't want anyone to take the FIKI comment personally.
TBMs_R_Us,
Ironically, I saw yesterday that former US Treasury secretary Paulson said that the Chinese helped cause the international financial crisis by "over saving".
but this Mr. Paulson had a strong political and financial background - at the first glance.
At the end a major miscast, without any backbone.
The current relatively low € (€1 = $1.31 instead of $1.50) alliviates exports of the €-zone....The US fpj gets more expensive!
We will see, when EAC/EJAI will show the full EASA cert!
BTW: The Mustang is not a VLJ because of its more demanding cert!
Julius
P.S. Fred's summary destroys all dreams: If $3B are invested in a GA company then there must be a corresponding positive sustainable result in GA...
TBMs_R_Us said,
Ironically, I saw yesterday that former US Treasury secretary Paulson said that the Chinese helped cause the international financial crisis by "over saving". What a joke! Those chickens will come home to roost. If the Chinese unpeg the yuan from the dollar, the US public won't be able to purchase their flat screen TVs at WalMart anymore, but the Chinese standard of living would soar, since they actually make things instead of just consuming things. And, if the Chinese, decide that holding US Treasury notes is not the best investment for them, then runaway inflation will hit the US as all of those dollars flood the currency markets.
We are lucky to live in a symbiotic economic ecosystem. My slant on this is more a result of reading way too many Tom Clancy books. This is part and parcel to "asymetrical warfare." The whole financial mess we are in now is linked to 9-11-2001. After the attacks, everything went to NEGATIVE interest rates: everything was subsidizied, AND we are still stuck in this morass of hyper-consumption that is fueled by constant stimulation of consumers and businesses by use of CHEAP credit. Baron, do ya remember the 0% interest loans GM offered back in 2001??!
Clancy put it in one of his books, something along the lines of the first Economic World War. No, the cold war was the first economic war. And now these savages have found a way to do to OUR economy what we did to the former Soviet Union. Hopefully Obama will be smarter. It makes no sense to spend $700 billion on "weapons systems" to defeat a nut case with a $100 IED. And there is something dramatically wrong with not just our Military Industrial Complex, but the Engineering profession as a whole if that $100 bomb can incapacitate a Humvee, forcing the US Taxpayer to incinerate more money with the purchase of the MRAP. But that's another subject...
Regarding China, they are the WORLD's factory **only** when the world markets demand cheap disposable goods. If we walk around Wal-Mart and Target, I'm sure we'd all agree in both absolute terms and in a percentage of retail dollar vaule (i.e., the *majority* of American 'factory' items in those stores are processed FOODs). I don't have many international penpals, well, Shane is the only one. So I'd need to get his opinion as to what the 'average' consumer in Ireland does when they need to buy a cheap shirt or pair of jeans. But I suspect that cheap good from China is pervasive in Ireland too.
The point here is that there is little risk for China to do anything drastic because it will be more than shooting themselves in the foot. More like shooting themselves in the head. They have so many new people that enter the labor market each year, that that NEED their economy to grow at 12% per year in order to keep things civil. They buy our bonds and T-bills so our politicians have cover to allow their crap in our stores. Oh, look at Dollar General and Family Dollar too. NBC= nothing but china. They need us, and we need them ...and that isn't likely going to change anytime soon. Where else would retailers get stock for their stores? NOW, if China released an Ebola virus that killed 99% of their population, THEN I would be worried ...cuz that would instantly change their labor market. Good thing those Communists are not f-ing nuts!!
My tax and auditing teacher said that ALL foreign money has already left the US as a result of the Sept-Dec nonsense last year, and that partly explains why our banks now have no CAPITAL to sustain loan losses (banks loan money from customer deposits; but their capital is what is kept in the vault to remain SOLVENT and insulate them against losses). I wonder if Bin Laden was smart enough to have literally planned all of this; if he did, then he is a F-ING GENIUS. It is how Al Queda has, in a sense, won an element of the war: forcing us to overspend on everything!! Lots of Guns AND EVEN MORE BUTTER!!! Cheap homes. Cheap cars. CHEAP PLANES!! No one can really afford them, but approve the damn loan anyway cuz we can't let the factory go down to a 60% utilization. And if we don't approve the loan, the bank across the street will. Then everyone files for Ch7 at the same time. Pass the popcorn, lol, we got plenty of butter!!
e.d.t.
Dave said....And how does that put liquidity in the securities market?
Absolutely. Citigroup can now move 8,000 lbs of liquidity across the Atlantic at M0.85. In US$100 bills that is about $363M in a very liquid and easy to value form.
If I were to invest in Citigroup, I'd love to see the CEO carrying the cash around in a 7X.
Oh my, the Blog is roaming wild with economic theory today.
Gosh, there is a plain vanilla down business cycle following a multi-decade boom, and everyone feels the need to "re-invent" the markets.
Everything is working exactly like it is supposed to.
Didn't everyone say for years that housing was overpriced, overbuilt, unaffordable? Well now it is being corrected.
Didn't everybody complain about high gas prices, high jet fuel prices, too many big SUVs being buit, etc? Well, now that is being corrected.
Didn't everyone complain about ppl in Wall St making too much money in cushy jobs? Well, now that is being corrected.
The correction is too painful and the US/West does not like pain, fine, let the gvmt smooth out the correction a bit.
Other than that, just get out of the way of the markets, they are working great.
(and trust me, the correction affected me in a very big and painful way - so the above is not a callous comment)
Back to Eclipse, I'd like to contrast the EA500 program with the DJet.
Eclipse was trying to design/certify a 6,000lbs class airframe, an engine, integrated avionics, build a company and raise money all at the same time. Lets say that is 5 concurrent major undertakings.
Diamond is using a COTS Engine, COTS Avionics, already has a company, is using internal funds. So they only need to certify the airframe. On top of that, they are certifying to FL250 standards and have only one engine.
Question? Why is it taking Diamond so long? After all it is trying to do something that it is about 15% or so of the order of magnitude Eclipse was trying to do.
Hi Shane,
Thanks for the ad hoc award of "snappiest answer" and the kind offer of several "pints"! I hope we can bend an elbow together on "this side" or that of the big pond* sometime this year!
(I think others might remember when I was accused of imbibing several pints while blogging! :)
I must confess, however, that I was crushed at not winning Mr. Congeniality. I KNEW Bassmaster would be giving me some stiff competition!
(In these times of challenging economic news, there is one thing that our fellow bloggers might be thankful for though- that webcams are not more common: the swimsuit competition WON'T be broadcast!).
Cheers!
