Tuesday, January 13, 2009

Where now?

This week the Bankruptcy Court in Delaware will rule on the Chapter 11 process. As there is only one 'credible' bid in play as I write, from Roel Peiper, it looks as if we can predict the future ownership based on what we already know. With that in mind, I decide to review some court documents that came my way. They are (or were) available to the general public and contain the facts and figures available to the company and it's officers, suppliers, customers and staff at then end of November 2008. Nothing in the files is therefore secret, but some people may find it hard to accept their dirty linen being washed in public, so I'll try to avoid naming too many names. If I've put you in the spotlight unfairly, drop me a line at eclipsecriticng@gmail.com and we'll see what we can do.

1. Total deliveries. 259 aircraft since the 31st of December 2006, although not all are currently in the hands of customers. Some have been retained in companies associated with EAC, or 'loaned' to ex CEO's. S/N 260 was in process of being delivered to a company who had paid EAC not less that $1,288,000 when the aircraft was 'seized' by the bankruptcy process. It's the subject of it's own legal action and I'm sure we will hear more.

2. 'Operations' income, per the 'Statement of Affairs' was $318,000 in 2006, $102,694,000 in 2007 and $210,185,000 (to the date of filing) in 2008. Interest earned (presumably from depositor funds) was $1,659,000 in 2006 and $4,047,000 in 2007. As a historical footnote, DayJet paid $20,000 in 2007, for something....

3. Current spending. In the calendar year prior to filing, EAC had paid $61,606,000 to creditors, and $85,443,000 was listed as the amount still owing. There was $81,455,000 (September 2008) of inventory in stock. There were 28 (give or take one, see s/n 260 above) FPJ's in production at the end.

4. Refunds. Something called "Olympus Aviation Corporation" looks like it was the last one to succeed in recovering a deposit ($175,000) which it did on or before 24th October 2008. That left 22 'pending' lawsuits seeking deposit refunds at time of filing. It's not clear how many aircraft these suits involve.

5. Property held for another person. There was $85,787,857 (and 64 cent) held by EAC, the vast majority of which is for 'City of Albuquerque' or 'Wesco Tools'. The items from Wesco I understand (tools etc) but the City seems to have provided all sorts of stuff, including computer servers and things like a 'Teletronics-Data acquisition unit -Exp AC 106' (listed at $53,523.79). The list is varied, and goes on for a long time.

6. Receivable balances. EAC list $20,720,225 as owing, mainly from customers.

7. Deposits. EAC list 'Creditors Holding Unsecured Nonpriority Claims' (and this is truly AWESOME) of $568,143,152.55. A chunk of this is money claimed by suppliers, but I gave up counting the number of 10% and 60% listed, after I got to 300. In another document, ETIRC were shown as having paid $8,900,650 (and 39 cent) as deposits for FPJ's. At least they had the sense to avoid the Con Jet, which tells its' own story...

Speculation, short term
Roel will buy the assets, probably with input from Al Mann. There will be a round of cuts, including staff reductions. Suppliers will be offered some small amount of cash (cents on the dollar) and be promised the earth to stay on board. Depositors well get some sort of 'coupon' to salve their wounds, but the price of the FPJ will be increased by a similar amount, so they will still have lost everything. Customers will be told that parts are more expensive and that all repairs must be paid in cash before return of the aircraft.

Speculation, medium term
Within a short period, probably less than 6 months, Roel will be facing further cash problems with suppliers and will end up having little or no choice on Chapter 7. Sales of aircraft were already tailing off, which is one of the reasons EAC ran out of cash in the first place. New victims will be hard to find, once the remaining Faithful (and there are very few left of them) have paid up for the aircraft he can build in that time.

Speculation, long term
Much more difficult, post Chapter 7. I wonder how the avionics can be supported, given the very high order of integration within the FPJ. AvioNG is touted as a major strength of the package, whereas most people see it as a liability. P&W can be relied upon to support the engines, but will be able to 'think of a price and double it'. The airframe will present special challenges when repairs to the FSW joints are required. Further AD's will present problems, and the whole area of 'upgrades' to keep EASA happy presents it's own pitfalls.

My opinion
The facts presented in the Bankruptcy documents prove that the numbers don't add up now, and have never added up at any time. A whole range of people were sold a concept which had never any chance of becoming a reality. The City of Albuquerque, depositors, suppliers, banks and shareholders are all left nursing wounds they won't forget in a hurry.

I wish the new owners all the best of Irish luck. This 'business' is a crock, was always a crock and has no chance whatsoever of being anything other than a crock.

But I am biased.....



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baron95 said...

Zed, I'm sorry, but you (and many) on this Blog are incurring in the Vern fallacy.

You are working things backwards. "We need volume X, to achieve price Y", without bothering to see if there is demand for volume X and/or if volume X is achievable.

Start from the right end.

A - There is no sustainable demand for more than about 50 EA500s/year, perhaps reaching 100/year if the economy starts to recover and oil prices stay low. At ANY REASONABLE PRICE.

B - Eclipse, with all the FSW, the thousands of employees, the hundreds of millions of dollars of investment has NEVER, EVER demonstrated the ability to produce
more than a sustainable 100 or so planes/year.


The question is....

What can be done with a volume of 50-100 planes/year. That is ALL that you can produce and ALL that the market can absorb on a sustainable basis.

Why waste anytime, like Dave loved to do, talking about 1 a day, 2 a day, high volume, multiple plants, blah, blah, blah. It is 50-100 a year and that is it.

I think the pecking order in late 2009-2010, with each vendor producing 50-100 year is roughly: Phenom 100 @ $3M, C510 @ $2.75M, EA500 @ $2.5M, D-Jet @ $1.75M.

All of those planes will be marginally profitable or slightly unprofitable at those levels with the profit margin coming from service and support.

baron95 said...

Joe P said ... having privately owned, for profit companies having to compete in a world market against government subsidized companies (either directly, like Embraer, or indirectly via bankruptcy, like Eclipse).

You can't be serious with this comment? Have you forgotten that the ENTIRE air transport industry in the US, including the airlines and airframe builders, were subsidized with ridiculous (to the tax payers) air mail contracts? Airlines/Airframer/EngineMaker conglomerates like Boeing/United/Pratt propped by the airmail contracts and side military contracts - that is how it all started.

Which is the chicken and which is the egg the 707 or the KC135?

And how is CH11 a subsidy by the government? No govmt money other than court costs is involved in CH11 proceedings. A company has failed and can't pay creditors, vendors, customers, employee pension plans. Choice A: shut it down completely, and everybody loses. Choice B: erased some of the debt, most of the equity, dump some of the pension liability into funds funded by insurance contribution, let the company continue to operate with everyone having a chance to recover a bit of money over time.

What you should be worried about is how companies like GM and Boeing with outrageous Union employee/legacy costs will compete against hungry entrepreneurial companies like Hyundai and Embraer.

It has little to do with subsidies and a lot to with market competitive cost basis.

Do you know that GM kicks-ass in Brazil and does well in Europe? The difference? It is not a German or Brazilian subsidy. It is NO UAW.

Ask yourself why it is that locally designed GM cars win car of the year in Europe and Brazil and go toe to toe with Mercedes, BMW, VW, Fiat in Europe and Brazil, have top mind share, make money, yet in their home turf they get their ass kicked in every segment, except some US-only idiosyncratic body-on frame segment.

What is the answer Joe P. ?

baron95 said...

Shane, my apologies, I brought the above two posts from the last thread so we can continue the discussion. They were posted at the time you put the new headline up.

A question for you: I thought the bid deadline was end of day today in Delaware. Is that not so? If so, we have a few more hours for a "dramatic" last minute bid ;)

Also, a nit-pick... My understanding that what is to happen tomorrow (14th) is the 363 auction, and not as you said "Bankruptcy Court in Delaware will rule on the Chapter 11 process."

Usually, there is an auction and a wining bid certified. Then the court will set up some time (a week or so) to hear objections to the 363 sale to the winning bidder under the bid terms, and there may be some back and forth on modification of terms/price of the winning bid.

The court then will either enter the 363 sale order and CH11 discharge or deny the sale and follow some other path (CH11 liquidation - YES, there can be liquidation under CH11).

So, I think we are still a couple of weeks away from a "ruling/discharge".

baron95 said...

And now, the best use of a personal turbine aircraft in 2009 goes to this pilot and his Meridian

Try that in a car or airliner ;)

baron95 said...

Slow day, so here we go...

On other news, Boeing 787 ZA001 - AKA Dreamliner 1 - has now surpassed the EA500 SN 001 as the longest jet aircraft in final assembly. ZA001 has now reached 614 days in final assembly and has been moved (I'm told) to the 767 final assembly line for, err... another round of fastener replacement.

At the standard IAM rate of one fastener/hour, I anticipate that ZA001, MAY, in fact leave final assembly for the flight test line before the end of the first quarter, some 2 years behind schedule.

Not a bad performance for a young (92 years old) aerospace company.

Shane Price said...


I was beginning to think I'd have to rename the blog the 'Baron95 solo hour'....


My understanding was that 'today' was the deadline for bids, tomorrow would see them opened, Thursday was for any required checking (e.g. if bids for the parts of the company exceed that for the whole) and Friday would be the execution.

OK, I'll rephrase that.

Friday would see the decision.

I can understand the need for speed. The longer this process goes on, the more DIP is required to fund payroll etc.

After all, it is still possible that Roel (and friends) may decide they want no further part of this sorry mess.

The differences between the FPJ and the Dreamliner are pretty clear, I think.

- Nobody who paid a deposit on a Dreamliner expects to get screwed.

- The 787 will be delivered complete and working to its contracted specification, from s/n 001. Not s/n 266.

- Boeing won't change their mind about the engine supplier after first flight, or the avionics suppliers after 6 years of work or announce a plan to move production from Washington to Russia after deliveries have commenced.

- Boeing are highly unlikely to announce a single engined version, for less money and with 75% of the seats, and then try to convince the market that this is the future for airline travel.

OK, that last one was a bit over the top, but you get my drift.


Anonymous said...

What always got me was the order book versus production rate. The advertised order book very quickly ramped up to the 2500 - 2600 range and then held constant. With the advertised / desired / required production rate of more than 500 aircraft per year, results in the complete build out of the order book in about 5 years. Then what?

Orville said...


Simple. The huge success of the aircraft, the many satisfied owners - now buying a second craft for their spouse - and starting to give them as Christmas presents - the overwhelming acceptance of the charter model (ant farming or whatever) - all would have led to a complete frenzy of people clamoring to get a plane - therefore - huge exponential growth - and the next Microsoft.

Joe Patroni said...


I'll just go down your list.....

One man's subsidy is another man's incentive......

I'll be willing to bet that various government entities have recovered their "subsidies" to aviation many times over, by taxing the profits of the companies, and the salaries of the employees.

As far as Chapter 11, take a look at the airlines.....crapping on their employees, vendors and investors, then undercutting their competition with their reduced cost structure, who then go into Chapter 11 themselves......a subsidy for crappy management, as far as I'm concerned, especially since the suits always seem to come out of the process with their salaries intact, and/or owning a big piece of the restructured company.

True, the Big 3 cost structure put one foot in the grave......but you cannot deny that the industrial policies of Japan and Korea helped put a banana peel under their other foot. I've seen numbers that suggest that Toyota, etc. se a $2000/vehicle subsidy from the Japanese government, due to currency manipulation.

I've worked at Brand "C"......and believe me, nobody on the shop floor is getting rich (part of the reason why I left).....but evidently, they are making too much, because wire harness assembly is being moved to Mexico, and Bombardier is moving subassembly work there also.

If manufacturing jobs are so "20th Century", why is every other country on Earth knocking themselves out, grabbing as many of them as they can, while the grabbing is good? You could export EVERY non-government job in the USA to China, and it wouldn't make a blip on their unemployment rate.

IMO, we are well on our way to turning wide swaths of this country into Mexico or Brazil. Great if your in the upper 10%, and can afford the armored cars and personal security.....not so hot a deal for everyone else. The problem is, a lot of people who think they will be part of the 10% will find themselves on the outside looking in.

If the model of the future is China, with it's bastardized combination of no-holes-barred capitalism/communist crony-totalitarianism, I wish the powers that be would say so, and at least be honest about it.

Our latest financial meltdown, with 40-1 leverage, derivatives with as much leverage backing them, making it possible for $14,000/year illegal alien strawberry pickers to take out an $800,000 mortgage might suggest that these dipSh#ts running the show aren't as smart as they think they are.

Nobody in this country can even agree on what the problems are (other than the fact that it's somebody else's fault), much less on what needs to be done to fix things.....I thought Obama deserved a chance, but since it seems that he plans to fill his cabinet with Clinton retreads, I have come to the conclusion that we are pretty much screwed.

AS the "Dilbert" cartoonist recently said in his blog, the internet age has given the cheats and crooks the upper hand, giving them the ability to steal faster than they can be detected and stopped.

I'm "long" bunkers, MREs, and AR-15s...... :)

Shane Price said...

Historical footnote, 1
Captain Zoom fawned over The Wedge for many a long year. Every 'event' was covered, in breathless detail. Zoom led the cheerleaders, and savaged the critics.

But it cost him....

A trifle, to a gentleman of such substance, I know, but to end up being owed $80,000 as an unsecured creditor seems, well, fitting.

And do you know, I tried (in my innocence) to warn him that he would get ripped off. He, of course, ignored me and continued on his merry way.

For me, this detail was proof, beyond reasonable doubt, that justice does exist.

Historical footnote, 2
Under the 'litigation' section, and right at the bottom, the blog related actions are listed as 'dismissed'. Clearly, one of the few winners out of EAC were the lawyers.

Which reminds me.

Historical footnote, 3
How come the legal firms representing EAC were paid $200,000, each, in October? They must have been working on the Chapter 11 for at least a month before EAC went to court, if that turns out to be what they were paid for.

I'm still extracting 'juice' from these documents, and will either update the headline or post comments as I see fit.


Anonymous said...

Well Critics ...

Court Docket #338 tells the story ...

Exhibit - Notice of No Qualified Bidders, Cancellation of Auction and Intent to Present Successful Bidder at the Sale Hearing. Filed by Eclipse Aviation Corporation. (Entered: 01/13/2009)

Niner Zulu said...


I believe you are pretty close on your "sustainable demand" number of 50-100 EA500's per year. Probably closer to the lower end for the next few years.

The question is, can EACNg actually make money producing 50 jets per year? I don't believe they can - not with the overhead I've seen at their ABQ plant.

If EACNg actually does restart production - a huge IF - then they will likely last only a few months as Shane has predicted.

Add Russia into the mix, and the situation looks even more dire.

Anonymous said...

For those keeping track of the timeline. Per the Court docket history ...

Bids due by 1200 ET on 13 Jan 09 (today)

Auction on 14 Jan 09 (now canceled since only the ETIRC bid was complete and conforming)

Objections filed by 1200 ET on 15 Jan 09

Sale Hearing at 1400 ET on 16 Jan 09

Dave said...

Why waste anytime, like Dave loved to do, talking about 1 a day, 2 a day, high volume, multiple plants, blah, blah, blah. It is 50-100 a year and that is it.

Baron, perhaps you missed it but Eclipse is in Bankruptcy because their price/volume resulted in them being unprofitable. I thought you were a business guy and as such things like profit and margin mattered to you. You like to say that this blog is wrong, but this blog was right that Eclipse needed a greater volume to be profitable and the matter of profitability (or lack thereof) is of quite a lot of importance to those people and businesses who stand to lose $100K to much more as a result of this issue that you consider a waste when I say it. Trying to be the canary in the coal mine that a business doesn't have a sustainable business model and is losing money is not a waste. You yourself just said what you thought Roel's business model was but that you didn't necessarilly subscribe to it - so why can you talk about such things (you specifically said you thought Eclipse was going to lose money on each plane sold with it being a matter of how much investors could tolerate), but if someone like me says that Eclipse's volume is causing them to lose money, it's a "waste"? In the last thread you also talked about about the Frankenjet being the high volume, low price as Roel's plan as well as talking about the Russian plant. I'm not as active as I used to be because I've been busy dealing with other things, but I do read the threads, so I don't see why you go out of your way to insult me for doing the same things you just did in your own posts in this thread and the last thread. I'd rather be posting here for other things than responding to a random insult.