Goat
(*an alternate venue? The annual Eclipse surplus Franklin BBQ- nothing like those "mint"y green $100's to add some good smoke flavor to the pork on the grill ! :)
...You reckon the U.S. Mint will issue a special, commemorative version of the One Hundred Dollar bill, with Wedge on the front, and the smoking ruins of EAC on the back??
(No ill humor intended for our friends still in ABQ- I hope things pull together un RP's wiser supervision).
Wedge's head wouldn't fit anyway...
LOL, I clicked on the link Goat provided and followed the train of thought to the Wiki page on the Gold Standard. Ah, the good old days!!
Even more surprising is that they refer to Alan Greenspan's 1966 paper on the subject, in that leaving the standard (creating a fiat currency) would be used by "Welfare Statists" as a means to support deficit spending. WOW, what a shock. And he is/was right. It was, IMHO, used by doves to finance the LBJ Great Society. And it was used by Ronald Reagan hawks to finance the cold war and defeat the Soviet Union. Leaving the Gold Standard is what allowed us to have cheap credit!!
The Wiki page on the gold standard was a good refresher since I've never had a college professor explain it very well. Essentially it served as a restraint against any Govt from running the printing presses 24/7, regardless of their good intentions to spend it on something critical and necessary (i.e., a "war of necessity"). I see both sides of the arguement, ha! And the Dutch side of me is nostalgic - if the HBO show John Adams is reasonably accurate - when it showed our dear John Adams with hat-in-hand begging Dutch moneymen for the much needed funds for the war against England. Even as I'm typing this, that lame commercial is on CNBC for $99 gold coins...
So yes, I am thankful for this correction; it was way overdue. As the market clears, all things approach a new equilibrium, whether we like that result or not. If my house is only worth $150k versus the $164k I paid for it (not counting interest), well, I won't like that correction. Fortunately, it may be just an unrealized loss so long as I don't go thru with it.
However, the problem is when the Govt takes action to sway things too far in one direction as opposed to the other; we need insighful leaders to know that it must be kept as close to the middle as possible. IMHO, this is where Limited Government is critical. I for one am hoping the Govt (read: Obama and the Democrats) does nothing so the correction works its way from the bottom of our economy to the TOP. When these depressions / recessions hit the fan, it takes a lot of bad news to force the typical BoD to fire a CEO. John Thain just lost his job ...and at least 100 more CEOs need to get the axe.
As this relates to Eclipse Aviation, well, who wants to argue against them? If on some other parallel universe, perhaps an environment with expensive credit would have prevented Vern from raising the $2 or $3 billion he incinerated. Would that outcome have been 'better' for the universe as a whole? I'm not objective here since I benefited from his access to cheap credit and/or gullable investors...
The point I'm trying to make here is that the credit markets are still NOT working today even as they perform this much-needed correction: (A) they have already lost money because of no gold standard or restraint aginst unlimited/easy credit, and (B) they are now trying to retro-actively compensate for those errors by **ACTING** like we are on a gold standard now, effectively eliminating credit entirely even for well-run companies with good credit histories. Baron, how does that get fixed, um, corrected????
e.d.t.
Ooops, I forgot. Baron is the only person who knows anything about economics (or anything else for that matter) :)
E.D.T.
So I'd need to get his opinion as to what the 'average' consumer in Ireland does when they need to buy a cheap shirt or pair of jeans. But I suspect that cheap good from China is pervasive in Ireland too.
What I do is buy lots of jeans in Toronto or Chicago, which I visit a few times a year, and lots of shirts in Germany, which I visit with similar frequency.
In either case, I'm pretty sure the stuff is made in a 'low cost' area.
What concerns me right now is how EAI will square the deal with the Russians. Will Roel honor EAC undertakings, or try to talk his way out of opening this additional source of aircraft next year?
Or will he honor his commitments to ABQ, and continue to meet the 'huge demand' for VLJ's from there?
Why did he make such a deal out of EASA certification, given the higher standards required?
Clearly there is more to this than meets the eye. I smell another agenda, one that has very little to do with the FPJ and a lot more to do with Roel's other ambitions.
But I could be wrong.
And, for the record, nobody is even close on our little competition.
Shane
Baron asked:
"Question? Why is it taking Diamond so long? After all it is trying to do something that it is about 15% or so of the order of magnitude Eclipse was trying to do."
Maybe because Diamond knows what they are doing and are committed to delivering a complete, safe and fully functional aircraft.
IOW, the reason Eclipse is now TU having blown through nearly $3B and taken more than a decade to deliver a couple hundred soon-to-be-orphaned gate guard candidates is that they NEVER appreciated the magnitude of the task they were undertaking, they were NEVER effectively managed, and they have still NEVER delivered a single, complete aircraft.
CW, could be. Or it could be that they are vastly underfunded/understaffed for the job.
They'd better watch out. They may miss the window to Cirrus, the way Eclipse missed it to Cessna and Embraer.
But then again, I forgot, Cirrus is running it on a shoestring budget also.
We desperately need another Vern to do a proper SE-VLJ with a proper $1B.
I heard from my Diamond rep a couple of months ago that the Djet is still on track for delivery this year. Hmmm. We'll see.
Also, there was "supposed to be a price increase" from the current $1.38 million last Oshkosh. Maybe he meant Oshkosh 2009? Either way, it doesn't look like that is going to happen in the face of what is going on in the economy. Only Eclipse has such a disconnect with the market that they actually think they can raise their prices and obtain any customers. Good luck on that.
Looking at the used market, the wholesale bluebook price of a earlier used Mustang has now dipped below $2 million. In addition, early Eclipse's that are listed for $1,050,000 still aren't selling.
JP Morgan analysts looked at current asking prices from jet owners, and concluded "The rising asking prices in the context of skyrocketing inventories reflect a disconnect between seller expectations and market realities, and we expect significant downward pressure in the future." Other market analysts are coming to pretty much the same conclusion - jet prices are now in freefall.
The new market is just as bad, or worse. I read somewhere that many European customers are simply walking away from their deposits on new jets, leaving hundreds of thousands on the table rather than take delivery.