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

This is a great famn damily.

Beedriver said...

The only Way I see for EAC to be successful going forward is to take the design, redesign it for rivets, (Something that can be done well and cheaply in the old Russian satellites), get rid of the complex integrated control system and substitute simple parts bought from others, Replace the instruments with the Garmin G1000 system you can only keep your costs low enough if you build it with the complex pieces bought from volume builders like Garmin and P&W.

there is no way you can support the overhead of maintaining a complex computer based system on 100 units per year. we built machine tools in that volume and all our controls were based on Fanuc, Siemens and PC's. these are Complex systems that were built by the thousands and those oem's could afford to do what they needed to do to maintain and continuously up grade the technology.
I do not know if Roel has the resources or the smarts to do this but owning the Type Certificate makes it immensely cheaper and simpler for him to do it than for anyone on the outside.

Beedriver said...

more thoughts.
The redesigned E 500 could even keep FSW as they have the tooling already in their possession and hopefully the knowledge on how to use it. however I would do all redesigns using rivets.
A more important economic reason would be that Roel would have a pool of 250 existing E 500's to retrofit for 500K to 1 million (Gross guess) that activity would provide cash flow for the near future.

Someone with more experience then me in this game needs to estimate the real costs to see if the strategy of dumping Avio NG for different simple controls and the G1000 makes sense.
perhaps Roel could use this strategy to cash flow retrofitting airplanes and building 50 to 100 new per year. which I agree is the probable long term volume.

baron95 said...

Shane said... - The 787 will be delivered complete and working to its contracted specification, from s/n 001. Not s/n 266.

Sorry Shane... Boeing already announced that SN001-006 will MISS performance guarantees (range and payload) by A LOT, and no fixes will be possible. In addition, SN007-020 will also be overweight by a good margin and it is possible that all 788s will miss performance guarantees.

baron95 said...

Zed - Thanks for the calendar recap.

Dave, welcome back. You said... but this blog was right that Eclipse needed a greater volume to be profitable...

No. No. No. That was my point. Higher volume is NOT the answer. There are sustainable buyers for only about 50-100 EA500s per year.

Do you think GM can fix its problems by increasing volume? Do you think Toll Brothers can fix its problems by building more homes.

No. No. No. Shooting for high-volume when there is no demand is THE quickest recipe for fast ruin.

EVERY smart company I know off is CUTTING production and fixed and variable costs as fast as they can.

Eclipse needs to rightsize and improve its processes to build around 50 planes per year as cheaply as possible, then TRY to sell them with positive margins but be prepared to sell them at a loss for long periods of time.

Just like GM, just like Piper, just like Cirrus.

For crying out loud. You guys talk about about increasing volume as if there were an infinite amount of demand. Did you by any chance drink any redish drinks prepared by Vern by any chance?

baron95 said...

Dave, we missed you. That is why I had to "bait" you back. Stick around. Ch11 looks like it is going down without any hiccups exactly according to RP's plans, as expected (by me anyway).

And Shane, the EAC lawyers definitely earned their fees, if this thing goes down as it is looking. Just as they wanted it. Awesome job. Fast track, surrounded by mines for anyone trying to spoil the party.

FreedomsJamtarts said...

I agree with Baron95 estimates of 50-100 per year demand, (which cooincidentally is about what the market for Meridians, TBM's, PC-12's, King Airs etc have been).

Problem is this POS has a highly unreliable (except for Ken's) integrated electronics suite, which is also compact.

So do you...
1. Toss Avio NfG, but Will the G1000 even fit (doubt it, or big hit to baggage space, paylod etc).
How do you do all the FADEC, pnuematic, Pressuristation, gear warning etc interfaces? Who certifies it and what does this cost?

2. Finish AvioNfG. Well Eclipse's team couldn't do it when the had nearly unlimited resources and about three attempts.

3. Go TU.

My money is on door number 3. I thought this would go to Chapter 7 in one hit, but stupidity is pretty stubborn, so it is going to take one failed resuscitation to New eclipse before it goes Ch7. Won't change anything.

In 10 years they will all be in museums, scrap yards, or the hands of a few diehard warbird like owners, to be cannibalized for parts.

Shane Price said...

Bankruptcy Court Notice

"The Debtors have determined, in consultation with the Ad Hoc Committee of Senior Secured Noteholders and the Official Committee of Unsecured Creditors, that no Qualified Bids were received prior to the Bid Deadline. As such, no auction will be held.

Pursuant to the Order, the Debtors intend to present the bid of Eclipsejet Aviation International, Inc. as the Successful Bidder at the Sale Hearing."

So, it's official. Roel and his merry band are the only game in town, and the Court will rubber stamp their bid on Friday.

Unless, of course, the 'Owners Group' decide to throw a spanner in the works. Can't see them doing it, myself. These guys have a proven 'sucker' mentality and will be easy to buy off with empty promises. Which will prove to be worthless, just like their aircraft and/or deposits.

No, the real 'iceberg' lurking in the path of this particular ship is....

... 'The Economy, Stupid'

Small private jets are a luxury item. Recession is traditionally a time when thrift becomes fashionable. People consider their pension fund more important than 'toys' and allocate income accordingly.

While I'm sure EAI (EAC is dead, long live the 'International' version) has funding behind it, and are willing to pour good money after bad, the scales will fall from their eyes. Prospective owners who've already lost money are unlikely to pay what they consider to be twice for the same product.

In short, no matter how much money Roel puts in, there is no medium term prospect of getting any out. Aircraft sales are simply non existent. Every aviation company reporting over the past few months talks of order reductions or cancellations, and are cutting back on their production to reflect reality.


julius said...

Friday we will know, if the judge will reduce the adavantange of a 363 sale: speed, transfer of assets free and clear of encumbrances and interests, transfer of restricted contracts and avoidance of exposure to claims under fraudulent transfer laws.
(see http://library.findlaw.com/2004/Oct/27/133620.html)

What about the sn/260 sale - just good luck for EAC?

Life goes on ....

How long will it take to get the full EASA cert?

RP said he would need about 200 M$, to ramp up production in ABQ to 200+ a/c p.a. in 2009. How to get that money when investors start looking for ROI etc?
The lack of interest in the auction should be a warning signal for every investor/bank!


baron95 said...

Hi Julius,

I'm curious as to why you think the judge will place substantial restrictions on the 363 sale. That would actually be going against recent trends. 363 sales are increasingly becoming the preferred way to buy/sell/reorganize companies. As a matter of fact it is good all around. It closes the book for the sellers, gives a clean slate assurance to the buyers and gets the courts out of the business of having to enforce/monitor complex re-organization orders. True courts hate when the buyers are the sellers as in this case, but that objection is waning with time. 363 sales are the way of the future. If Cerberus were to sell Chrysler, that would be a good vehicle to do it.

As for the lack of other bidders, that is pretty typical of private co CH11. Occasionally, like it happened with Columbia, some outside party makes a half hearted bid, but it is rarely if ever successful.

Now lets see what EJAI will do. I'd say it will take them 90 days or so to pump out another ship after money comes in.

airtaximan said...

"For crying out loud. You guys talk about about increasing volume as if there were an infinite amount of demand."

this is the EAC gorian knot problem, since day-1... not this blog. The low cost jet was/is dependent on unrealistic volume. Every supplier bought into a curve, whereby volume resulted in lower supply costs.

At 50 planes per year, my guess is the EA50 will cost more than a mustang proably more than a Phenom.

Who will buy? No one. Not one.

So, Baron, perhaps you know something we don't, and Vern didn't and even RP doesnt (remember, he claimed they will ramp back up to higher rate prodction soon)... how do you get to a lower cost jet, when the previous plan was for "high rate = low cost", and rate is gone?

OH, and yes, lowering the cost and price of homes WILL have a positive result on the home market. Its not that buyers are scarce, its that they are scared. At the right low price, sael happen, and are in fact hapenning. So, if a home buyer can find a way to get to the "right" price, they can sell homes. Is it through rate? I am not sure.

Same with this jet - my sense is, at $1M... they would still have a few hundred orders. My sense is, if dayjet found a way to offer real value, and the price was appealing, they could have found a lot more clients. A trip on your scedule, from Boca to Lakeland for $150 or less... for example, might have been a winnner.

Dave said...

No. No. No. That was my point. Higher volume is NOT the answer.

That's what I've said for ages.

There are sustainable buyers for only about 50-100 EA500s per year.

Again when I was "wasting" my time that was what I was saying. That there weren't enough sustainable buyers for Eclipse's business model and as such they were doomed to end in BK. That volume range that you are giving now is what I gave in the past and my comments at the time were that Eclipse was off by a power of 10 when they were talking about their annual volumes.

Do you think GM can fix its problems by increasing volume? Do you think Toll Brothers can fix its problems by building more homes.

Baron I was not saying I subscribed to Eclipse's model then just as you've gone on record saying you didn't necessarilly subscribe to Roel's plan now. My complaint has been that Eclipse had a flawed money-losing business model based on selling at unrealistic volumes.

For crying out loud. You guys talk about about increasing volume as if there were an infinite amount of demand.

Baron, I've only said it as a criticism of Eclipse, not that I believed it. I don't think any critic here ever believed in Eclipse's high volume low price business model and as such since the various Eclipse critic blogs have been around have only been talking about high volume to say that it wouldn't work.

Shadow said...

Fellow bloggers: what is your guess for per-aircraft costs now that almost all of the liabilities will be gone via the bankruptcy sale, presumed more costly contracts with suppliers and an assumed 50 to 100 per year aircraft build rate?

Shane Price said...


Everyone in the supply side who's contacted me claims the COST to EAI per aircraft at 'one/two per week' will be in the region of $3 million.

The FPJ will need to be sold for more than that to generate something EAI have never managed so far.

A profit.


julius said...


perhaps, the judge will rule that the s/n 260 must be passed to the "real owner"....

Perhaps we will see...

I rather would like to know the price/costs for/of the fpj.

New (2009) price 2,39 M $ /with AVIO NG 1.5 and FIKI?


baron95 said...

Give or take $.25M, my guess is that the cost to Eclipse will be on the order of $2.5M (parts+labor+overhead). I think they can sell it for about $2.25M in the US and $2.75M in Europe. That is about break even, with profits, if any to be made on service/support.

baron95 said...

Let me clarify that the above is for the base airplane. I'm assuming US planes will go out with about $100-150K of options and European planes will go out with about $200-250K of options.

baron95 said...

Anyone looking to lock-in Oil futures, contracts are now selling for $36/bbl. Not quite the recent $33 low, but close enough to lock it in.

Shane Price said...


Well, it's taken me a long time to get these for you all, but here goes:-

Expressed as 'Agreements' and taken from the official, court sourced documents.

1. 'E500 Purchase Agreements', delivered, 249

2. 'E500 Purchase Agreements', 60%, 236

3. 'E500 Deposit Agreements', 10%, 447

4. 'E400 Deposit Agreements', 70

So, 259 delivered FPJ's were done under 249 contracts. Those who had paid their FPJ 'progress payments' (typically 60%) number 236. A total of 447 deposit contracts were outstanding, for amounts between $97,000 and several million, and 70 contracts existed for the ConJet.


The Wedge had 753 outstanding contracts, backed by real money, for at LEAST that number of aircraft. He didn't need to inflate his order book, it was actually deeply impressive.

Just goes to who what an idiot he is...

Trouble for Roel is that these people are burned, badly. I've talked with a few of them, and they are not likely to pay EAI money, for anything. That's for those who still have a few dollars to spare.

Also interesting to note the global spread, and the variation in deposit amounts. FPJ's were from $97,000 to $170,000 per contract. The '60%' club also had a considerable variation between the lowest and highest.

I should also stress that I have no real way to confirm if some of these contract had been annulled (refund request) or voided by any other means. The raw data looks like a 'dump' taken from the EAC database.

Finally, it appears there were actually very few 'fleet' orders. It's pretty easy to break down the numbers, as almost every delivery, progress payment or deposit seems to have been written against a specific aircraft.


Niner Zulu said...


I seem to recall that the blog consensus for the actual number of real orders in EAC's order book was somewhere around the 800 mark, instead of the 2400-2700 jets claimed by EAC.

Looks like that number was pretty close, and once again the blog was the only source for real information. The media sure didn't get it right.

By the way, I've been shopping around for turboprops in the $1 million-$1.5 million range and brokers are tripping all over themselves trying to get me to make an offer - any offer - for their planes. Seems not a lot - no let me rephrase that - seems NOTHING is moving right now.

My family has made it pretty clear that they value comfort, reliability and payload more than they do "new", fast and high tech. I still hold out hope for either a Mustang or a Phenom within the next couple of years, but in the meantime looks like we may be back to a reliable old turboprop. Now the question is King Air, MU2, or Twin Commander?

Niner Zulu said...

So EAC was purchased by Roel for $28 million cash.

The few bidders there were, including at least one aircraft manufacturer, took a look - obviously didn't like what they saw - and walked away.

That is pretty telling.

Headoutdaplane said...

What about phostrex (sp)? it one awards for being able to replace existing larger heavier fire extinguishing systems. Could someone just bid on the phostrex rights and sell it to other manufacturers?

Black Tulip said...

Niner Zulu,

After eleven years of ownership and 1,600 hours I can wax poetic about the Twin Commander. If you'd like to talk get in touch through Shane.

Shane Price said...


I'm pretty clear in my own head that there were more than 800 AIRCRAFT on order.

For example, one of the ConJet agreements had a $2 million deposit against it. Without exception, every other had $100K showing. It would be reasonable to speculate that the $2 million was an order for 20 aircraft, which would take the total towards 90.

Likewise with the 60% and 10% progress payments/deposits. Some of the numbers associated with each agreement would point at multiple aircraft.

Sadly, I can't see any way to extract AIRCRAFT from AGREEMENTS with total accuracy.

What really gets me is that 'ol Wedgie didn't need to lie. The truth is, truly, impressive.

And watch out for BT. He is really REALLY keen on his Twin Commander....

As he should be!


Shane Price said...


Good name, by the way, and welcome to the blog.

Do a search on PhostrEx. The first site you get directed to is here. We're the only ones talking about it, which should tell you a lot....

It's a dead letter. EAC were unable to get anyone else to buy it, and the auction of assets has already been cancelled.

Even if you did want to bid, it's too late. Roel has bought 'everything'.


Anonymous said...

Shane -

With the reported tally of roughly 1500 fleet orders (DayJet had around 1300 of those) and the 259 aircraft with a C of A, and the couple hundred cancellations they had in June-July ... that puts the order book right around 2700-2800 after all.

Time for some here to eat some crow.

We know that the fleet orders were at least 50% options ... so, the firm orders were right around 2000 at one point.

Sales dried up once the delivery dates got 4-5 years into the future. The faithful were willing to wait 6, 7, 8 years for their jets, but not the new customers.

With $3B+ in possible revenue how could they screw it up so badly?

gadfly said...

Headout . . .

In addition to Shane's comments, "Phostrex" seemed to have serious issues related to health and corrosion. Mix that with the "stir fried welding", and those little "aluminum eating bugs" ("aluminum eating bugs" copyright: "gadfly" 2008) . . . with inter- and intra-granular corrosion, which was never addressed in life-cycle testing, and you have a strange but certain recipe for problems . . . and an open invitation to lawyers?