So what's the point of all this bad news? Well first, it's only bad if you own an aircraft and are trying to sell it. If you're a new buyer and able to bide your time, you can sit back as jet prices drop by $100,000 per month or more. By the time this is all plays out, you won't have to look for a great deal. They'll be everywhere. It will just be a question of what do you want to fly. So those who lost their deposits on Eclipse's and didn't blow their cash elsewhere may actually end up being better off as a result of NOT taking delivery on their Eclipse and seeing their losses compound. They may end up being able to buy a Mustang or a Phenom for very little more.
from AIN,
"UBS: Bizjet Flight Activity Decline Continues
Business jet flight activity last month fell 19 percent from the same period a year earlier, although that was better than November’s 25-percent drop-off, according to a business jet market report issued this morning by UBS Investment Research. Flight activity for the entire year was off nearly 12 percent compared with 2007. About 86 percent of the flights UBS tracked last month were U.S. domestic flights and the remainder was international. “Business jet activity has declined sharply since mid-2008, which we expect will negatively impact the service businesses of the manufacturers and suppliers,” UBS analyst David Strauss wrote. While flight activity has declined in all aircraft categories, light jet activity saw the largest decline last month, falling 21 percent year-over-year. UBS data shows that midsize and large-cabin jet flight activity dipped 18 percent and 17 percent, respectively. “We believe the deterioration in our survey of industry professionals, increase in aircraft available for sale (including new delivery slots) and decline in flight activity presage what we think will be a significant slowing in new aircraft demand,” the UBS report concluded."
AND REMEMBER, "SOMEONE" ON THIS BLOG VEHEMENTLY REFUTED MY ASSERTION THAT THE LIGHT JET CATEGORY SUFFERS THE MOST IN CHARTER.
guess who?
"We desperately need another Vern to do a proper SE-VLJ with a proper $1B.:
... and the days go by... and the days go by.....
This will not hapen again for a VERY long time - the hangover from this one will last a decade or more.
baron, there are certain aspects about the Djet that are more complex than the eclipse project.
what CW says (sortof) is my opinion. EAC would still be at the drawing board today, if they were committed to delivering a finished product as they promised/close to it.
Djet IIRC changed engine... there are significant integration issues with the engine in this config, that they are stuck with. EAC abandoned their problems and pawned them off as "delivered airplanes" to position holders.
'nough said
According to ARG/US vice president Shirley Mason, program manager for the TraqPaq program that is licensed to track aircraft arrival and departure information for all IFR flights in the U.S., the drop in overall large business jet flight activity is due mainly to reduced charter activity among large jets. Organizations are choosing to charter smaller airplanes because of the cost savings, she said.
The idea that 90% of the money Eclipse raised went to GA workers is just pure wishful thinking.
Vern must have spent one quarter to one half of the money he raised on an almost endless series of marketing stunts.
Countdown clocks to first flight. Sent to just about everyone loosely involved with the program.
Friction stir weld lucite blocks.
Lucite blocks with a 3D E500 engraved inside.
For that matter lucite blocks of just about any milestone you could imagine.
Sponsoring just about everything at Oshkosh. Buying the biggest tent at the show.
Customer breakfasts.
Press breakfasts.
We couldn't so you can't stickers for everyone at Oshkosh.
Press tours celebrating Nimbus.
Press tours celebrating DayJet.
Press tours celebrating AVIACE.
Sponsoring the celebration of the 100th Anniversary of the Wright Brothers first flight. (Implying that Eclipse was just as important.)
Lobbying for the Collier Trophy.
Double page ads in almost every publication a pilot might read.
World tours.
Expensive presents for depositors, investors.
Revival tent meetings for the faithful.
Vern produced some of the best marketing the GA industry has ever seen.
"Vern produced some of the best marketing the GA industry has ever seen."
Not to mention the most expensive. At least Eclipse got $80k worth of advertising for free* from Zoom.
* after bankruptcy discharge
Where does Enaer stand in the supplier ranks? Are they owed anything by EAC? Is it remotely possible that a culture that can build contract ERJs build whatever EAI needs?
Mr price if your looking for the big price for a fully functional EA500 its TBD. None exist yet.
BTW I prefer IPA's!
FlightCenter,
Thanks for an excellent walk down memory lane. No matter who receives the Collier Trophy it will never seem as prestigious.
I may be in a minority of one here, but I do think that what Vern/EAC/EA500 brought to GA (in the year) they received the trophy are actually worthy of the Collier.
Other than the incomplete avionics, there is nothing terribly wrong with the EA500, and they achieved some pretty significant firsts.
They managed to package a 5-6 place, twin turbofan, 1100 nm, 800lbs-payload FL410 jet into 6,000lbs MTOW. I say that is a *HUGE* accomplishment. You can argue about market need for such a package, but it is a *HUGE* design and engineering accomplishments.
They totally schooled Cessna in Aerodynamics. Even with the MTOW increase, engine weight increase, tip tanks, etc, the plane flys very nicely AND unlike the C510 it got FIKI without having to grow after thought wing-boot-VGs, aft-strakes, vert stab boots.
It proved that civilian 900-lbs tiny and cheap ($210K according to Shane) turbofan can be made to work well.
It prove that a GA project for a sub-6,000lbs plane can raise $1B dollars. Awesome and unique right there.
It started on the right track, and for the first time had real time updates on the planes development on its web site - that was a first. (of course they lost their ways and transparency when things started to go bad).
Did a very competent job marketing the thing. For the first time a sub-6,000lbs plane project was reported by the mainstream media from Forbes to WST to NYT to USA today. Awesome right there.
So what exactly is your beef with the Collier trophy? That the avionics is not done or the plane is not a commercial success?
Duh!!!! Big deal. Does not invalidate all the above one bit.
The Concorde was the largest financial disaster in aviation. Should we deny that it is a technological marvel because of it? Should we not salute their designers and engineers are the best of the best at the time?
The F22's avionics stack is still not finished and crapped all out crossing the dateline a couple of years back. Should we negate that it is the top fighter in the world today because of that?
Concorde, F22, EA500 ALL advanced aviation by substantial accomplishments. They, and the people behind them ALL deserve praise and admiration, despite their shortcomings.
Anybody read Zoom today? On the lead-in to today's Aero TV on VLJ's catch the note on the bottom.
Hell knoweth no fury like the wrath of a woman scorned...
P_P
Other than the incomplete avionics, there is nothing terribly wrong with the EA500
That reminds me of the line, "Other than that Mrs. Lincoln, how was the play?"
baron95,
They totally schooled Cessna in Aerodynamics. Even with the MTOW increase, engine weight increase, tip tanks, etc,
hmmmmmmmmmmm old rhetoric trick...
The plane is small or too small.
Aerodynamics are always a compromise. The check ride for the Mustang is as tough as that for the fpj?
The aerodynamics are so well that the third pitot tube is useless (when flying FIKI)?
Other deficits: Avionics, system (breaks, tyres..), qualtity of production...
The fpj got the same cert as the Mustang?
What about the Nimbus deal?
EAC didn't manage to deliver any a/c according to specifications and promises inspite of about 260 deliveries.
The non-auction is indicator for
perfect business chances of the fpj and perhaps the frankenstein?
If may subsume: EAC (with its products) and its exec team demonstrate(d) a suboptimal performace.