Now, whether justified or not, who in their right mind would take on this tiger.


(Shane . . . 'sounds to me like Roel "bought the farm" . . . and I had always thought that "Dutchmen" were somehow a notch smarter than the norm . . . but maybe there's yet hope for Irishmen and Scots.)

EclipsePilotOMSIV said...

gadfly you do realize that the Phostrex issue has come and gone, right? It was a bad batch that got some water in it. It has been fixed, and customers are aware of it and how to watch for it. As much as you like to bring up your copyrighted term, you are just blowing smoke old man.

Shane Price said...


Pardon me, but I must disagree....

Remember, these are EAC's OWN figures, as presented to the judge. 750 odd agreements, for (at a guess) 850 aircraft.

Of the 259 deliveries, you have to take out the ONLY fleet actually in operation (DayJet), the 'hanger queens' and the marketing 'loans'. I make that about 220 or so aircraft in the hands of owners.

Lets take those 750 contracts, deduct the 22 who had already gone to court seeking refunds, add another 200 for those who'd asked for refunds but held fire hoping (against hope) that 'something' would turn up and you're down to 500 odd.

And remember, options would have been recorded somewhere.

I can't find them, and I have, literally, everything.

Nope, I stand by the numbers. The Wedge actually had, at best, 1,000 orders. About a quarter of those actually shipped, another quarter asked for their money back when the price hit $2.2 million, and there's about 500 in limbo hoping they will get 'something' out of this mess.

'2,700' was always a lie.


Roel claims to have '$300 million' to back up his bid. I think he's been taking too many happy pills, and even if he isn't, that amount is chicken feed when you see what EAC burned through last year. I'm truly staggered at what they spent, versus what they booked. Round numbers for income was $200 million. Round numbers for spending are harder to be sure about, but it seems to have been north of $350 million. They shipped 150 odd aircraft in 2008, and appear to have lost roughly a million dollars on each and every one.

Cash arsonists? This company would need the Fed to fund it, going forward...


julius said...

With $3B+ in possible revenue how could they screw it up so badly?

EAC needed more than $4B (based on 2000 orders).
Did EAC ever manage to get a positive cash flow?
Was there any competent CFO?

Afterwards it's easy to enumerate the faults - but that's the difference between the wedge and an entrepreneur...


P.S.: Have look at EAC's "Eclipse 500 Total Operating Costs Compared to Other Aircraft" - EAC shows The price of the Mustang of 2002 - but not the equivalent of the fpj.
That is not a lie but a real "red head"!

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


At first I had much to say . . . but deleted it all.

These folks seem to have so much money that nothing much really matters. I’ve had the privilege of knowing some of these folks . . . even enjoyed flying in their jet where the sky begins to be “Indigo Blue” . . . and looking down, rainbows were complete circles . . . and the rare aircraft sharing the sky was military.

In the beginning, I had this idea that the design and manufacturing was important. I’m that simple.

Of late, the discussion seems to center only on “P&L” . . . and rarely extends beyond!

Foolish me . . . I once thought that the safety and reliability of an airframe was of importance . . . at 71 years old, I now realize that the world has passed me by.

Once, I saw a bumper sticker that said, “The man that dies with the most toys, Wins!”

At the time I thought, “The man that dies with the most toys . . . Dies” . . . and I thought of a verse that says, “It is appointed unto man once to die, and after that, the judgement”!

Eclipse is about to pass into history . . . Chapter 11 . . . Chapter 7 . . . what does it matter? . . . it will pass.

A lifetime of attempting to do the best I can . . . keeping folks safe “at altitude” . . . whatever, some of us did the best we could do. What the younger generation does . . . they will answer for their own actions.


(‘You ever get tired of telling something to someone that desperately needs the information? . . . and you discover that “no one’s home . . . the porch light is out and the furniture is missing?”)

baron95 said...

Shane, if you counted around 1,000 firm orders, it doesn't take much imagination to see that there could be another 1000+ options, getting the number above 2,000.

The issue was never that Vern made up the number of planes on order. The issue is that he purposefully didn't explain what EAC considered an order and counted orders, options, LOIs, all in.

Anyway of the 500 or so outstanding deposit backed orders, if half of those stay on board (for some consideration of the deposit), that is 5 years of production at typical TBM/Mustang rates. Not bad at all.

BTDT said...

Some comments and this may be long.

The chickens have come home to roost. Roel has what he wanted, but does not need, and once more aviation has been screwed by the lies of the Wedge, Bede, Tony Fox and a few others.
It amazes me that with over 300 million people in the US that there are only a little over 600,000 pilots. Yet on a world wide scale a ratio of airplane manufacturers seems to be out of whack with the total market of aircraft for these potential buyers. You would think that 4 or 5builders of airplanes would be enough and I am talking about GA types and not the Boeing or Airfunnybus builders.

We seem to sit back and continue to try and invent or re-invent a wheel that has no place to roll. I agree 100% that the market for a single engine or twin bizjet/VLJ not counting Cessna CJ and Jungle Jets in the US is about 50 units per year. But the band wagon is full with Piper, Diamond, Cirrus, Honda and now the new EAI ala Roel.

So when do we stop, as a song in the 80s said about looking for "That free bubble up and rainbow pie" and get a dose of the real part of this.

As I have mentiioned before in another post this is all part of a cycle but sad to say this is going to be a LONG one on the down side. It will be 2012 or more before we see a leveling out and some equalizing of aircraft for sale, used or new, with buyer demand.

What always amazes me is the ones that get the aviation business into this mess are the punks in $1000 suits that have the college degree and been on the job for a few years and know all there is to know.Also the ones that have more money than brains, Wedge, that keep thinking about that wheel that needs, in their mind, to be invented.

We pump out people from places like ERAU that have the book learning and go hog wild and cause the problems.Or some "genius" comes along and decides that we need a square wheel. The funny part is that some sit back and take it all in. I do have to admit that the latest finacial situation with the likes of Madoff is not that different. Just bigger numbers.

I have in my short 44 years around airplanes seen the likes of a Ken that are cheerleaders to the end, I might add that it takes balls to post a picture of an instrument panel inflight that shows a 6 knot difference in airspeed from one side to the other and then go into a long winded explantion of why. Sorry but any aircraft that has that much difference in indicated airspeed is grounded in my mind. No matter how much BS of an explanation there is.

Some of the media we put up with in aviation just adds fuel to the fire. I like this little saying. "Freedom of the press is not the right to lie" or add BS where it fits what the person writing wants out of it. I must say that it took a lot of balls for the likes of Karen DiPiazza to dig into the DayJet/Eclipse truth. But yet we all sit back and put up with the crap and reposts of press releases from the likes of a Campbell/ANN and no one questions the veracity of the statement or questions his statements about having 17,000 hours of flight time and flown over 1100 different types of aircraft. Yet we let him go on and we all believe him.

So who do we blame? Maybe we should blame ourselves for not having "street smarts" and asking the right questions or taking to task the person making the statements. Be it the Wedge/old FPJ with 3000 orders, or a media person that makes statements they can't back up.

So how many initial $25,000 deposit Eclipse hats are there out in the world? How many EA500s can the aviation museums in the world take? Because no matter what is said, discussed, or debated, that is where they will end up.

But the $1000 suit wunderkins that sell airplanes and don't even know what "second segment climb" means will still be there waiting for the uninformed. We will still put up with aviation press cheeleading BS from certain people and go on. I would guess the aviation community will be in for another round of this in about 15 years when the memories fade.

Maybe some people get what they deserve.


gadfly said...

"Been there, Done that" has spoken well. Although, as you know I would have not said it using the same words, he's said things that need saying.

Now, take the time to go back and review his thoughts.


(Thanks, BTDT, for your carefully composed thoughts.)

gadfly said...


It matters not that I have no idea who or what you are, but you remind me of countless people that I have met over the years . . . constantly “stirring the pot”, and claiming that the final stew will somehow turn out differently than the tried and true recipe.

Eclipse is not what they claimed to be . . . the aircraft never achieved the claim . . . not once.

The number of orders . . . play with them until they come to take you to a different “cell”, and give you a different colored “jacket”, and different padding on the walls . . . it doesn’t matter.

The Farce is over . . . or at least in the final act. Let it go!


(Do you really wish to be remembered in connection with Eclipse? . . . Whatever . . . !”

Eclipse, and those who fell-in with their claims have hurt many people here in New Mexico. People in positions of responsibility cared only for their own political gain . . . a “mayor” and a “governor” come to mind (but they are far from being alone in this sick game of power).

My advice is to back off in supporting something that has hurt many folks who do not have the power and authority to fight back, from the position that they have been driven, in this farcical scam.

For your own good . . . let it go!)

airtaximan said...

Associated Press
Eclipse fails to draw bids; ETIRC sale likely
By HEATHER CLARK , 01.14.09, 08:45 AM EST

Eclipse Aviation Corp. will not be put up for public auction this week after the troubled Albuquerque, N.M., jet manufacturer failed to attract any qualified bids by Tuesday's deadline.

Eclipse, after consultation with the Ad Hoc Committee of Senior Secured Noteholders and the Official Committee of Unsecured Creditors, determined there were no qualified bids, said Dan Guyder, a partner with Eclipse's law firm, Allen & Overy LLP in New York.

"There will be no auction," Guyder said.

The lack of bids allows Eclipse's largest shareholder, Luxembourg-based ETIRC Aviation, to move ahead with plans to purchase the company.

ETIRC Aviation had announced it hoped to buy the maker of the six-seat Eclipse 500 when the company filed for Chapter 11 bankruptcy protection Nov. 25 in U.S. Bankruptcy Court in Delaware.

ETIRC affiliate EclipseJet Aviation International Inc. plans to pay $28 million in cash, issue $160 million in new notes and offer 15 percent equity in the company to senior secured note holders, Guyder said.

The buyer also must pay $7.5 million to wind down the business of Eclipse Aviation, which will change its name after the purchase, he said.

The sale to EclipseJet must be approved by U.S. Bankruptcy Judge Mary Walrath, who has scheduled a hearing for Friday on the proposed sale.

More than 30 objections to the sale have been filed with the court, but attorneys close to the procedures said they expect the sale to go forward as planned.

The deadline for objections to be filed is Thursday.

Randall Sanada, a member of the Ad Hoc Customer Committee's steering committee, said the possible sale to ETIRC's affiliate is a "good thing."

The committee has had several conversations with ETIRC about how to allow the company to move forward on a profitable basis, while honoring existing deposits and getting customers their aircraft at a reasonable price, said Sanada, who also is chairman of Westlake Village, Calif.-based Jet-Alliance Inc., Eclipse's first customer.

"They're simply not going to be able to honor all aspects of all contracts that Eclipse had in place at the time of the bankruptcy," Sanada said.

Financing for the sale includes up to a $205 million loan from the Russian Federation Bank for Development and Foreign Economic Affairs, known as Vnesheconombank, and up to $75 million from Spain's AirLyper Investment Partners, according to the purchase agreement filed with the court.

Russian participation in the financing reflects Eclipse's plans to build an assembly site in Ulyanovsk, Russia.

A day after the company filed for bankruptcy protection, chief executive, Roel Pieper, told The Associated Press he was upbeat about the company's future both in Albuquerque and Russia. He said at the time that Eclipse had 1,100 orders for jets on the books.

Pieper, who is also chairman of ETIRC Aviation, said at the time that if the restructuring of the company succeeds, construction of the Russian plant should be completed by mid-2010.

He said he foresaw the Albuquerque location serving China and India, as well as the U.S., while the Russian assembly site would serve Europe.

The bankruptcy proceedings came after a year of turmoil at Eclipse in 2008. The company saw layoffs of more than a third of its work force, an unplanned two days off for workers after the company was late making payroll, the exit of its founder and former chief executive, Vern Raburn, and Federal Aviation Administration directives that have cast doubt on the aircraft's safety.

Copyright 2008 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed

comedy at its best... IMO

gadfly said...

'Not to take you away from "airtaximan" . . . which is fully worth your time as well, but go back and review all that "BTDT" has so carefully composed . . . It is worth your time, and you should not miss it. Read it a second time. "Been There, Done That" has spent time composing an excellent piece . . . Don't miss it!

And then carefully study the article submitted by airtaximan.


(Of a sudden, the level of intelligent comment has reached great heights. Fantastic!)

TBMs_R_Us said...

Anyway of the 500 or so outstanding deposit backed orders, if half of those stay on board (for some consideration of the deposit), that is 5 years of production at typical TBM/Mustang rates. Not bad at all.

Every good lie, or irrelevancy, starts with the word IF. IF 250 people who have lost a lot of money, watched their dream vanish, are actually stupid enough to go back for more punishment at a much higher price in a tanking economy, and IF RP would actually give them some consideration for a deposit long gone, then maybe that statement would make sense. But "not bad at all"? You've got to be kidding Baron!

airtaximan said...

based on the AP post above, I see:

- More idiots lining up to get screwed, many with public money

- RP, planning an exit, in due course, of course

- Total disregard for the facts, history or any credible due diligence - I guess "language barrier" could be a viable excuse

The rediculous claim regarding the 1,100 remaining orders; the Russian plant finished in a year; Chinese and Indian market served by the US plant, while Russia serves the EU (call 9-11 please, this hurts); and Randall Sandana as poster boy for all of this, hurts my head, a lot.

Ignoranmouses ignore history and facts.

- China and India have never shown up - now that RP is involved, they are viable markets? Please.
- 1,100 order left, please.
- Randall Sandana qualifies as the aviation village idiot, who never made any promising investment decisions in this business, ever.

So, BAron, you are correct, sort of - you predicted the same ol, same ol.. ad I guess I imagined a little more BS would be required to get'rt done. No so - HUGE markets in India and China await Abq... Russia has the Eu huge market, and everything now makes sense, once again.

Huge market, 2 huge facotrise, with a lot of production, at low cost. What's not to love?


gadfly said...

OK ... all good points. Now, go back and read BTDT's comments, again. They are that important!


And if you don't get anything else from this blogsite, I'd say that "BTDT's" comments sum up 'just about everything that's important.

airtaximan said...


my problem with BTDT's post is that it is too narrow - it blames the constituents, not the readers...

Man, wake up - its in front of your face. Why rely on morons like zoom, Sandana, et als, when the truth sits on you head - just wake up and smell the coffee.

Yes,t there are some special messangers promoting a message that makes no sense. The world is this way.

The VLJ as an economical way to travel for many people, is dead. DOA. Everyone in the know, knows this. All operators accept this craft fails at providing a return. All operators. Mustang owners, EA50al of them worldwide.

If I were asking, I would look at the books of the operaotrs, and I would see one clear message. Light jets and props win.

The VLJ is ODA, except as a sportscar for a selfish enthusiast with few friends and little family, or no whaere to go.

Reports to me over te last 6 months confirm, the VLJ is not preferred... operators enjoy fewer hours that expected, and fewer hours in total compared with the (more expensive) LJ.

This is the dumbest gamble waste of time in recent GA aviation history.

Dumbest, by far.... and growing. I would love to see the Spaniards and Russians in a few months, with no orders, asking themselves who are the bigger idiots?

gadfly said...


If we wait for someone to come up with the all inclusive blog . . . we'll never get there. But I'm reminded of what "Mason" told "Dixon" . . . "We've got to draw the line somewhere!" (or so I'm told!)

Let's go with what we have . . . and maybe ten percent will get the message. Frankly, having taught many Bible classes, and technical classes . . . I'll gladly settle for a "ten percent" success rate.


airtaximan said...

Gad, I learn from you. A long ime ago, someone very high up and very shallow told me: "eventually, everyone WIll understand".

I do not take solace in these kinds of statements, but need to learn that somehow, my message is lost on most.

I happen to be well connected and KNOW a lot about the ROi and operating housrs of VLJs comared to the conventioanl fleet. Bottom line, they suck.

Eventually, I guess... until then, more cash is burned.


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


WOW!!! How much can change in such a short period of time.

gadfly said...


It seems we're on the same team. I'm glad to work with you, to get the message out . . . and hopefully, benefit a common love affair with general aviation.


(Enough for tonight . . . the traffic along I-40 should be down to the point of safely getting home without incident . . . it's 14 miles from the shop to home, up through the "pass" and on north to a cozy home at 7,100 feet. It's interesting to note that thirty years ago, the traffic from ABQ and Sandia Labs was somewhat "tame", with a general sense of courtesy on the highway. In recent years, the attitude is "everyone for himself" . . . and "Katy, bar the door!" . . . so, I wait until the "new generation" gets home . . . and then can safely move along at 70mph, up the canyon.)

BTDT said...


My comments are broad so as ATM says where do we lay the blame?

Free enterprise gives us the good and the bad. We here on this blog just happen to have the Wedge and Roel to discuss and their attempts to make a square wheel.

Do we still need rotary dial phones? 2o years ago a cell phone was a luxury.

But the aviation consumer is in some ways so behind the curve that any good hipe and a pitch man can make a square wheel sound good.

The aviation community is different then any other group I have been associated with. Pilots are different. PERIOD.

As such they are always looking for something that fits the persona. WOW my own personnal jet for under $1 million.(original price)

To good to be true? You tell me.


Shadow said...

Zed, it's you who should be eating crow. The "firm" orders from DayJet were only 238. The rest (nearly 1,200) were options. In reality, DayJet took delivery of 28 Eclipse 500s and it only needed 12 to operate.

Shadow said...


It's unfair to paint the entire aviation press with ANN's brush.
And "Saint" Karen isn't the only aviation journalist to question Eclipse. You obviously need to expand your reading list a little.

baron95 said...

BTDT said...


My comments are broad so as ATM says where do we lay the blame?

What blame???!!!??? There is no "blame". It is called venture/risk capital for a reason. That is all that EAC ever was. A venture-funded, long-moon-shot company. Failure was to be expected and likely. Success was to have taken everyone by surprise.

You guys are so emotional. Glad pleading with me to stop supporting Eclipse. Come on. Have some level of maturity. There is no guarantee of success even with established companies like Boeing and Focker and MDD, let alone with startups in GA. All of you, blaming Vern for failure, when failure was the likely result from the get go, are just showing incredible naivité.

I admire Vern and others at EAC for having had the balls to raise a ton of money and spent 10 years of their lives trying to make the moon-shot work. I repeat. I admire them for it. I also am very critical about some of the ways they went about it, their lack of transparency, etc. But who am I to judge? I'm 2,000 miles away on a comfy chair typing, while they were "doing" it for 10 years.

Now, a new chapter begins. More long-shot venture money chasing the long-moon-shot idea. Chances of success increased just slightly (the plane is done, just needs to be produced and sold at near-profit levels). Failure is still to be expected. Success should surprise us all.

Another venture is pursuing the dream of supersonic bizjet. Again, failure is almost a given. Getting to a few planes flying would be a huge surprise. Profitability is a near impossibility. Still, I admire the people trying to make it happen. I'll praise their accomplishments and criticize their poor choices.

Some balance and maturity people. I know it is a lot to ask from this Blog, but please try. Look up the definitions of venture/risk capital, etc.

What Sanada is doing is showing maturity and accepting reality. Honoring previous contracts was an impossibility. Move on. What is the next best thing that is possible? EclipseJet continuing in some form (support for the planes) with some level of consideration (albeit nominal) to owners and depositors. That is life. Move on.

Stop talking about utopic 3 planes/day (Dave), "they didn't succeed as originally announced" (Gad and everyone else).

Join the real practical world will you? Ken and Sanata want Eclipse Jet to continue ops to upgrade and support their planes for a certain cost at least for a few more years. It looks like they will get it. After a few more years and after the new money runs out (and it will)? Cross that bridge later, now is not the time to fret about it.

Cheers to all.

Shadow said...

I offer as proof that the aviation press wasn't asleep at the wheel regarding Eclipse:

VLJ Myth May Cost Us All, Flying, June 2006

Sky obscured over financing of Nimbus/Eclipse 500 mega-deal, Aviation International News, April 2002

Keep searching and you'll find much more.

gadfly said...


At this point, I'd settle for about "one" single E500 that actually performed as promised.

But the problem comes back to a simple theme that seems to have been totally ignored since "day one" . . . Honesty! And that has never been achieved.

Without that, nothing else matters.


baron95 said...

So what Gad?

So Eclipse missed the original "goal" set 10 years ago. Just like not a single space shuttle or MD11 or A340 or Phoenix Missile or Virginia Class sub or Windows OS ever performed according to original promises.

Big deal. Note that and move on.

Or alternatively, spend the rest of your life repeating in front of the WWW mirror "Not a single one of xxx performed to original spec". That will do you a lot of good.


baron95 said...

And now, courtesy of the 3 Detroit stooges, Barney Frank calls for ALL bank executives to give up their biz jets to receive aid. Wonderful how 3 idiots with no balls can contribute to screw up the industry.

Reason enough for not ever again buy anything from any company associated with them.

Besides that, good article on the state of biz jet today....

gadfly said...

Setting goals is one thing, with full disclosure along the way if the goals are not met. It is quite another thing, to claim to have met the goal . . . take the money and run, and then for the customer to find out "too late", without recourse.


baron95 said...

For those of you that may be interested, here is the most recent update from Cirrus on the Vision Jet with a lot of good data.

It is interesting to compare what another 6,000 lbs small fan-jet design has been able to achieve. With similar cabin volume (but better arrangement in my view), same MTOW, single engine and 25K max operating altitude, it looks like compared to the EA500:

The Vision Jet will be about 20% slower, have about a 30% smaller payload/range envelope, burn just about the same amount of fuel per hour.

So clearly trading a lower acquisition cost for substantially lower efficiency and performance(mostly due to the altitude limitations).

Which leads me to believe that sooner or later a VJ50-A will have to be developed with FL300 capability.

All in all, it looks like Cirrus is catching up to Diamond fast.

Niner Zulu said...
This comment has been removed by the author.
baron95 said...

Oh, I should acknowledge that the penalties associated with the FL250 restriction are much closer to Flyger's predictions than my own.

In good Cirrus fashion, that just makes room for the Vision Jet GTS a few years after the first model is out ;) That one with FL300 capability.

Katrina said...

Who is going to start a hondo jet critic blog? They have apparently hired many of the ex EA staff. Some good and some bad, bad, bad. Hampson to make hondo empenages?!?. Out of school techies that botched the EA500 and sent problems downhill to become SB's are now here at hondo. Bassmaster mentioned something about young engineering and it looks like some have migrated East. EA will rid at least another 33% of staff, (but that staff will amount to over 62% of paid wages) and trudge on for a while if the climate changes. 1.7 COMPLETE AC/week will get from red to black with those adjustments. From my little observation of this blog zed has some interesting if not strong comments, the baron guy and gadfly seem to live on the blog so I can only guess they are retired with nothing better to do. Nothing wrong with that as I wish I could do the same.


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

B95 said:

"Look up the definitions of venture/risk capital, etc."

B95, you may want to look up the definitions of ethics and integrity. IMHO, gross lapses in these areas were major contributiong factors in the failure of Eclipse.

Shane Price said...


Welcome to the blog.

Your comments on a 'hondo' blog caught my eye. I presume you mean, in this context, the Honda Jet?

I've been mulling over future directions for some time. EAC is dead, long live EAI. Eventually, when that unwinds, the owners will have nowhere else to turn and should 'inherit' this site. I am, after all, only it's custodian.

Honda are an interesting company, the Jet has an interesting design and should attract a wide following. Whether there is enough 'meat' to a) get a blog up and b) keep it current is another matter.

Most would agree that this blog has such a diverse readership, with input from so many intelligent contributors and is blessed with a target so prone to screwing up as Eclipse that it will be very hard for me, personally, to follow.

When I took over the baton from Stan at the start of last year, I was initially worried that material to keep it moving would be in short supply. He responded by assuring me that Eclipse would 'trip up' on a regular basis.

How right he was....

Back to your original question. If anyone is minded to start such a blog, I'd be happy to offer a few pointers. You can contact me on the blog email address



Adam Hunt said...

I thought readers here might like to see what AvWeb has reported on the auction:

Eclipse Auction Cancelled, by Russ Niles

I thought the quote: "ETIRC is proposing to pay $188 million ($28 million cash, $160 million in new notes) and offer 15-percent equity to senior secured creditors" was of note, particularly that it doesn't mention existing position holders.

I am not clear who of the secured creditors would want equity.

chickasaw said...


Hampson was not completely to blame for the almost non-existent quality of the EAC empanage. The fixtures and drill blankets they were forced to use were not production worthy. EAC owned both the fixtures and the drill blankets. The techs at Hampson were too inexperienced to understand how to drill the holes for the rivets.

The Honda jet is composite which has another whole set of problems, especially if they don't have experienced laminators.

bill e. goat said...

Excellent coverage of the latest twists and turns. I suspect there will be even MORE as the year progresses.

I confess to drive-by-blogging (more catching up to do as time permits, but for now).

Welcome Kat- you seem to be tuned in to the new, more realistic production numbers: I'm wondering if you were tuned in to old production forecasts as well.

To Wit (and Kat, and anyone else who might know):

What was up with Wedge's saying he needed 500, no 600, no 750 aircraft per year to break even?

I cannot tell:

1) if Wedge is like "Tourette's Guy", and just can't keep from blurting nonsense, or

2) if the "750 per year to break even" was structured and deliberate nonsense, or

3) if they really were so screwed up they DID need to build 750/year to break even.

My calculated evaluation is: Wedge was trying to impress the 800-some position holders that Shane mentions, and create the impression EAC considered it in their own vital interest to get those airplanes built ASAP (in reality, just trying to keep them from walking while EAC took several years to build that many).

My previous evaluation, before Shane's revelation that the Wedge Truth-O-meter was at 33% (or, Lie-O-meter was at 67%), was that Wedge was trying to "build buzz" (rather than build airplanes), and create the market (IPO market) impression that EAC was "closing in" on volume production.

(This evaluation correlates to item 2 above, which I've not completely dismissed yet; but I suspect that all three items might be correct).


Anonymous said...

Adam, welcome. Great to see new folks join the family. If anyone has seen our old friend TBM please let us know.

Adam wrote … “I am not clear who of the secured creditors would want equity”

You are correct that the secured note holders probably do not want equity in EclipseJet, but what other choice do they have?

They have invested over $600M, and now have $28M and a 15% equity stake.

From that $28M they are paying a chunk ($2.5M I believe) as a cost-share of the $10M closeout funds.

In the end, their 15% equity will get them one of a few seats at the Chapter 7 pot-luck dinner.

Adam also wrote … “it doesn't mention existing position holders”

The deal will not mention any of the thousands of unsecured creditors. Few 363 sales do.

The position holders are just a portion of the thousands owed an approximate $568 Million in unsecured debt.

Position holders stand to do well (by a completely whacked standard) compared with many other unsecured creditors.

EclipseJet needs them to survive, and they had more disposable income going in than many of the other now jobless folks at vendors, service centers, etc.


Anonymous said...

Bill e Goat –

What was up with Wedge's saying he needed 500, no 600, no 750 aircraft per year to break even?

Assuming a 10% profit on a $1.25M sale, it would probably take 750 units per year to service the debt on the $3+/- Billion he burned to that point.

Footnote on the aero discussions … haven’t forgotten, still on my list.


Anonymous said...

baron95 said...

The Vision Jet will be about 20% slower, have about a 30% smaller payload/range envelope, burn just about the same amount of fuel per hour.

20% slower, same fuel burn per hour. Means it costs 20% more fuel *and* time to take the single jet versus the twin jet. And that is if there is no weather or icing issue at FL250 that the twin could fly over!

Like I said before, you can't apply piston economics to a jet. The whole single versus twin thing doesn't work for jets.

So clearly trading a lower acquisition cost for substantially lower efficiency and performance(mostly due to the altitude limitations).

And higher insurance and liability burden on the airframe and engine maker. I believe the extra operating cost of the twin is negligible over the single jet when all factors are included, and may even be lower.

Look for the VJ50 to come in overweight. 200-300 pounds overweight. Now figure your range/cabin load profile. Ugh. And they can't "gross up" because they would cross the 6,000 pound line where the rules change. The squeeze is on.

bill e. goat said...
This comment has been removed by the author.
bill e. goat said...

Hi Zed,
Thanks- but your answer imputes a degree of honesty and sanity to Wedge's thinking- therefore, clearly the incorrect approach! :)

(The "750 per year" I think was spouted in early 2008, well past when the price was only $1.2M...But maybe Wedge kept hoping to get it back down !?!)

But- I was curious about your proposition, and ran some numbers:

I think the blog seemed to be focused on $20-30M per month cash burn, and I don't know quite why, but this seems to have explained a lot. Let's call it the Wedge factor*, and let it be $25M per month.

(*As opposed to the Wedge constant: 0 for profit, IQ, and business ethics).

And in early 2008, the price was ?around $1.6M, I think...

So, diving into Wedge-o-nomics;

12 months x $25M = $300M per year.
assuming a 25% margin
$1.6M x .25 = $400K/airplane
=750 airplanes per year.


I think we all did our own mental math (all except Wedge, that is:) of the "burn rate". I based my numbers on EAC press releases of 2000 employees, and estimated the talent mix, and my observations on typical labor rates, with some overhead expenses added:

1500 blue-collar jobs @ $75K/year
500 white-collar jobs @ $125K/year
=(1500x75)+(500x125)= $175M/year
=$14.6M/month, and then apply some multiplier for utilities, debt service, and other operating expense of x1.37 to x2.05, for $20 to $30M/mo. Rather crude, but it seems to be surprisingly accurate...

(As opposed to Wedge, who was rather crude, but inaccurate- with neither being a surprise to long time blog readers :)

I promise NOT to use Wedgian mathematics in your aero class though!

bill e. goat said...
This comment has been removed by the author.
bill e. goat said...

You showed great restraint (and probably even greater dismissiveness) in not responding to EPx ("you are just blowing smoke old man."). I believe most of us consider such craven rudness to be the work of a spoiled punk ass kid, without any manners, and patently without any clue he hasn't any manners.

EPx, if you'd like your views to be considered by the adults, please try to act like one.

Otherwise, please confine your trash talk to between you and your friends at the mall.

Adam Hunt said...


Thank you for the welcome and your thoughts, although I have actually posted here before.

Inadvertently I seem to have become the main updater of the Wikipedia Eclipse article, which is why I keep an eye here for links to articles that can be used for references in updating that story.

baron95 said...

Katrina said ... the baron guy and gadfly seem to live on the blog so I can only guess they are retired with nothing better to do.

Welcome to the Blog Katrina. I wish I were retired, but with my youngest daughter being 2 yrs old and the state of the economy, I think that will have to wait a couple of decades.

baron95 said...

Flyger, I believe the regs only change at 6,000 lbs MTOW for twins, not singles. But there are insurance, landing fees, hangar costs, etc that are keyed to 6,000lbs, so there is a barrier there, but it is not the same reg barrier that Eclipse would face on the EA500 if they went over 6,000 lbs.

What a bad week for aviation. First a moron jumps out of a Meridian to fake his death. Barney F#g wants all companies receiving bail out money to ditch their biz jets. Now there is an USAIR flight (same flight I took last week) down in the middle of the Hudson river.

Looks like Eclipse Jet is actually the only one providing good news.

bill e. goat said...

Thank you for the nice work on the Eclipse Wikipedia site!

gadfly said...