Julius
P.S.: You remember it wasn't the wedge's idea to build a "vlj"!
Someone will call the wedge a copycat...
baron ... my dear baron ...!
once again you see the tree , but not the forest behind !
Concorde was a financial disaster , especially for the french-tax payers (one of the big difference , we make lots of poops , like all other , but we try NOT to spread the cost of it on others ... ;-) )
it is the result of the 1973 Oil-crisis (sparked by Shah Rezza Palavi , Iranian ruler put in place by US and UK because they had the feeling he would be easy to control , they [US&UK] found out only too late that the puppet was quite clever and not at all incline to bow in front of anybody ... it didn't bring him chance as Mr Jimmy Carter , Giscard-d'estaing and maggie Tatcher decided to "remove" him for his throne in Paris-conference to substitute him a another "easy to control" guy in the name of Khomeiny ... ayatollah Khomeiny ... ! history is so fun ... some times ... ;-) )
the price of Oil was multiplied by 4 overnight : so what was a very efficient way of traveling became of F***g expensive way of going from A to B ...
so the point about Concorde is somehow valid on financial matters , but at the difference of FPJ , Concorde was NOT designed to attract gullible buyers to sell them a dream ...
that's already a world of difference !
Being reported by Medias ? come on ...
with a marketing budget fat enough , i would be pleased to advertise the sell of your pubic hair ...
only a question of amount spent !
as for the Raise of capital :
sorry to disagree , but it's rather weak ...
Madoff = 50Billions US $ raised on absolutely nothing ... only on his name ...! which is a VERY good sign of the madness which took WS in the last decade ...
Taking a dream for a real value !
as for the service to GA : economy is working mostly on TRUST and FAITH in future ...
on this subject , EAC has done such a good job to destroy any TRUST public could have in a "not internet bubble , again" ...
remember most of victims are FIRST time buyers ...
how many
Grrrr .... ! hit wrong button ! sorry ...
so how many of those depositors had their dream crushed ?
(let apart the validity of the dream )
how many are going to trust again anyone in GA ?
meaning , next time a perfect project full of talented and trustworthy entrepreneur need to raise capital ...
who's going to be willing ?
quite sure most would say "burnt once = cured for life !"
so , remember a chain has ONLY the strength of its weakest links ... NEVER the opposite ...
if it would be the case Hitler would be reminded as the guy who saved Germany in very difficult economic crisis ... not as the one responsible for so many attrocities !
"but it is a *HUGE* design and engineering accomplishments"
Baron, I think this is a mistake. Just becasue no one cared to do this before, really, does not make it an engineering feat.
The trades resulted in a commercially impossible plane, which explains how come knowledgeable folks do not try this (im)balance of weight an size, performance, etc. The price might have been the killer, but the price is just a statement regarding the failure to produce the product to spec. Its an expensive plane to build, with a utility problem, and likely a durability problem.
I think you are basically calling the SMART car an engineering feat, which it is not, really. (someone thought it was a good idea to design for "parking" instead of "driving",
IMO.
I just consider the EA50 to be a misapplication of technologies, that were/are either too early for prime time, or poorly executed integration and/or tested and passed over by reputable OEMs.
" the drop in overall large business jet flight activity is due mainly to reduced charter activity among large jets. Organizations are choosing to charter smaller airplanes because of the cost savings, she said."
Thanks TP,
does this mean most of the light charter guys are gone, and "some" of the the (fewer) large guys are using some of the smaller planes?
in short, your point does not refute mine, it might provide some inisght into the dynamics, bu the point stands... the light end of flight activity is down MORE than the heavy end.
fred,
bonjour!
The so called oil crisis wasn't that bad.
Lesson learnt - no! But everybody could see that there was/is a lesson that sooner or later must be learnt!
One day free of traffic noise - a real experience!
Trees and forest:
There is a former G. W. Bush adviser who still dares to reiterate "Isn't it good that Saddam was kicked out of office"?
I have learnt to keep calm and not to shake the head...
It's Cato's very old trick "ceterum censeo Carthaginem esse delendam" - the hope, that someone will believe it finally!
Next Tuesday we will learn something about EJAI and EAC!
Julius
marketin at EAC was wildly unsuccessful. They spent more per order than anyone in aviation history, and they had a product that they sold for half the cost to build and deliver, yet they never came close to achieving an order book that you would need to have in order to be successful, finacially.
Like the engineering feat, the marketing feat was loud and ineffective, based on any metric that matters.
Yes, the blew a ton of money on marketing. So what?
The only worldclass competency they had was raising money. IMO
Julius, I'll stand up and say Wedge copycatted.
I've been told on good authority that Wedge copied the Eclipse 500 business plan from a competitor. Seems a mutual friend of the two men (Wedge and the man who started up the other VLJ hopeful) was reviewing the original business plan and told Wedge about it. Wedge asked to see it, and not long after he started up Eclipse Aviation. Eclipse's exclusive contract with Williams for the EJ22/FJ22 also helped to snuff out this competitor.
Apparently competition isn't a good thing in Wedge's world.
ATM's rebuttals to B95's cheerleading of Eclipse accomplishments are spot on.
All Eclipse have done is confirm the assumptions/ research of the real manufacturers.
There is a tiny niche market for VLJ's.
You need a very tightly controlled program to make money from this niche market. Performance is secondary to cost in this market.
An amatuer blowing a billion+ bucks to confirm what the experts already worked out is not heroics, it is stupidity.
Eclipse Regurgitated Inc is also going to fail, because the unfinished product they have is not optimised for the niche market that barely existed in boom times.
Pretending that blowing a billion to create $100 million of value is still a good thing for the industry reminds me a bit of the command economy aspect of soviet communism.
Regardless whether anyone needs what we produce, we are going to fulfill our quota, regardless what it costs, even if the quality suffers to the point of the widget not fulfilling it's intended purpose. Wedge should have called eclipse - USSR V2.0.
Gutten Abend , Julius ...
yes ... as they say : "beati pauperes spiritu" ;-))
i can almost foresee big panels for European customers ...
"Winter Schluss Verkauf"
(or since RP is dutch : replace the last word by " Verkoop" )
Freedom :
Eclipse Regurgitated Inc
=
excellent !
your parallel with Soviet era controlled economy is very valid ...
soon old unfinished Fpj will be cannibalized to serve as spare-parts provider ...
then it will be "back to future" or "good" soviet times when they could make a thousand cars with the pieces needed for 20 ...
simple : mount and unmount to re-mount the spare-parts as many times you need to fit the numbers ...! ;-)
Question? Why is it taking Diamond so long? After all it is trying to do something that it is about 15% or so of the order of magnitude Eclipse was trying to do.