The incident within the past couple hours at KLGA points out the need for integrity in "General Aviation". There is no excuse for setting the bar any lower, than that which has been attained in Commercial Aviation, within the US of A.


gadfly said...


Your hands are full with "little ones" . . . and my hands are "full" with many grandchildren (19, at last count), a few the age of your "little ones" (and younger) . . . and it may yet be many years before I can retire. So, like it or not, we have more in common than would be apparent.

Multi-tasking wasn't invented yesterday, nor is it limited to the younger generations.


(Now, excuse me, while I get back to work . . . it's still a couple hours until quitting time, and I have much to do.)

baron95 said...

Much more than you think, Gad, since I am also a multi-discipline engineer by training with multiple patents.

I get a kick of people that try to analyze people's personal situation based on a few posts on a blog. It sure is funny at times.

Any way, if you retire before me, come fly with me to MVY. If I retire before you, I'll go fly with you in the desert ;)

Lets see what we can "invent" together on the flight.


EclipsePilotOMSIV said...

Bill i am just tired of hearing about the same dead issue over and over again. I get that the guy has great life experiences, and has been around flying for awhile but I think he may have forgotten to take his Aricept and Namenda when it comes to the issue of the Phostrex. Believe me, people know about it. I'll give my friends at "the mall" the "411." OK? You guys have your lack of respect for a lot of other people ie Ken, myself, any other person who has anything to do with Eclipse. In addition, you openly attack us for our beliefs at any given moment, so my question is: Why in the hell do I have to exercise this restraint you are talking about? Pot meet kettle. You're black.

baron95 said...
This comment has been removed by the author.
baron95 said...

gadfly said...
There is no excuse for setting the bar any lower, than that which has been attained in Commercial Aviation, within the US of A.

But Gad, How would you propose we fit the slides and rafts in the EA500? ;) (pls don't answer

bill e. goat said...

I think you are (continuing) to (unfairly) blame unions for Detroit's bad management decisions.

Detroit consciously decided to make gas guzzling pigs, to maximize profits. Now, they are paying the price.

UAW builds the Ford Fusion, and the Chevy Impala, both competitive with similarly priced Accords and Camrys.

In Brazil, GM cars are crap, just like they are here, and everyone that can drives a Peugeot or Citroen.

No union "problems" there?
GM lays off 802 in Brazil

And, regarding free trade- Brazil socks imported (just about anything) with a 100% tariff.

"Take away the protection and most Brazilian firms, especially those making products like machine tools for factories, would have a hard time competing.

"It would be a massacre for the majority of Brazilian firms," said economist Nogueira Batista.

BBC, Brazil

Oh, and guess what, China is lecturing Brazil on the importance of eliminate that tariff- just for Brazil's own good, I'm sure.
Chinese propaganda

You are right about subsidies helping develop the US aviation industry. The return to the tax payer is 1) improved transportation network, and 2) job creation. The taxpayer DESERVES to have those investments protected- both the improved transportation network (which Embraer will help) and job protection (which Embraer will hurt).

The point is us TAXPAYERS subsidized the aviation industry- and we had/have the best. And it wasn't taxes on burger flipper wages that paid for it- it was taxes on manufacturing sector wages. THOSE NEED TO STAY- otherwise, we're just burning up investments made during previous decades. THINK ABOUT IT:








And by the way (ah, in case you couldn't guess), I'm completely against US Airlines buying Airbus- the result was Douglas Aircraft collapsing. What? You say they couldn't compete? If an airline CAN buy an airplane for 1% less, it will: is that 1% savings worth losing 100% of a US company? NO.

"What you should be worried about is how companies like GM and Boeing with outrageous Union employee/legacy costs will compete against hungry entrepreneurial companies like Hyundai and Embraer".

Well, Baron, how do you suggest GM and Boeing deal with employee and legacy costs?

Pay workers $2.50 per hour like in Mexico? The loss of tax revenue affects EVERYONE- schools, police, parks, or we could just get rid of all those services, or reduce them to the level of third world countries.

Have the federal government pick up insurance costs for the retirees? There goes taxes up.

I said it before: if you want wages to go down, then tax rates must go up. Take your pick.

"Do you know that GM kicks-ass in Brazil"

(The shit-box Astra is made there, now dumped on the US market as the Cobalt- compare it to, well, just about anything else, except the equally crappy Cavalier which it is meant to replace).

But concerning GM's "competitiveness (?) in Brazil:

"General Motors plans to invest $1 billion in Brazil to avoid the kind of problems the U.S. automaker is facing in its home market, said the beleaguered car maker. According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding will come from the package of financial aid that the manufacturer will receive from the U.S. government..."
US Taxpayers Give GM Brazil $1 Billion

"Boeing already announced that SN001-006 will MISS performance guarantees (range and payload) by A LOT, and no fixes will be possible".

It is not unusual for the first few (dozen, sometimes) production airplanes to miss their targets- somewhat. I think "A LOT" is probably a few percent, in this case.

"In addition, SN007-020 will also be overweight by a good margin and it is possible that all 788s will miss performance guarantees".

Hmmm- I don't see any order cancellations, so I think the "good margin" is pretty marginal.

"At the standard IAM rate of one fastener/hour, I anticipate that ZA001, MAY, in fact leave final assembly for the flight test line before the end of the first quarter, some 2 years behind schedule".

Baron- I give up- do you NOT SEE this is a management issue- but yet you hammer the union???

And really, it is stockholder issue- management was going for short term profit, to boost stock prices, and cut expenses- engineering capability. The IAM has:
to do with problems of the 787.

The STOCKHOLDERS created the problem- by supporting quick-buck quarterly stock price bumps. And since you want to blame the union, then it is true you want to blame someone. So, blame management, and the stockholders- but I don't see you blaming them, just the union- why? Can you not see the where the direct responsibility lies? The plane is late because the engineering was F*%KED UP. That is because they cut costs and didn't invest in engineering during the 1990's, and cust costs by outsourcing work to cheaper suppliers now- those were MANAGEMENT decisions. I DON'T SEE you commenting on overpaid execs that made those decisions- why not??? I don't see you saying that the stock holders got what they deserve, by being greedy and slashing costs/investments in previous years.

Don't get me wrong- I don't care what execs get paid, nor care what the stock price is. But to blame unions (which, I am NOT a member of, btw- just an impartial observer of the situation) is ludicrous.

End of rant.
(Until I catch my breath!)
(which won't be long!!)

bill e. goat said...

Regarding Phostrex, I believe Eclipse claimed it

"Would make as money from Phostrex as from Airplanes".

Well, that's the ONE Eclipse proclomation that DID come true.

bill e. goat said...

Hello EPx,

"Bill i am just tired of hearing about the same dead issue over and over again".

Yeah me too sometimes, there are a number of them floating around here.

"Believe me, people know about it (Phostrex)".

Yes, apparently they do. Nobody is using it- except Eclipse.

"You guys have your lack of respect for a lot of other people ie Ken, myself, any other person who has anything to do with Eclipse."

Funny- I never read where Gadfly attacked Ken. Or me either. (In fact, I have a LOT of respect for Ken). I believe there are a number of critics that indeed have had dealings with Eclipse:

Burned suppliers,
Burned depositors,
Burned investors,
Burned employees,
Burned tax payers.

Too bad Phostrex didn't work on those fires.

Regarding lack of respect being demonstrated, I condemn it- whether it is Ken being dis'd, or Gadfly.

When you see someone being dis'd, take people to task- then and there- don't brood and attack others in retaliation. "OK" ??

"Why in the hell do I have to exercise this restraint you are talking about?"

Sigh, let's review: "...without any manners, and patently without any clue he hasn't any manners." (HINT : this is a CLUE).

"Pot meet kettle. You're black".

Kettle meet pot- he's acting like an angry young man.

Clue # 2: Be nice. Don't act out.

I don't really think you are an angry young man, so acting like one comes across as unseemly and unbecoming, and it diminishes the influence of your otherwise intelligent posts.

(You can yell at people, but you can't yell at people and make them convert- regardless if you are right or wrong. Indded, I suggest you see how Ken handled things, for a good example).

Well, now that we have all that out of the way (for now at least :)...

Epx, I believed you missed Gadfly's excellent tutorial on metallurgy (re: "inter- and intra-granular corrosion"), about 18 months ago. I know that since this was before you started reading the blog, it must not be important. But for the rest of us, WAS very informative (I'll try to find it and repost it- maybe Gadfly still has a copy he could put up).

And as Gadfly notes, there has been no disclosed environmental testing of FSW. In fact, while I believe Eclipse disclosed static testing, I have not read about the results of any fatigue testing.

(Although the FAA gave Eclipse 10,000 hours of fatigue life, but, ah, they also gave them "TC" about the same time, during the Marion Blakey/Pete Domenici era of corruption).

And Epx, regarding FauxTrix, I think you are barking up the wrong tree. I am unaware of your reference regarding a "bad batch" with water in it. Gadfly's point is more generic: Phostrex IS corrosive, and must be rinsed out immediately after a discharge.

If your engine really was on fire, that's not much of a concern, but if it was accidental, and there is no other damage such as burned wiring harnesses, it is a significant maintenance factor.

Now, that's not such a big deal if we're talking about cleaning out an engine nacelle. But, it becomes a bit of a bigger deal, if it is in a mechanic's lungs, who was working on the engine nacelle during discharge (which is what is most likely to cause an accidental discharge).

Eclipse has a nice white paper, which poo-poo's such concerns, about people working "in or around the airplane during discharge". But considering "all of the spectacular, Verntastic advantages", there must be some spectacular disadvantages too, if nobody else is using it, eh?

Phostrex White Paper

Reading the fine print, one Eclipse-size canister of FauxTrix produces 24.21 grams of H-Br. Okay, the white paper also states that there is an "Immediately Dangerous to Life and Health" concentration of 0.1 gram/meter^3,

Fine if you are in the cabin, but if there is a discharge in a contained space, such as a nacelle, this is bad news- it reacts with water, think, moisture in your lungs, and turns into acid.

Now, that's for an engine with 900 lbs of thrust. Scale that up for an more typical biz or commercial transport, with say x5 to x50 the thrust, and you need x5 to x50 as much FauxTrix, with a proportionally higher mass discharge, and there's an even lower chance of survivability for mechanics.

That's my guestimate why nobody is touching this stuff.

(?Or some other reason? I'm open to suggestions?)

BTW, for an excellent discussion on Phostrex, you can check out NerdyEngineer's post on Sept 30,2007, 10:22 AM (Yeah, it's before your time, but I suggest you read it anyway. It won't change your mind on the "plus-es" of Phostrex, but might enlighten you to the "negatives").

Eclipse Aviation Critic, Sept 28, 2007

And I learned something too- AlexA mentions Spectrum Aero is using Phostrex also- although their survival is questionable, following the fatal crash of their only flying prototype two and a half years ago, yet they continue to claim S-33 certification and delivery in 2009", despite being over the 6000 pound limit for more lenient certification, mentioned above.

With no press releases for 4 months, and the next-to-last one being for "fleet sales" (ah, although "both companies have policies that prohibit public disclosure of detains and order backlogs"- uh huh...), this is looking more like another buffoonish snake oil sales job than an aircraft company. (Appropriate that "Linden Blue joined Vern Raburn on the podium to declare adoption of Phostrex...",
Linden Blue and Wedge

baron95 said...

B.E.G said ... It is not unusual for the first few (dozen, sometimes) production airplanes to miss their targets- somewhat.

EXACTLY. I know this. You know this. But Mr. Shane Price (to whom that comment was addressed), firmly believes that ONLY Eclipse and Eclipse ONLY delivers planes that miss estimates and/or have variations between the first couple of dozen off the line and subsequent units.

People here on this Blog are so emotional that they lose all send of reality. They firmly believe that a start-up GA company MUST deliver from they one a fully conforming plane, when in fact that never ever happened, and does not usually happen even with established companies like Boeing.

That was the whole point of that sentence. Keeping things in Perspective.

As for the UAW, the IAM, etc... let them continue as they are. Lets see how many jobs are left after another couple of decades.

Shane Price said...


Can't let your last comment pass...

What I ACTUALLY wrote was part of a piece contrasting the 'corporate culture', Boeing v EAC. My second point, which you've (slightly) twisted was:-

- The 787 will be delivered complete and working to its contracted specification, from s/n 001. Not s/n 266.

Read it again. I said 'contracted specification'. EAC promised FIKI, the functionality of AvioNG 1.5 and a slew of other items when they took the original deposits.

Now, POST Chapter 11, EAC is dead. Those contracts are bust. That company will never deliver on those original promises.

Whereas, every minute, of every hour, of every day, of every year, for almost 90 years, someone, somewhere is flying a Boeing which meets it's promises.

Gadfly was right. They never did deliver a single finished FPJ.


eclipse_deep_throat said...

Baron's and Shane's comments are interesting, as a whole; excellent post Shane. And Baron is 100% dead on in terms of risk in the biz world in general. It would appear that the "beta" of risk in GA is significantly higher than risk for average companies. I'm digging thru the cobwebs of my brain, but for those that don't know, the standard biz school finance class refers to a beta of 1 as 'normal' risk. Well, thank God for Wikipedia, as they further clarify it as "non-diversifiable risk, its systemic risk or market risk" (look up beta coefficient if you are interested in the subject).

Would we say now, that the events of 2008 have dramatically altered the GA landscape OR, is the risk really the same for both customers AND plane makers? I'm thinking that not much has changed **IN THE MARKET** as a whole, and that fuzzy calculation of risk hasn't really changed either. Could we quantify the risk Roel is undertaking? I'm still scratching my head as to why on earth he'd want a GA plane company since we all seem to be in basic agreement that his average cost is likely going to be in the $3 million / plane range yet EAI won't have any pricing powers; no sticky prices here. I think we intercepted one of Roel's communications that said the Eclipse brand was severly damaged. How does that factor into a model of risk? But playing devil's advocate here, aren't GA consumers in general forced to accept that as a given? I'm curious how this will play out over the next 2-3 years, but I suspect the hard numbers for Cessna, Mooney, Piper, Gulfstream, Lear, Honda, etc. will not change too much. Honda is the only one (I think) that has yet to fail on a deliverable and alienate its customer base. So to some degree, the risk the GA customer takes is mitigated by their perception of brand value: i.e., they 'know' that Cessna drives them nuts for whatever reason, but they choose to ignore that because of Cessna's vast service network...

So if this market or inherent risk is more-or-less constant in the GA biz, that's going to make it even harder for Roel to sell at a profit. Say EAI has a beta of 1.3 versus a beta of 0.90 for Cessna and 1.15 for Honda (I'm just picking these numbers out of thin air). On the consumer side of the equation, I think a lot of **potential** GA customers will sit on the sidelines and just wait-n-watch. Thus the paradox: the real "absolute" risk hasn't really changed with all the bankruptcies this past year, but GA consumers *WILL* alter their behavior (and not buy anything) because their perception of risk has changed. Does anyone disagree??? Is there anyone out there that thinks Roel can turn EAI into a self-sustaining profitable venture? Ken???

Also, anyone notice only 23 listings for EA500 jets on Controller.com? Lowest priced jet is available for only $1.25 million! What a bargain!!


julius said...


As for the UAW, the IAM, etc... let them continue as they are. Lets see how many jobs are left after another couple of decades.

At the end of the fiscal year there is a "cake" that can be "eaten" by the company, the BoD, exec team, and other stakeholders.
What are the rules? Oh, offer another "cake", to make everybody happy? Who cares? Should only one party respects some rules?

You remember Uruguay Round, GATT, subsidies, and social dumping?
That's a long and complicated story.
Perhaps there is a blog which addresses these issues...


Shane Price said...


Yes, Roel did say (I have the podcast of it somewhere) that the brand was damaged. But his view is (was?) that the order backlog justified moving forward.

Well, I've talked to a few 10%'ers and 60%'ers and I've done a fair bit of digging around myself. A variety of ex EAC people (I'll say the 'ex' bit to protect the guilty) as well as industry 'wise men' and specialist journalists helped. So I write this with a small amount of knowledge on the subject.

1. A considerable proportion of EAC customers were first time jet buyers.

2. Of that group, a significant number were first time aircraft purchasers.

3. A percentage of those who ordered did so through third parties, all around the globe. I'm doing the numbers now, but you would be amazed by the contract addresses.

My key point here is the 'damage' done. A lot of these guys were new to GA and/or jets. They typically run their own companies or are 'high net worth' people.

They will not forget how they were shafted, no matter WHAT Roel offers. They waited years, were told lies repeatedly, and eventually got taken to the cleaners in a pretty public way.

Thus my 'informed' opinion is that the 'order backlog' has, for all intents and purposes, evaporated. Those burned by this mess will tell two types of people.

Those they meet and those they don't.


chickasaw said...

B.E.G. said:
"Detroit consciously decided to make gas guzzling pigs, to maximize profits. Now, they are paying the price."

Detroit built the gas guzzlers because that is what the consumers wanted. The hybrid market is only 3% of the US market and only 1.5% of the global market.

If you had a manufacturing company building widgets and what-nots, and every one wanted to buy the widgets, what would you manufacture? I don't think that you would spend alot of time or money making the what-nots that had only a small market.

The free market decides what products will be successful and what products will fail. You can not force the consumer to accept a product that they don't want.

Your other assessments are pretty good.

Deep Blue said...

My understanding of EAC's order book is the same as SP's: it's evaporated. The Etic team made an odd bet on an "order book" which is really not a bankable asset given the complexity and cost to stand EAC back up, both in production and esp. after-market.

Shane Price said...


Expect news shortly.

As you have come to expect, I have a 'reliable source' close to the action.

Keep you eyes open over the next few hours. It should be fun, 'blogging' events from 3,300nm away.

And while I'm at it, what a fantastic job by Captain Chesley B. "Sully" Sullenberger III. A dead stick landing with an almost fully loaded commercial airliner, into a river, in the middle of a city of skyscrapers.

Where all 155 passenger entrusted to him escaped with their lives,

Now, THAT'S what I call a pilot....


airtaximan said...

my personal expert opinion on the EAC order book - they still have 2500 orders.

They always did, they always will! Same BS orders.

Niner Zulu said...

I truly hope Roel doesn't really think that any orders left on the books are still orders. The jet market is awful and getting worse.

To quote BC&A's January 2009 article: "There is no wholesale market and I don't know where the bottom is because nobody is buying inventory. Nothing is hot, but if an aircraft is priced insanely cheap, say 20 percent below value, it will sell."

"The market is flooded with inventory, especially with Lehman Brothers and AIG dumping their airplanes..."

"Eight months ago, it seemed as though there were 30 buyers for every aircraft on the market. Now it's though there are 30 aircraft for every buyer..."

In every business venture, you have to plan for a "worst case scenario". This market environment IS that worst case scenario and it is not getting better. Roel's investors are going to end up chopping off his head and handing it back to him on a platter, but first they will lose every penny they put in to this deal, and then some.

airtaximan said...

"In November, Fuji Heavy said it may not collect $24.8 million in receivables after Eclipse Aviation Corp., based in Albuquerque, New Mexico, filed for bankruptcy. Eclipse Aviation makes and sells the Eclipse 500 very light jet aircraft, for which Fuji Heavy supplied wings, according to spokesman Kenta Matsumoto.

The automaker will book a charge of 3 billion yen this fiscal year related to Eclipse, Mori said."


baron95 said...

Shane, (this is not the place, but), Boeing IS missing it's contractual specifications on the 787 for several of the first articles (Boeing's own admissions) and likely many more. It is COSTING Boeing hundreds of millions in compensation and will like top $2B when it is all done.

And that is really the difference. A - Airlines were much smarter in their contracts with Boeing than Eclipse buyers. B - Boeing has deep enough pockets to pay the compensation.

So now enough about comparing Eclipse to Boeing - yes, I know, it is my fault.

Compare them to Adam Aircraft (another startup). Obviously Ken was shafted less than the 6 Adam 500 buyers and the dozens of depositors. Yet, Adam (the man and the company) was hailed multiple times here as the model of integrity and ingenuity.

baron95 said...

As for the business climate and jet market, most people fail to understand that the difference between a "hot" market and a "soft" market is just a small change in the number of participating buyers and perception. It doesn't take much for things to change.

I firmly believe that the American consumer (and over time consumers world wide) is sending a clear signal. We will only buy cars, planes, phones, etc, with great incentives in terms of discounts and easy financing, leasing. If you make terms hard, we sit out.

The only three sectors of the American economy that have not yet faced the music are Government, Health Care and Education. But even that will come over time.

I sat on the sidelines, but just closed (yesterday) on a deal on what is/was a very hot car. The key? Manufacturer pitched in a 20% incentive, dealer pitched in a 5% and bank pitched in a very low money factor. I drove 61 miles to get that deal. And made it plain to the local dealer that they had no chance to get my business with biz as usual mode.

I think this is happening all over the economy. My ex-wife just did the same to Toyota. Got a great deal with 0% finance and great discount on a Prius that used to sell at a premium.

Business better get used to ZERO or negative margins for a long time, moving to supermarket type margins 1-2% over the mid term.

Poorly capitalized companies will be snapped up by well capitalized companies or die.

Power is shifting (back) to the US consumer in a huge way.

Piper is not likely to survive. Beech's piston line is not likely to survive. Mooney is as good as dead. Diamond needs a serious capital infusion. Cirrus may need capital as well.

julius said...


I am not sure if RP cares about the US EAC orderbook and if, to which extend.

He knew (and said) that EAC was BK without his money in Feb. 2008.
He knew that the ch 11 sale 363 would make mischief in all areas.

He got a semi EASA cert, made the ch11 363 sale. won it, and waits for judge's ruling...
And then surprise, surprise...

The show goes on ... until someone stops the UWLW dream?


P.S.: A380: Bischof (Lufthansa)says the airline understands that airframers "are pushing the bar" in terms of technological advancements and delays are a natural part of that process.
(2009-01-16 http://www.flightglobal.com/articles/2009/01/16/321230/jfk-on-super-shortlist-as-lufthansa-mulls-first-a380.html)

BricklinNG said...


Diamond and Cirrus

Diamond seems to have a second leg to stand on with the suitability of its aircraft for training. Cirrus is a poor training aircraft. Flight schools are buying Diamonds (one school just announced buying 10 Lycoming-powered twins), even though individuals have cut way back. This leads me to wonder about the use of one of the small jets as a trainer. Which would be the most suitable for that purpose? The winner in this department might get some orders that the others will not. I would again think Diamond might be superior in this regard because of its relatively low acquisition cost and the continuity with the Diamond piston trainers.

WhyTech said...

"Mooney is as good as dead."

Again. Mooney can teach cats something!

FlightCenter said...


Thanks for posting the deposit numbers from the court documents. Based on those numbers, Eclipse had 683 deposits upon entering bankruptcy.

For those folks who wonder where they should go to find the best information regarding Eclipse, consider that the Order History spreadsheet provided its last definitive estimate on deposits on August 30, 2008.

Eclipse 500 Order History

At that time the estimate of total deposits outstanding was 702. Since 8/30/2008, Eclipse has shipped 12 aircraft bringing that estimate down to 690 deposits outstanding.

So the blog estimate made on August 30, 2008 was only 7 aircraft off from the 683 number provided in the bankruptcy court documents.

FlightCenter said...


Thanks for the Cirrus Jet charts. They are very interesting. I'm having a little trouble buying the cabin size numbers however.

The numbers in the charts would seem to indicate that the Cirrus Jet has a cabin substantially larger than the D-Jet or the E500.

I'd buy slightly larger (after sitting in all three) but these numbers would seem to put the Cirrus Jet in a different class entirely.

The Cirrus numbers from the chart are 10.9 ft x 5.1 ft x 4.1 ft. If you assume that the pilot's seats take up 3.4 ft of the length, and assume the width tapers down to 4.1 ft, you get ~112 feet cubed for the Cirrus cabin.

By comparison the D-Jet cabin is about 73 feet cubed and the E500 cabin is about 86 feet cubed.

The Mustang cabin is about 157 feet cubed. All cabin dimensions are measured from the back of the pilot seat.

The Cirrus exterior baggage space at 31 ft cubed is double the E500 interior baggage space.

The Mustang and the D-Jet have double again the exterior baggage space at about 60 ft cubed.

Does anyone have the latest purchase price information for the Cirrus?

I'd like to calculate the price / performance of the Cirrus Jet compared to the Eclipse, D-Jet and Mustang.

airtaximan said...

welcome back FC,

nice to see you.

My sense that you are back means there's some meaningful data... which is nice.

Our call on the order book off by 7planes is pretty cool, too.

tnuc said...

16/01/2009 4:00:00 AM
THIRTY people lost their jobs when a long-standing Port Macquarie aviation business closed its doors and went into administration yesterday.
CoastJet, based at Port Macquarie Airport, ceased trading on Tuesday afternoon and an administrator appointed yesterday.

Administrator David Leigh from PPB Recovery is examining CoastJet’s assets and liabilities.

He expects to have a better understanding of the company’s position in a week.

Port Macquarie surgeon Guy Hingston bought the 19-year-old business 2½ years ago.

Dr Hingston said the main reason for CoastJet’s demise was the loss of a $2.8 million deposit on two new jets when American company Eclipse Aviation Corporation went into bankruptcy.

The business was made more vulnerable, he said, by its heavy investment in a new partnership with Sweden’s Lund University School of Aviation.

He said CoastJet was preparing for its first intake of 24 students from Sweden at the end of March.

Dr Hingston said he and CoastJet’s staff were devastated.

“We had two jets we were about to take delivery of, but with the manufacturer going bankrupt, we’ve lost everything,” he said.

The jets were destined to for CoastJet’s growing air ambulance service, Dr Hingston said, as well as for international airline pilot training and charters.
An Australian operator went to the wall this week blaming their demise on the loss of deposits on S/N 271 and 276.

CoastJet launched its private air ambulance service between Port Macquarie and Sydney in September.

“I’m devastated that it has now fallen over,” Dr Hingston said.

Thirty staff were out of jobs.

eclipse_deep_throat said...

Shane said,
And while I'm at it, what a fantastic job by Captain Chesley B. "Sully" Sullenberger III. A dead stick landing with an almost fully loaded commercial airliner, into a river, in the middle of a city of skyscrapers.

Where all 155 passenger entrusted to him escaped with their lives,

Now, THAT'S what I call a pilot....

I totally agree. Here's to Captain Sully!! What is the old saying? 'ANY landing that you can walk (or swim?) away from is a good landing!' The pic of all the passengers **standing on the wings** while waiting for the ferry is one to make even Stephen King shudder. May the US Air Gods smile upon Captain Sully and award him a big fat bonus!! IN CASH.

On another note ...my bank, Bank of America, is looking real bad today, closing at $7.18 per share (-13.7%)!! They lost only $1.79 billion in Q4. I suppose Vern ain't that bad in comparison since it took him 10 years to lose $2 billion. I find it somewhat amusing that CitiFinancial is about to go bust too. But deus ex machina, the Feds will save them all. I borrowed $5K from Citi last year, so.... I wonder what would happen to that loan. The real surprise today is Circuit City going tits up. What on earth is going on??? How could they have had a 'bad' biz model? They had been in biz for 60 years!

I for one will pray more often this year. And right now I'm praying that BoA doesn't go TU, at least not until *after* I get my tax refund...


gadfly said...

A bit of trivia, from the viewpoint of an old “diesel-electric” submariner. . . that may have spelled the difference between life and death, for the survivors aboard the A320 out of KLGA, yesterday.

Not once, have I heard among the news reports anything about the buoyancy of jet fuel, helping to keep the A320 afloat during the rescue operations. We don’t know the fuel load, but whatever it was, the buoyancy of “Jet A”, compared to the water in the Hudson was significant.

Back in “olden times”, we had a number of tanks aboard “the boat” that were called “fuel-ballast” tanks. As the four diesel engines used up the fuel, sea-water filled the tanks from the bottom, in these “saddle tanks” (outside the pressure hull) . . . and the sub became ever more “heavy”. The tanks did not require pressurization, since they were always 100% filled with either “fuel oil” or “sea water”. But from full tanks of 120,000 gallons (our “sub”), we could gain over 52 tons of submerged displacement from the time we began a patrol, until the time we could again smell the aroma of the “Dole” pineapple cannery, returning back at “Pearl”.

The fuel load aboard that Airbus may have very well spelled the difference between life and death, as the survivors stood on the wing, awaiting rescue.

This takes nothing from the skill and heroism of the pilot, and the entire flight crew.


(Speaking of “bugs”, it bugs me no end to hear news reporters speaking of a “crash”. That incident was not a crash, but a controlled “gear up” landing on water, by a skilled pilot who performed according to the safe performance, that every pilot can only “wish” . . . given a similar test of training and skill.)

airtaximan said...


"There have been several objections to the proposed sale, and sources tell News 13 that one of the potential holdups involves 30 jets in production, because those planning to buy the jets have paid deposits.

The judge is being asked to decide if these planes should belong to the buyers or if they should become the property of ETIRC along with the rest of Eclipse's assets."

airtaximan said...

you know, I am thinking about the judge, tryng to decide who the partially completed jets at EAC belong to... and I wonder, how the disctinction is made between "depositors who have planes in work" and "depositors who do not, but were promised planes by now"... OK, on one level, there are assets that were purchased with deposit money - on the other hand, there is inventory and assets that was purchased with deposit money...

Hmmm... seems razor thin to me.

I hope the planes belong to the depositors, according to the judge. AT least they will get something....

Then again, what's the cost to complete them? I guess RP can make up any number he wants.

"Sure, its your plane in work... we required another $1.8 million to complete it - please send the check to my office in Lux"

What a cluster

airtaximan said...

must read... (Baron, you'll enjoy this - he makes a lot of your points) I just like the reference to Eclispe as "vile".


gadfly said...

One more suggestion from the gadfly:

Collect all of the original and present officers of the company . . . along with the politicians involved . . . give them free room and board in a gated community . . . and allow them to come up with an agreement, as to who owns what . . . with a fair value to be paid to each and every one of those who made deposits and/or performed work for the little bird company of Albuquerque . . . and only require that they refund the amount that they have acquired over the brief ten year history of the company.

Is that expecting too much?

(Oh, I just remembered . . . the New Mexico taxpayers . . . but they’re used to being ripped off . . . in fact, they no longer recognize the “pain”.)

Of course, there seems to be at least one customer, that is fully satisfied with the aircraft that he received . . . and continues to praise its attributes. He keeps flying down south, somewhere . . . returning now and then to praise the little bird.


(Please forgive the minimal logic of a bug . . . ‘Buzzing off!)

airsafetyman said...

Lets see, Baron, unionized aircraft assemblers and unionized engineers can design and build the Boeing 707, 727, 737, 747, 757, 767, and 777 airplanes which become the standard of the industry. Boeing management then decides to get trendy and build a new-technology plastic airplane AND decides to outsource the engineering AND the sub-assembly manufacturing to low-cost third world aerospace wannabee countries and just ASSEMBLE the airplane in Seattle. When the whole farce blows up in management's face it is the fault of the IAM?

Dave Ivedorne said...

e.d.t. pondered:
The real surprise today is Circuit City going tits up. What on earth is going on??? How could they have had a 'bad' biz model? They had been in biz for 60 years!

60 years is nothing - consider the case of Western Union...