Answer:Because they're doing it correctly?
airtaxi ...
you're right !
we are back to basics ...
would you prefer 100% of nothing or 80% of something ?
even if our Kenny is going to argue "i save about a glitch of $ on fuel" the price of the Fpj was not meant to be the one for a Working and Complete one ...
in this case , buyers were getting 100% of something (almost) not usable (at least NOT in the way it was promoted ...!)
in french , there is a saying for such "économie de bout de chandelles" (saving on end of candles) typical situation of someone trying to save a few cents here and a few cents there ...
it almost always end-up in costing so much more in the end ... !
Just suppose, maybe Diamond is taking so long because they are doing a crap job there in Canada? Maybe they bit off more than can chew?
It's possible, and wouldn't be the first time a company made a big cock up after initial solid growth.
The reason this is not relevant to the Eclipse critics blog, (and that there is no D-Jet critic's blog) is that Diamond is not baiting and switching lines numbers, they are not calling in six month progress payments for planes that their own planning show won't possible be delivered for the next two years, they are not rubbishing the whole industry as being stupid dinosaurs, they are not dragging their industrial partners through the dirt, blaming them for delays/weaknesses in their own management, they are not building a Ponzi scheme of unsecured creditors, they are not doing investment round of the week, and their business model is not built on some fantasy projection of thousands of deliveries per year.
Whether Diamond hasn't finish yet because this is how long it takes to make a sensational product, or because they are making a series of mistake, doesn't matter to the critics here, because even an error will be perceived as an honest mistake, given Diamond corporate behavior.
Baron95 is a big supporter of market forces. Let creative people try. Many will fail, some will try repeatedly. Enough will succeed to make free enterprise the most effective system available.
In GA only the rarest company (Robinson) can walk this tightrope for more than about two business cycles without falling off.
I don't see any disagreeing with the free enterprise concept here.
No one on this blog seems to have an issue with an honest mistake.
But...
Dishonesty takes the free out of free enterprise.
Where many of us strongly disagree with B95 is that we detect an odour, strong enough from everything about Eclipse, to have judged that dishonesty was (and still is) involved.
Whether a court of law will ever confirm our judgment is still open.
Fred,
bon soir,
yes ... as they say :...
sorry I misspelled your name!
no comment - time is over -hopefully! Where are the scissors
to cut my thoughts, my comments?..... hmmmmmm
Winterschlußverkauf (time, when it is allowed to sell something below costs (sometimes it is dumping), to clear the stores of winter clothes; now deregulated) makes only sense if there is something in the stores - just now only preemie-fpjs!
That is better then nothing and good for attracting new victims....they may ask for updates .....
Julius
B95:
Really liked your post concerning markets and that they are actually functioning (and adjusting) just fine. Agreed. Markets are supposed to fail. Free markets are tested best when they do (political interference notwithstanding).
Concerning EAC, I suppose one could argue that the market worked just fine there as well. Nobody held a gun to the desposit makers. And nobody forced ETIRC to buy out of C11 (noone else in the market would).
Now that the EAC "hype dust" settles (i.e. the order book; air taxi, etc), EAC is now just like every other GA OEM (as you remind the Blog): under-capitialized; highly cyclical; on the edge of illiquidity on a daily basis; Piper, Mooney, Cirrus (even now Hawker Beech). Gulfstream/Cessna? May be exceptions, due to large cabin line up, but if they were divorced from their holding company parents, could be somewhat problematic.
copycatted the business plan?
Heck Dial a jet existed long before EAC, and there were at least 10 VLJ programs dating back decades.
There's nothing new here, except the volum, tone and timber of the "revolution" - resulting in $3B down the pooper.
Heck Visionair went through $100M or so, only a few years before... OK not THIS light and small, but if smallness was a virtue in this business, maybe it would matter???
A load of BS was bestowed on GA, and unsuspecing trusting investors and position-holders.
Money begets money - what a surprise. I have hear the I-banks were looksg at the deal purely becsue of their desire to meet and or do some business with Bill Gates who was an investor.
So, Vern had acces to capital, and made a run. Welcome to business 101. He knew nothing really about what he was doing from a market or technical perspective, but spoke well and was a loud mouth about his ideas - which lead to lesson-2: all the money gone up in smoke.
Oh yes ... freedom !
Free enterprise + wish to success in honest way = very good !
but are we talking about Eclipse ?
thanks julius for correcting and translating my German ...
sometimes i just forget not every body is used to "exotic idioms" ! ;-) , i have written the word in separate to underline the drama ...
and sorry for the Big S , i do not have such letters on my keyboard ... ;-(
and you're right : to organize a sale , you need first to have products to sell ...
some would be very shocked by the protectiveness of European laws concerning consumers rights !!!
obviously , a real pitfall for EAI !!!
ATM said...
Just becasue no one cared to do this before, really, does not make it an engineering feat.
I think you are basically calling the SMART car an engineering feat
I think that given the speed x space x payload x range x MaxFL x number of engines they got under 6,000lbs MTOW is just astounding. You can say many things about the EA500, but they did an incredible job of weight control. Just top of the class, IMHO.
Re Smart, I think the fact that they got the crash-test performance they did is a *huge* accomplishment as well. If I ever were forced to drive a microcar, I'd drive the Smart Brabus for the crash performance reason alone. But yes, you are right, it is an overpriced toy. It lingered for a while, but then found a market 22K sold in the US by Penske), and it is being copied (Toyota IQ, etc).
BTDT
The comments about the Collier Trophy are right on. It has been smeared for ever.
As for another comment about all the "goddies" paid for by the Wedge at EAA, there again is an organization that as far I am concerned has been smeared by the Eclipse scam.
How else could Tom P get paid $450K a year plus other bennies if the likes of the Wedge, who was on the EAA BOD at the time, didn't put up the bucks.
And how about the Young Eagles thing that ran for all those years and took in all that money from sponsors? 1,200,000 Young Eagles taken for plane rides and to this day EAA can not tell you how many actually became pilots.
But the bucks flowed in and it was publicity to the MAX for the program.
And all this done by volunteers so the money could flow to Tom P?
Just in case you have not noticed the badges some of the EAA volunteers wear that say. "You can't fire me, I'm a volunteer"
Thats Bull Crap!
After 22 years I got the shaft!
Never been fired from any job/volunteer position in my life except for EAA.
I hope Tom likes that $1 million condo on Lake Michigan.
Not knocking Airventure. It is the best get together in aviation. But slave labor put the money in Toms' pocket.
"How else could Tom P get paid $450K a year plus other bennies if the likes of the Wedge, who was on the EAA BOD at the time, didn't put up the bucks."