( "Good" is a transitive term when discussing the merits of a business model. ) Sound Of Music was a stereo store that identified who their biggest competitor's customer was, and then did a better job of diversifying as that customer's tastes evolved. Hence, Sound Of Music became Best Buy. Best Buy repeated the process successfully in a growing number of local markets until its biggest competitor was Circuit City ( in terms of national numbers - they basically didn't compete in any local markets at that point ). Before BB opened substantively in any of CC's markets, they had developed an Nth-generation merchandising concept, where CC was pot-committed at N-minus-2. CC's response of opening stores in BB's markets was greeted by the sound of crickets - it was too little, too broadly ( my personal opinion is that CC would have been better served - long term - by shoring up in the markets where they already were strong ). BB stepped on a lot of fingers & toes on their way to the top, and now they have "business model" issues of their very own...

Would you like the Ranchero Sauce?

Shane Price said...


Sadly, there is no real news.

1. Roel was grilled, on stand, for two hours. He must have really enjoyed that...

2. The chap who paid for s/n 260, only to be denied delivery when the Chapter 11 petition was lodged, must be happy. EAI will have to release the FPJ to him, on completion of proceedings.

3. Current FPJ owners have been bought off, with some empty promises. They must be really 'empty', as the Court was not told what they were.

4. The Judge has called for a recess, until Tuesday next. Maybe, just maybe, there is a 'spanner' in the works. Time alone will tell.


Niner Zulu said...
This comment has been removed by the author.
baron95 said...

Gad, you are loosing it pal. Come on.

Buoyancy of Jet Fuel is what saved them!!! Your statement that more jet fuel would make it better is totally and obviously wrong.

Hint.... What substance would be in the wing tanks, occupying the space not filled with JetA? What is the relative buoyancy of that substance? (remember, the wing/tanks were not breached).

But to answer your question, the A320 was dispatched with about 40% of max fuel load. The LGA-CLT route is not a heavy cargo route, so, most likely it had no more than 10,000 lbs of cargo in the belly, perhaps as little as 5,000 lbs. I'd guess some 20%-25% below MTOW.

Unless the wings were separated or the tanks breached due to engine water-impact or one-wing low impact, that plane was not going down, no matter what fuel load it had. But the lower the fuel load, the higher on the water it would sit.

I'm truly disappointed. You should know that - what is in the ballast tanks of your beloved submarines when you want to surface?

chickasaw said...


Diamond also sells the small single to the US government for military training.

Niner Zulu said...

While I am happy to see that the owner of s/n 260 finally was able to get the plane that was rightfully his, I wonder why there has not been more of an outcry from the faithful. No outrage at all.

Sure, it's a "happy ending", but why did it take a court to order the a**holes at EAC to release the plane? Roel was in charge when this happened - why didn't he see to it personally that this owner was treated fairly?

And people still want to do business with him? Mind boggling!

baron95 said...

The treasury deptmt better stop dicking around and start buying the "unpriceble" toxic assets outright at whatever pennies on the dollar a reverse auction would yield.

Else it will be an endless and distortive injection of money in the likes of BoA and Citi and WellsFargo+Wachovia. Enough is enough. Time to wipe the slate clean.

Paulson is all talk and no action. He is paralyzed like a deer in the headlights. Bernanke is besides himself and is loading up the Fed's balance sheet with all sorts of crap to compensate for Paulson's inaction. Thank got we only have another 4 days to put up with him.

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


You have a point . . . no argument. But a "bubble" of Jet-A is worth more than a "bubble" of water. A couple pounds of bouyancy per gallon of capacity is a big thing when you are in a hurry to get off a sinking craft.

If there is a breach in an empty fuel tank, air will escape much faster than jet fuel . . . in time, the entire aircraft will sink. But the rate of loss of floatation can make a big difference.

The point is that fuel oil is lighter than water . . . and in an old diesel sub greatly contributes to buoyancy, and is an important factor in "trim".

And, in my opinion, is something to be considered in the total picture.


(And maybe you're right . . . I have probably "lost it", attempting to expand the overall picture, when attempting to put together the pieces, and consider all options, assuming nothing.)

baron95 said...

Yesm ASM. Just like the unionized UAW workers brought us for decades the standards in the industry from hydramatic 61 Chevys to Fleetwook Caddys to Chysler Imperials.

Past results are no guarantee of future success. The world is changing, and what worked well in the 50s-90s may not work well in the 2010s-50s.

Just ask all the unionized steel plants, now GM, C, F, tomorrow BCA.

But hey, they have the power to strike and bring any of the above manufacturers down, so more power to them. Let them continue in their ways.

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


Yeah, the guys at EAC really went out of their way to help the owner of s/n 260 keep his plane from being seized by employees of EAC. Huge effort on their part. Believe what you want to believe but EAC tried to steal his aircraft. They knew exactly what they were doing, and Roel was probably behind it. I know it, the owner of s/n 260 knows it, and you obviously don't know it because you've got a bad case of "battered wife syndrome" from dealing with EAC for so long.

I'm sorry you lost your ass to Eclipse, but it's your fault, no one else's. No need for the hostile attitude towards me or anyone else here. The writing was on the wall for so long on this fiasco there is no way you shouldn't have seen this coming. Sorry I don't sugar coat my words - maybe it would make you feel better - but the outcome wouldn't have been any different.


Dave Ivedorne said...

Baron, don't forget to call your physician in the event of an erection lasting more than 4 hours - the hard-on you have for unions has been in full effect for much, much, longer than that!

Side effects may include blurred vision,

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

For those skimming the posts (understandably), I must clarify a link I put up yesterday

"GM Lays Off 802 in Brazil"

Well, that actually sounds rather benign.

But my intended point was,

Brazil GM Workers Protest Layoffs

GM Brazil IS unionized, and it has clout.

Baron, I apologize for my excited tone.

EPx, I apologize for being a bit "excited" to you also.

"Lowest priced jet is available for only $1.25 million! What a bargain!!"

"It would appear that the "beta" of risk in GA is significantly higher than risk for average companies".

Hmmm- I think the "beta" on those $1.25M babies must be off the chart! :)

Thanks for the details regarding sn260.

Regarding fuel in the wings, hmmm. Baron rivals FC for helpful numbers.

Obviously, an wing filled with air floats better than a wing filled with fuel. But, if there is a small leak, the fuel is much more viscous, and wouldn't float out as fast as air.

One other factor- if there is fuel in the wings, they would be heavier, and that would translate into more momentum, which might have helped keep the wings from being sheared off.

This sort of reminds me of the theory that hot water in an ice cube tray freezes faster than cold water. (Theory being, hot water has more eddy currents- and supposedly, it IS true, by a small margin...).

(I think I'd vote for the empty wings though!).

I'm please that you (!anyone!) concurs:)

But please consider:
"Detroit built the gas guzzlers because that is what the consumers wanted".

I believe Detroit wanted to build "S" "U" v's (because of the lack of competion in that niche), and therefore WANTED consumers to want "s" "u" v's.

I would argue that consumer behavior was substantially, and perhaps, dramatically, influenced with the advertising campaign* (and further nudged by the lack of decent domestic large-car alternatives).

*I really would like to read some treatise on this hypothesis- anyone have a good link or two?

Thanks for the good no's.

I concur regarding Boeing's commitment to shall we say, customer satisfaction, in regards to complete to spec delivery. Even if the first so many are a -little- off. I do believe Eclipse did a credible job of meeting performance specs, just not a very credible job of meeting avionics functionality.

(This made a thought pop into my head- usually it is just odd voices- regarding new airplane development. Seems to me way back when the JSF was being proposed, or the F-22, or the Wright Flyer, I can't remember which, but I read that 60% of the cost was going to be software. Granted, it's a military airplane, but I would propose the more significant element than military-vs-commercial, was integrated-vs-federated architecture. Therefore, I would suggest something on the order of the Eclipse development cost was software-related as well.

I've never heard a good (hmmm, or even a bad) explanation of why Eclipse didn't have a flying test bed during the two-three years between Williams and P&W motors. Some Cessna 340 or Citation or some such.

I'm being charitable here- the only reasons I can think of are:

1) EAC didn't want to get "locked" into an obsolete avionics suite- and preferred to do avionics at the last minute, to get the most modern suite possible; or

2) EAC was using wishful thinking, and hoping their vendors "would make everything work just dandy" when the time came.

If they had had sound management, both these concepts would have been readily dismissed as wishful thinking.

Thanks for mentioning the Uruguay round- actually, I did NOT remember it (I did remember the Montreal talks later though). For our viewing public,
Uruguay Round

"In every business venture, you have to plan for a "worst case scenario"

Well- at least Wedge didn't re-acquire EAC- THAT would have been THE worst case scenario, for sure.

"Mooney is as good as dead." Again. Mooney can teach cats something!


Roger the 7x7 series, sans 787, and the union. I don't think the union made these airplanes better, but the union did not hinder them either. But the union DID perform it's primary function- it DID make the worker's lives better, and consequently, made Seattle better too, with corresponding payroll taxes. Seattle would be WORSE OFF if those jobs were exported, as is the case with the 787. It would seem that Boeing is worse off as well.
Nice post of Richard Aboulafia's article.
I must say, Eclipse could have been a success for both the "romantics", and the analysts. They had the time, money, and talent.
The ONLY thing they lacked was: GOOD MANAGEMENT.

Dave I.,
(Very well put !! :)

baron95 said...

DI said.... the hard-on you have for unions has been in full effect for much, much, longer than that!

You are correct. But it is not chemically induced. It is innate ;)

But at this time, I'd rather be alone in a room with the Detroit-3 Stooges CEOs than the UAW president.

Just shows that I'm an equal opportunity enforcer ;)

baron95 said...

BEG, if you knew more about Brazil's labor market, you'd know that virtually ALL employees in Brazil MUST belong to a union or professional association and must be represented in labor negotiations by their respective entities.

This is a setup originally imported from France/Europe and is equivalent to the non-right-to-work laws of Michigan and other UAW-rich states, except it applies to all employees, not just those that have had their workplace unionized by a vote. There is no vote. Virtually every worker in every workplace is unionized, by law.

Similarly, all Hyundai assembly line workers in Korea are unionized

The difference, however, is that NO UNION in Brazil or Korea and other places has EVER, EVER had contracts with the restrictive work rules and legacy retiree benefits that the UAW has. NONE.

As I said before. I'm all in favor of unions. If it is under right-to-work laws, where every one can choose to join or not a union, and the union behaves in a sustainably competitive posture vis-a-vis the state of its industry globally, then it all works great.

julius said...


is this type of ch 11 sec 363 sale typical?

Maybe, RP did everything according to US standards - even the s/n 260 sale...

Why should a customer, a supplier trust a person that is responsible for the " s/n 260 sale"?
Once the reputation is damaged there is no need to pay attention to the reputation...

Are there any comparable cases?


P.S.: The post s/n 260 should be delivered with FIKI, AVIO NG 1.5 with Garmins to ...non-US customers?

chickasaw said...


I for one, take exception to DI's statement that you have a hard on for unions. It is clear to any one that you have a hard on for every one.

Seriously though, I invite you to Detroit, where I will take you on a tour of an automotive plant. I will also take you to one of the best micro breweries in Michigan.

Why did the Prius sales fall 34% by November of '08? Remember this was during the highest gas prices we have ever seen.

The government is trying to mandate what we buy. They succeeded with digital TVs, now they are trying to do it with vehicles.

I apologize to Shane and everyone else for side tracking an aviation blog.

WhyTech said...

"Side effects may include blurred vision,"

and flawed reasoning.

airsafetyman said...

"Past results are no guarantee of future success. The world is changing, and what worked well in the 50s-90s may not work well in the 2010s-50s."

Well, it is 2009 and IAM workers and unionized engineers at Boeing are still cranking out 777s, recieving enough pay to maintain a decent standard of living send their kids to college. And their products help the nation's trade balance. You have to wonder about a company's management that embraces change for the sake of change. "Hey, its Thursday, let's move the headquarters to Chicago!"

airtaximan said...

blame unions, blame management, blame gov't, blame anyone you want - you'll be as wrong as you are right.

The world has become a very fast moving place, and keeping up or staying one step ahead is really tough... everyone screws up now and again. All systems and institutions can become part of the problem, or part of the solution.

IN EAC's case, we like to blame Vern, and IMO, he was a big problem. He also provided enormous amounts of capital to burn, so he had his purpose.

My sense is, the right mix, with the right talent in the right place is key. Unions are by definition large organizations, and are tough to move, tough to keep up. So is automotive manufacturing - its a large capital intensive business. Difficult to move, adapt.

Guess what? SO is Aviation. Development times for new powerplant technologies are measured in decades. Vern thought he could leverage this - and thought he was from a fast moving industry that could be applied to aviation.

He was wrong. His buddies placed big bets, not understanding the basic issue with aviation business - and assumed the problem was in management, or unions, or the old companies themselves. They sought to change this - and they could not.

The basic idea behind EAC was flawed. The product they put out was a mistake - it did not meet the market required for the price it was sold for. This basic business problem exemplifies EAC - it was a big, expensive misguided project, rooted in misunderstanding and mistaken thinking by someone with little experience, and thought the knew better. BUT, blaming one guy, or management for everything is wrong, too. A lot of peole bought in, put up money, promoted EAC, helped in the design, etc...

In the end, I think the mix was wrong, the trades for the product were wrong, and the company was a mismatch for aviation success.

BTW, I don't like "blame"... it solves nothing, but understanding the root casues and issues are important, to me, FWIW.

The unions, the management, the industial institutions are part of the success and failure... blaming the unions, IMO is a waste of time. To me, its like blaming the higher quality of life and higher cost of living for falling employment. Reminds me of a little restaurant story:

"no one goes there anymore. Its always too crowded"

bill e. goat said...

Hello Baron,
Well, I continue to disagree with your position, I find the discussion interesting.

And I am pleased to observe, while the discussion involves disagreement, we're not being disagreeable.

(If long winded and boring, on part, at times- okay, most of the time- I confess).

While we wait for news about EAC, I find the discussion entertaining and informative- I hope our fellow bloggers will also participate, or at least indulge it, although like Chickasaw, I do not mean to detract from the blog's central theme.

I have found the business case of Eclipse the most interesting aspect of the blog, and these forays into economic theory seem related to that discussion.

(Where's Fred when I need him!!! ??? :)

WhyTech said...

"If long winded and boring, on part, at times- okay, most of the time"

On this there is much agreement!

gadfly said...


Your thoughts concerning the wings filled with fuel helping to keep them from being sheared off has great merit. And, once in the water, anyone would “opt” for empty wings. But the fact remains . . . the fuel (whatever amount) was still in the wings . . . the wings did not shear off . . . and were mostly submerged during rescue. And without those “fuel loaded wings”, the stable platform would not have been there to provide support for passengers, crew and (by the way) the fuselage which by itself would have probably rolled over and sunk within seconds or minutes, at best, taking lives with it.

“Dumping fuel” was not an option, neither before nor after the beautiful “wet” landing.

You will recall the much videoed jet, (some years back) hijacked, out of fuel, that “crash landed” close to shore (just off a tourist beach) . . . and the wings did shear off . . . many lives were lost.

Every part of an aircraft, including the structure, is more buoyant “below” the surface, than if it were above the surface . . . simple physics . . . becoming more buoyant by the amount of water it displaces. Even steel and aluminum is more buoyant (less “negative buoyancy”) below the surface, than above. And fuel below the surface, with a lower specific gravity than water, actually contributes to floatation. The portions of the aircraft above the surface, including the open fuselage and “tail fin”, no matter how much trapped air, contributed toward it sinking . . . not flotation. And the engines, as they are designed to do, probably sheared off (?) on impact, contributing to longer floatation (evidence on that is still pending).

So, them are my thoughts.


(We now return to our regular program . . . the “Little Bird” from Albuquerque, and the people that want it to fly.)

Shane Price said...