I have often wondered about this over the years. From the outside, the EAA BOD looks like a pretty cozy bunch. My best guess: there is quite a story here.
Freedom said... Dishonesty takes the free out of free enterprise.
No it absolutely does not. The markets MUST account for, plan for and assume dishonesty. They must independently verify, verify, verify and on top of that assign risks to every venture.
Public companies for example, have their results independently audited by their internal audit board, externally audited by the accounting audit firms, their risk further (supposedly) assessed by external credit rating agencies, all of the above further verified by the SEC the NYSE/NASDAQ/etc auditing processes, plus a ton of assessments from financial analysts, individual investors etc.
The point is to make out right dishonesty, deceit and lack of transparency hard to sneak by the net.
In a free market, every player is supposed to be looking for his/her best interests alone. E.g. a CEO should be interested ONLY in furthering his career and compensation package. The board in turn, should make sure that his compensation package and career advancement are intrinsically tied to achieving shareholder goals (e.g. increased customer satisfaction, market share, long or short term profits, etc).
Be very, very scared of ANY CEO that tells you "I'm not in it for the money and career advancement. I'm in it to help the world, blah, blah, blah".
Likewise, customers and employees should be looking out for their interests at every turn. And you HAVE to assume that along the way many will be tempted and will be dishonest.
That is just the way it is. Plan for it.
DB said ... Gulfstream/Cessna? May be exceptions...
They are not. Cessna was failing, was close to bankruptcy when it was acquired then sold by GD then scooped by Textron. And Gulfstream also gets shored up bu GD.
The full story of the Experimental Aircraft Association has yet to be told…
“Power corrupts, and absolute power corrupts absolutely.” Lord Acton
“From shirt sleeves to shirt sleeves in three generations.” Lancashire proverb
Source reports that the EAC to EAI sale will close Thursday (tomorrow). Didn't they get the memo about Tuesdays?
Wonder if RP will actually show up in ABQ on Friday morning, or make folks wait around all day for his grand entrance as usual.
Wonder how many EAC exec's will make the move? My guess is everyone who is not fired.
How long will it be until the EAC BoD folks start going for deep cover?
Regarding Diamond ... several reasons for the long gestation of the D-Jet.
1. They have taken a measured approach to development for the past 27 years
2. They have limited staff both in North America and Europe
3. They have three base models in production (20/40/42)
4. They have several variants of each of their base models.
5. The Thielert engine and parts availability is absorbing a lot of their time
6. They have both the DA-50 and D-Jet in development
7. Optimizing performance of a split serpentine inlet in not simple
8. Completing the design, development and certification requires cash
9. Why rush a new model into a slumping market
10. And, oh yeah … former Eclipse engineering wunderkind Ken Harness is their COO
Zed, I think you left out the *main* reason. Diamond got *way* behind the weight curve on the DJet.
Williams pitched in with a power increase on the same engine (new dash variant) to help, and they started a new. BUT, runway performance, climb performance and cruise fuel burn are all big problems in addition to limited payload.
*ALL* because their structure is too heavy. Eclipse, by comparison is a much, much more structurally efficient design even though it flies 3+miles higher.
I'm telling you. As far as weight control goes, Eclipse is setting the bar for the class.
That is why I *so* wanted to see them soldier on the EA400. We all know that Cirrus planes are structural weight *hogs*. Diamonds were middle of the road, up until the DJet. They really had no clue how to pump a composite fuselage.
Incidentally, Diamond's Austral division just got certification for their Thielert replacement engine.
Kudos to them. It is not a *light* engine, but, at least it is a kerosene burner.
baron95 said...
I may be in a minority of one here, but I do think that what Vern/EAC/EA500 brought to GA (in the year) they received the trophy are actually worthy of the Collier.
How insulting to those who actually did something to get a Collier.
Other than the incomplete avionics, there is nothing terribly wrong with the EA500,
They got almost *everything* wrong and had to do it over. Recall:
The Robert J. Collier Trophy is awarded annually "for the greatest achievement in aeronautics or astronautics in America, with respect to improving the performance, efficiency, and safety of air or space vehicles, the value of which has been thoroughly demonstrated by actual use during the preceding year."
In 2004, the year preceding the award to Eclipse in 2005, the "demonstrated by actual use" was a farce, some might even say a fraud, because they had flown the abortive Williams engine knowing full well that wasn't going to work. Almost everything about the planes in 2004 has changed so almost everything was *WRONG* then.
They managed to package a 5-6 place, twin turbofan, 1100 nm, 800lbs-payload FL410 jet into 6,000lbs MTOW. I say that is a *HUGE* accomplishment.
That wasn't why they got the Collier because that did not happen in 2004. What you've written is revisionist history to justify after the fact, and even that is very weak given they bumped up the weight by 1,200 pounds and ended up with undersized parts everywhere.
Why don't we find some nice post doc in Physics and given him the Nobel prize now just in case he does something brilliant later?
B95, really, I begin to put less and less weight on your posts because they are drifting further and further from reasonable basis in fact.
Black tulip and one other person have brought up the situation regarding EAA.
The local press in Oshkosh has also asked some interesting questions when EAA went to the local County Board to ask for monies to make additions to the EAA grounds with taxpayers money.Just do a search on the paper, Oshkosh Northwestern to find the facts. Also if you have the time you can do a search on IRS 990 forms filed by 501C3 groups that are tax exempt.
Now I want ALL of you to listen to this story about a decision that Tom P made regarding an event that was once in a life time/history making.
Get this. THE last fully qualified current, B-17 pilot from WWII who had been shot down in WWII. Evaded the Nazis for close to 90 days. Was repatreated and returned to the US to continue as a B-17 instructor. Helped EAA get the "Aluminum Overcast" in the air. Gave free time and spent a LOT of his own money to make the aircraft flyable and also was one of the few B-17 check pilots in the US that trained the first few pilots for EAA got SCREWED BIG TIME!!
AND ALL FOR MONEY!!!!!
I want you to follow this very closly.
He was current in the B-17. He decided that on his 80th birthday he was going to hang it up. One more flight in the 17 and that was it. He wanted to go out his way. Current medical and current in the airplane.
It was scheduled for Oshkosh 2001. Oh excuse me AIRVENTURE 2001.
The only thing he wanted was to have his two sons and two grandchildren with him on the last flight. I mean lets look here folks at what this meant as a part of history.
At OSH there are two parts of the airport before the start of the airshow. One part, the North side, is still open to arrivals. The South part, runway 18/36 is open to what is known as Show Case. Up to a certain time it is open to fly bys or for other FLYPASTS. 30 minutes before the airshow starts that airspace becomes "Waivered" and that includes FAA restrictions. In other words only "Essentail Crew" in the airplane.
Now. The Chairman of Nestle is coming to OSH and he has a BIG checkbook. He wants to take his kid for a ride in the B-17. OK so that means that he gets the ride with his kid in the non waivered airspace that the other person the REAL B-17 pilot was to fly in. So that also means that the LAST REAL B-17 pilot that wanted to take his kids and grand kids for the last flight gets screwed!!! Last 30 minutes before airshow are waivered. Essential crew only!! No passengers
So Tom P makes the decision that the checkbook is mighter then the person. The Last B-17 Driver gets to make his flight, but without his kids and grandkids.
INTERGRITY. Total power corrupts. Call it what you want.
If you want to see it in print. "The Last of the Combat B-17 Drivers"
Look at the bottom of page 265 and you will see the words
"I was keenly disappointed" and you can read the rest on the following page.Oh and remember my previous post about getting fired from EAA as a volunteer?
Politics people.
Thats what it is all about. From 1980 to 2001 if you were at OSH and you heard the announcing of the Warbird Show. You heard my voice. Remember 1985 and the "Salute to the Vietnam Veteran". I did that and put it together. How about OSH 1995. Just can't get myself to say Airventure, those 175 airplanes that came over the airport at one time was my idea in conjunction with one other person.
The Wedge, Tom P and others have no sense of what is right and or moral. It is all about money for those that control the game.They take it. In some ways the others get screwed and WE let it go on and on.
In one of my last posts I said we "Deserve what we get and pay for"
Do you have any more questions?
BTDT
Flyger, thanks for the timeline recap. I was in fact commenting about and mixing the end product EA500 which of course came after the Collier award.
The bit about demonstrated performance in the previous year has NOT been a strict criteria in the past. E.G. IIRC the 777 got the trophy before being proved in commercial operation, the F22 got it before being proved in combat, etc.
I think you will find that the people awarding the Collier fully take into account the fact that an aircraft is in the developmental stage and extrapolate.
Yes, perhaps with the EA500 they were quite premature in the award, but ultimately were proved correct, just like the 777 and F22 (not that there was much doubt on those two, mind you).
I think the EA500 may easily be the most structurally and aerodynamically efficient twin pressurized plane under 6,000 lbs ever and by a good margin. The fact that it was created by a start up company and CEO with no previous aeronautical experience is a feat that must be acknowledged.
Yes, too bad they were boisterous, arrogant, truth-benders and avionics mess-uppers, pyramid scammers, etc. Still the vision and the execution of a very efficient light (as in under 6,000lbs) turbofan with advanced integrated flight deck was an accomplishment. There is no need to deny them that for all the other mistakes.
And maybe that is why RP/Mann put the money up to buy the assets. Maybe they don't even know exactly what to do with it at this very time, but they have a *hunch* that a design this good must have some value in the future.
We'll see, of course.
"E.g. a CEO should be interested ONLY in furthering his career and compensation package."
What a crock! Unfortunately too many think this way and we are now paying the price of a "catch me if you can" mindset in business and politics.
P.S. WhyTech, I should have written that "for example a CEO, as CEO, should only be expected to or counted on to act in his best interest, blah, blah, blah..."
But since this is so off topic, I didn't bother correcting how it came out.
And I truly believe that. For example if Bill Ford makes an environmental play, it is because he believes that enhances his stature (career, image, etc), and makes him more money (by enhancing Ford brand perception, etc), and so on.
I believe that maximizing ling term CEO compensation and careers require ethical behavior and consistent performance. I see no divorce whatsoever between a CEO looking after number one and great value to markets and society.
" I see no divorce whatsoever between a CEO looking after number one and great value to markets and society."
Open your eyes and you will see.
"I think the EA500 may easily be the most structurally and aerodynamically efficient twin pressurized plane under 6,000 lbs ever and by a good margin. The fact that it was created by a start up company and CEO with no previous aeronautical experience is a feat that must be acknowledged."
Baron, you are Way over your head, buddy. There are many demo technologies that can be applied to make a "better" tein jet design, according to your criteria, JUST NO ONE CARES TO TRY TO DO IT. ITS S-T-U-P-I-D.
If I made the lightest weight, easiest/fastest opening umbrella, who would care?
Hey, look here, my umbrella weighs 1/2 the weight of the nearest umbrella, and if you press here and pull there, it opens 10% faster, too. Also, unless I make 12 billion of them, its twice the price compared with the other "brand". Also, its made of saran wrap, and no one knows how long it will last.
Welcom to the gasoline powered turtle neck - possible, sure...why bother? Is the real question.
PS. the newfangled umbrella is 25% smaller in size, too... my shoulders and nose get wet... but yes, its lighter and faster.
Did I tell you about my nuclear toaster? Quite a technological feat. If I make enough, I can get the price down to $500 each... I only need to produce 7 million a day. I suspect the factory will cost around 25 billion to erect... any takers?
"I see no divorce whatsoever between a CEO looking after number one and great value to markets and society."
Citigroup, Merrill Lynch, Bank of America, Lehman Brothers, AIG, Countrywide, Wachovia, Bear Stearns? The CEOs of these firms have damn well almost destroyed the financial system they gamed to enrich themselves. They should be in a cell with "Bubba" rather than picking out parchment wastebaskets. Or hanging by the neck along lamposts lining Pennsylvania Avenue. Maybe hung there by some UNIONIZED workers?
Fred,
"Would you prefer 100% of nothing or 80% of something?"
Old software development observation:
"90% of the time it works 100% perfectly".
(Is the cup...or CPU, half full or half empty :)
ASM said ... They should be in a cell with "Bubba" rather than picking out parchment wastebaskets.
Nope, they should lose their compensation packages, industry stature, etc.... Oh, wait! They did.
Duh! Could it be the market working exactly as designed?
BassMaster,
I think not everyone was familiar with the Chilean subcontractor for Eclipse, ENAER (I wasn't until your post, links for other's benefit follow).
I don't know how "out in the cold" they are- maybe things will warm up if EJAI gets some product rolling off the line- they make the nose section. Not too large of structure, but typically a lot of detailed parts and assembly in a tight area- fairly labor intensive, I should think, but probably not too severe of tooling cost, as most of the parts are relatively small (I think).
---------------------------------
I suspect many have recommended Wedge seek professional medical attention, mostly in a behavioral science context. Unfortunately, he based much on this advice, but apparently misinterpreted the implications of "see a psych".
There is probably some justification for Miss Ana being held responsible for the demise of EAC. But then again, perhaps things would have been even worse without her input. No word on whether RP will include her on the EJAI board of directors, although given the collection of nit wits they've had in the past (sans Mr. Mann), I think she would be a valuable asset.
Wedge's Business Strategist
(Hmmm...I think Shane had inquired about what Peg was up to a few weeks back...)
---------------------------------
Doing some research on Bassmasters inquiry, I discovered there is some evidence of other professional services rendered (to the airframe) as well in the past:
Eclipse undergoes cosmetic surgery (parts is parts), circa 2004
EAC press release, skins and nose
Nose job:
ENAER
Nose Job
Dermatologist (skin care):
Ducommun Inc.
Skins for Eclipse
baron ...
never heard of something called "Ethics" ?
if not , don't worry ...
your wife will be sleeping with your neighbor because his pool is one foot bigger ...
your son will mortgage you to buy a sportcar ...
your daughter will betray you for a make-up set ...
after all = only a market effect on some New ones having ideas on "how to get rid of old junk" and thinking about themselves FIRST ...!
i REALLY wish for you that you don't believe anything is about money ...
A significant part of the Eclipse "success in structural efficiency" (Tm B95)is that avionics integration.
They aren't carrying heavy FADECs, they have cards in a card file. They aren't carrying PMA's for the engines, as they have no back up electrical generation. They aren't carrying PSU's or gear and flap warning computors, as these are functions of the AVIO. The aren't carrying pressurisation controllers or cabin altimeters, as this is all integrated in AVIO.
None of these are inherently bad ideas (quite the opposite), but they represent huge program risk, as the differculty/cost/time required to certify/ and support integrated systems increases near exponentially with complexity.
These features of the EA500 design which had the greatest potential for advancing complete A/C performance, were also those parts which were most poorly managed, and have resulted in the greatest millstones.
Once the AVIO and AVIO NfG suites become unsupportable (which is not too far in the future) the plan B of anyone wanting to keep an EA500 flying can only be to form a group or company, pay a huge sum of money to competant avionics shop to strip all this integrated work out, put in G1000 (or equivelent), CB panels, warning systems and panels, Fadec's, Bus control systems, switches, PMA's etc etc, and do a certification program which will close to a full new design cert program.
This is not going to happen. But even if it did, the result of this program would destroy the "success in structural efficiency" Baron95 crows about. The supportable avionics and systems would cost at least a seat in internal space, for equipment racks, push the panel and pilots seats back 20cm, and reduce payload by 200+lb.
The final cost of an EA500, plus the retrofit will cost far more than a Mustang plus years of fuel.
The A/C will still be left with an airframe which is very light, designed to a much lower gross weight, partially built with a techology previously only used on disposible miltary flight vehicles, which has not be thoroughly fatique tested.
The quality of that "structural efficient" airframe can be inferred from the words of an Eclipse manager "The quality of the aircraft is Crap" (or was that "shit"?), in combination with an empenage from a vender over which Eclipse told the court that their quality was bad when the vendor sued them.
Ken, enjoy it while you can.
billy ...
i take your comment (working 90% of times) as this :
new tricks are made in old pots !
we could live perfectly well if we could satisfy ourselves with what we have ...
unfortunately , some fall for something called marketing ... (when peoples start to think "They Need" when wishes is the word )
then all NEW tricks get some relativism ... ;-))
in the trip i have already made in my life : the most happy ones i had the pleasure to meet = they didn't have anything , not sure some of them had any idea about a weird concept = paper-money ...!
freedom ...
YES !
économie de bouts de chandelles !
or when saving is so much important , that you end-up paying much more ...!
"Nope, they should lose their compensation packages, industry stature, etc.... Oh, wait! They did."
Not quite right again. Like Bubba, these guys have leveraged their positions to accumulate hundreds of millions (even billions) of net worth which they still have, and most will return for Act II (again like Bubba, who is wealthier and more popular than ever). What planet do you live on?
"(again like Bubba, who is wealthier and more popular than ever)"
In our society today, it seems that being ethically challenged is a formula for great personal success (of course, at the expense of others). Sad.
"again like Bubba, who is wealthier and more popular than ever"
Ah, THAT Bubba! Yes Clinton has sold out the Presidency, and all of us as well. He merely followed what others have done since Nixon started the process (with the possible exception of Carter). Now with his hideous wife as Secretary of State he can pimp her out as well. Not quite as lucrative as having the harridian in the Oval Office, but, hey, take what you can get. It's the new American Way!
airsafety ...
no , in fact it is more lucrative AND much less risky ...
if you would have a "foundation" and your wife in the position to incline the biggest military potential on earth one way or another ...
what would you expect ?
me , i would wait for all heads of state and Gov. to queue for making me a donation ...
and i would call anyone making a check of less than a one hundred millions : "a little player "
= more lucrative and much less risky , no one being forced to do so ... ! ;-)
"i would wait for all heads of state and Gov. to queue for making me a donation ..."
Fred, for some reason the Clintons remind me of the charming Ceausescu couple from Romania. I just hope Obama gets rid of her before its too late.
pick your poison,
either
the Clinton pay for protection foundation, wherby foreign money is used to maintain amicable relations
OR
The Bush/Chaney backdoor military Hussle, whereby American taxpayers fund wars which create corporate profits lining their pockets
Welcome to politics.
"gets rid of her before its too late."
Its already too late.
New post up.
Thanks to all who contributed to several lively discussions running through this thread. The blog continues to provide a useful service, and long may that continue.
Shane
baron95 said...
I think the EA500 may easily be the most structurally and aerodynamically efficient twin pressurized plane under 6,000 lbs ever and by a good margin.
The Collier was awarded to a company that was so clueless about what they were doing that they thought they could do it for 4,800 pounds MGTOW.
The Collier award went to the person most responsible for the death of the idea, and not to the people who actually did the hard work. Anybody want to bet where the physical trophy is right now?
Maybe they don't even know exactly what to do with it at this very time, but they have a *hunch* that a design this good must have some value in the future.
Anybody can make a very weight efficient design that can't be made for a profit. NASA and the DoD do that all the time. Eclipse has an uneconomical design that has cost about $12M per copy in total.
That's like giving the award to the kid in school who took the longest on the exam and had to answer every question twice, and still didn't get an A.
And don't give me no bull about how it was a hard problem. There were knowledgeable people in the industry that knew going in they were misguided. Instead of using that free advice, they ridiculed it with WCSYC buttons.
Eclipse has done considerable damage to the aerospace industry. Any new startup with a real workable idea will have to live with the ghost of what Eclipse did. This is not something that deserves a Collier.
I would love to hear who the other nominees were for the year that Eclipse got it. I believe it will be easy to choose someone far more deserving from that list.
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