1. Still at least three hours of testimony scheduled, even though they went as late as 18.30 last night.

2. Wedge got an 'initial' $1 million severance.

3. Role says there will be price increases of $300K-$600K over current base price. All undelivered aircraft starting at SN 261 will have same new price.

4. Depositors will get coupon equal to their deposit. ConJet depositors are considered in the 10% group, and will get coupon toward E500.

5. E400 deposits were never segregated (per Mark Bordeth CFO). Roel Peiper threw Wedge under bus on this one. He and BoD approved E400 anouncement in May 08, but the speech and contract language about escrowing money was "managements decision".

6. The ConJet prototype funding came from the deposits collected, and would appear to have cost about $7 million.

7. Those who requested refunds will be offered coupons instead of cash. Good way to lock them in.

Shane's opinion
So, the FPJ will have a base price of $2.5 million, and an effective cost of $2.8 million. 10%ers and 60%ers will be asked to stump up the difference between what they contracted to pay and the 'new' price. ALL previous (low) prices go out the window. If you thought you were getting a jet for, say, $1.5 million, you will have to pay at least a million more than you thought.

And no refunds.

Or upgrades for free.

Just 'coupons' from a company emerging from Chapter 11, in the middle of a serious recession and with other aviation companies shedding jobs and programs every week.

Will Roel repair Wedgies 'loan' FPJ when it breaks?

How many of the company officers will do jail time for fraud?

In short, how long do YOU think this circus will last?


gadfly said...

"Until the fat lady swings!"

airtaximan said...

so, apparently there are 35 airframes which are in assembly, probably all of them have paid up 10% and 60% deposits on them... and ETRICK is claiming the planes do not belong to the "owners"... and reports are that this might be a bone in the judges throat.

a little observation:
35 planes @ +/- $1M paid up = around $35M.

this is more than the cash ETRIC is offering for the whole company

- pretty sad

fred said...

I am here , Goat ... don't worry ! ;-))

just back from Morocco , where the snow was excellent and the Temp° (in some other places) was an average of 21C° ... unfortunately for our "poor" Baron , no one stole one of the car ...not even throwing me out of the car , but they laugh quite much when i told them this ! ;-))

you stated the economic of EAC , well since the BK statements are out in the wild , one can see that the whole Bizz-plan was flawed ... (if any still had doubts ... in this case , unless you undergo Brain-transplantation ... you're done !)

i cannot miss the "Personal-computer" style of the bizz (quite normal for former Microsoft nerds) in the form of : " No Need to have margins on our products , we'll make a fortune on volumes ..."

which is , in my opinion, the difference between a Mac and a PC ... (one is totally open and ruining more or less anyone trying to practice this kind of business ... the other one is proprietary and still making hell of a profit ! some peoples never learn , not even out of their own mistakes !!!)

little note for Baron : France has one of the lowest Union figures (adherents) in E.U. ! (+/- 8% of working pop. , state employees : 12%)
the problem = they are mostly in state-administration ... so they can be on strike 360 days per year and keep their jobs ...

about the current situation :

it starts to look real weird ...

the year-running deficit in US is more than the amount of debts France has accumulated since Louis XIV (the one who has built Versailles castle) i personally gave-up counting , it doesn't mean anything ...anymore ... ;-)

In a country where 90% of problems came from peoples over-consuming , over-spending ,over-indebtedness ... (some call it : "buying things you don't need with money you don't have ...")

what is the point to spend a few hundreds billions to have the same peoples to consume more ?

In Russia , the situation is bleak ... since Washington stopped to send blank checks to Ukraine , the Orange coalition (Bought and installed by the C.I.A.) has managed to ruin the country , in return and because they are bankrupt (Ukraine is set to announce state-bankruptcy in March , or at the most in April ...) they stopped the transit of gas from Russia to E.U. customers ... Russia has already lost 1 or 2 Billions $ of non-delivered gas !

(the whole thing is political and driven from Washington DC ... it is to ensure a bright future to a Gazoduc named "Nabucco" (built with US tax-payers money ) with only one major glitch ... there is NOTHING to put in the pipeline , all gas around the Caspian sea is already bought either by Russia or China ... ! ;-))

mostly everything is running to the river , in the same way ...

so asking a Russian bank for a loan now is probably one of the way to be deported ...

richs of yesterday are now considerably less noisy type of person ... i doubt they will be tempted by the joke called FPJ ...

AND the Main reason : Mustang are on offer for the same price (if EAI resume production and want to survive after the first year = Fpj : 2.5/2.75 M.US$) at the only difference : it is finished and putting some money in Cessna pocket is not a case to have you sent to lunatics asylum ... !

PS: for you all , a bright year full of love , peace , free-time and excitements ...

airtaximan said...

a $7M stunt.... pretty sad

airtaximan said...

Hmm.. this "coupon" is in fact a reverse coupon.

You used to have a deal for a plane that costs $1.5, and now, with this "coupon", you have to pay $1M more.

Back to old tricks, redefining simple words and concepts that have been around for years.

I hope the judge says "no" and just makes them liquidate - this is too sad. Its like death by paper cut.

trying to make a business of selling this plane at $2.5M++ is crazier than claiming there's an air taxi market.

trying to have anyone believe that ABQ will be back into 1 per day production for this $2.5M plane requires a straight jacket.

trying to have anyone think there could be a factory in Russia AND ABQ... I am lost for words

I think at $2.5M they might one day be able to sell 25 planes a year, if the thing is finished, functional and extremely finely finished and fitted. Maybe.

Also, I suspect the order book is now officially Zero.

Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

Court records are such great sources of information.

Seems that Shari placed a deposit on FrankenJet S/N 40 on 30 May 2008, and then requested a refund on 09 October 2008. (Court Docket 381 for those following along at home)

In addition to filing an objection to the sale proceedings, the E400 Depositors’ group also filed an adversary action. Along with a lot of jabber, that document (Court Docket 405) states in part …

“This action involves claims of breach of contract, conversion, breach of fiduciary duty, and seeks the imposition of a constructive trust and permanent injunction based upon the wrongful conduct of the debtor”

And further …

“Wherefore, Plaintiffs respectfully request the following relief:

(a) By way of specific performance, an order compelling the Debtor to immediately remit to Plaintiffs any Deposits it now holds;
(b) An order permanently enjoining the Debtor from wrongfully retaining or commingling funds in an amount equal to the Deposits or otherwise breaching its contractual and fiduciary obligations with respect to the Deposits that may be held by the Debtor;
(c) Imposition of a constructive trust over the Depositsreceived by the Debtor and not remitted to Plaintiffs;
(d) Restitution of Deposits received by the Debtor and not remitted to Plaintiffs;
(e) Disgorgement of Deposits received by the Debtor and not remitted to Plaintiffs;
(f) Money damages;
(g) Punitive damages;
(h) Interest;
(i) Costs;
(j) Attorney’s fees; and
(k) Such other and further relief as the Court deems just and proper.

Seems that while faithful to the end, now that the end has arrived, they are critical as well.

Who would have thought that possible.

Niner Zulu said...

By the time this global depression is over (if you don't like the d-word you can call it a "severe recession") you'll probably be able to buy a slightly used Mustang for a lot less than the cost of a new E500.

I think we'll see Mustangs with less than 500tt on them being sold around $2 million mark, maybe as early as the end of this year. It wouldn't surprise me if they went for less.

Yeah, it sounds crazy. But 1 year ago no one would have believed our country would be in the shape that it is in now.

airtaximan said...

I still wonder why no one has accused RP of buying the company with the money he rasied for EAC while running EAC.

If I was the judge, I would want to see a plan and where the operating capital is going to come from.

I know this is a little convoluted, but the judge needs to know that if she agrees to the sale, this in in fact the best route, besides liquidation. Under scrutiny, I think it would be discovered, that just like they used deposit money to build the E400, and just like the 35 planes that are in work for customers who paid $1M each for these planes (so they could/should already belong to the customers)... the money Pieper is using to buy EAC/Run EAC in fact might already belong to EAC. Imagine IF the DIP money is actually backed by the 35 planes in work - yet EAC does not own those planes.

Anyhow, some of you guys will correct my logic, and tell me this is not the way 363 works - OK... but still, this smells all too fishy, and IMO, RP is buying EAC with EAC's money.

They claimed last year the Russian deal went through - OK, he was running EAC at the time - where's the money? Where's the deal? IS it in the court docs? It should at least be an EAC asset.

julius said...


I still wonder why no one has accused RP of buying the company with the money he rasied for EAC while running EAC.

I think that is allowed.
Dave or D. I. stated last year that this might be checked in case of CH 7.

The nice thing with ch 11 sec 363 sale is that this is not checked (or?) and then uninteresting. 363 is just a quicky ... and nothing with scrunity.
If you haven't access to RP's pockets... in Lux ... is it worthwhile to try get money from him?

Shane stated that EAC paid approx. $200K to lawyers to prepare ch 11 sec. 363 sale...That does not mean that everything is ok!

RP has a nice feeling for timing:
$81M inventory stock, 28 a/c in production...

But it's up to the judge to decide!


fred said...

9Z :

yes ...!
the atom of chance EAC still had is gone into smoke since the mustang is very probably going to be sold for less (much?) than the EA500 factory can afford to build an item ...!

it DOESN'T sound crazy ... and i do believe that as long as your country won't accept undergoing dramatic changes , things will only worsen ... (even if in the first minutes it will look bit better ...)

Airtaxi :

you're right !

i wonder how it can be possible to buy (and screw old furnishers/clients) with the money being a fruit of your own mismanagement in the very firm you are trying to buy ?

back to the "good old" story : of the hen and the egg , who was first ?

julius said...


good morning!

How do you make fast and big money?
Making a good organized company better and sell it? No!
Takes too long, good company knwledge is needed...

The best way is to take some money out of the company, divide it, sell all or parts of it and drop it when bk is looming.
The bank, that gave you the money,
wants something back...

In Russia some people have/had better ideas.

Now the logic (for EAC) is quite simple:
If EAC files ch 7:
- The employees get some money..
- The inventory, intellectual properties are sold and ....
- The support of current fpj will be a question mark.
( BTW: an expensive lesson on Ponzi schemes for the fpj owners etc.)

If EAC continues (as proposed by RP and someone believes in the fjp):
- There is a chance to get the fpj.
- There is a chance of upgrades and maintenance.
- The fpj will be much more expensive than anticipated.
- There are expenses for the Ponzi-scheme lessons (they actually were written on the backside of the price tags)!

Now RP is the guy who screwed up everybody by stopping the ponzi scheme (and probably "helping himself") and is willing to disgruntle everybody by asking for new cash otherwise ...

BTW: If EAC in ABQ is TU, the price for (used) Mustangs will increase!


fred said...

julius , gutten tag !

you're right ...

often peoples kill the messenger for the bad-news they carried !

RP has been the messenger (he stopped the mess) but his implication in the early process remain to be inventoried ...

at least we can agree (ich glaube) on one thing : the current situation is the result of RP's pragmatism (the whole thing is doomed , so why not try to get some juice out of it ...)

on an owner point of view , RP is probably the last person (lack of any other offer in the bid) to dream on some sort of maintenance ... as i believe that this will be the most of it , since new factory and renewed production of newer planes will remain a chimer ! (unless , off-course , some new suckers are willing to be departed of their cash ...)

but i must admit you got a point ...
making big and fast money can be achieved by "launching" a new firm ...

it needs a minimum of knowledge , sweat and gutts ...

seems Wedge and the like understood quite rapidly (or only much too late , a question of opinion ) that the critical-mass of said knowledge couldn't be compensated by some more BS ... or cash !

probably the reason why the Fpj was sold primarily to first plane buyers (easier to fool !)

fred said...

don't forget , as well , that the "mustang effect" is something that can be added to the minus , but cannot be subtracted ...

with the current economic situation , the mustang are probably going to be on offer for less (the main problem of US , taking idea of real value for the real value ...)

which is a dramatic problem for a new Fpj production , it a near-guarantee of never reaching an hypothetical level of profit making , or at least a guarantee that the time needed for such will be much longer (too long?)

Mustang prices are probably (could?) be lower if any alternative could be represented by a Fpj new production (still Fpj HAS to be margin making !)
but the Mustang prices are not going to be higher (in a certain amount of time ... not before mid-2010 , i think !) even if the Fpj is liquidated = the Fpj was not a credible alternative offer !

Shane Price said...


1. A sub group of objectors to the sale, calling themselves "Work In Progress" are claiming that s/n 261 and up to s/n 296 are NOT the property of EAC, but belong to them. These are all the 28 aircraft that were actually in production on the filing date.

2. The ConJet group, ably supported by our old friends Ken and Shari Meyer, made a complete mess of their presentation. Their lawyers failed to provide the judge with the video or audio evidence which would have proved Wedgie had promised to put their $100,000 deposits in escrow.

3. ETRIC are very keen to point out that during the entire period of discussions about the sale of assets by EAC, no one put any pressure on the companies directors or officers, in any way.

Shane's says
1. You maths types out there will have notice that 296 less 261 does not make 28, but then we are talking EAC here. They never could make the numbers add up...

2. This proves the Meyers are really silly people, but then they are also down a 'standard' $150,000 deposit on their second FPJ. Seems like there are TWO born every minute.

3. That's why Peg resigned then. She was being ignored by EVERYONE....

4. Roel Peiper commented under oath about how many vendor contracts would be assumed by EclipseJet. He responded by saying "none of them". This will no doubt give vendors confidence going forward.

5. Roel dumped on Wedge, big time. EASA delays are due to 'arrogance' in refusing simple mods requested by the Europeans. The matter was only resolved when Roel stepped in. He also claims to have provided between 260 and 300 orders from his area, which makes me very worried about the 'order' book again.

6. The hearing as adjourned until 1030 ET on Tuesday, 20 Jan 09. Perfect timing for Roel, as the level of reporting will be an historic low.

So, there you have a brief summary, if you take all four of my reports together.

One final thing. I'm told that, as soon as they have control of the assets, EAI will void ALL of the existing aircraft sales contracts. It will formally draw a line under this, and make it clear that anyone with money on the line has lost out. This was not stated in court last week, but is 'lawyers chatter' as to the next step.

But it makes sense to me. Roel wants to get rid of all those stupid low price sales, and get straight to $2.7 million as his 'average' selling price. I still don't see how this thing can make money, when he wakes up to the 'new' cost price.

After all, vendors don't get mad with dodgy customers. They get even.


airtaximan said...


your comment about Meyers is unfair - we should appreciate them for what they are, IMO, the consummate EAC believers and buyers. In a strange sort of way, you might actually want them around if you had to paddle a canoe from Canada to China. They are risk takers to the max, and except for the fact that they wont acknowledge this, they are OK - its their money they are burning. And, yes, I believe Ken is almost always 100% honest (albeit misguided) in his promotion of EAC.

Regarding point 3: I would just say that these guys ARE and HAVE ALWAYS belived that you attract more flies with Honey than Vinegar. By these Guys, I mean the buyers/position holders. Their personality is such that they will risk a lot... see comment above... more than the average buyer, to get what they are told is a great deal. They continue to risk. Others are grabbing, objecting, making noise... these guys are thinking somehow they will end up with the long straw. This is the nature of the scheme, bet, whatever you call it that Vern set up. Its designed for these kinds of "buyers"... so, no surprise there. When told to "make noise", they do very little. So, RP, you take solace in the fact no one has tried to fry you ass yet. I sincerely believe your time has come. Your time will come. Keep acting like the asshole you are, and eventually, someone will tell you to shove your ass-backwards coupons where the sun doesn't shine... and sue your double dealing behind. So, tis proceeding does not bar any liability for D+O, or criminal actions. I remind you that you treated the delivery-positions as securities and promoted the speculation and selling thereof. Including making the market for them. Beware.....

The remark about the low balled sales being extinguished is a huge double edged sword. The mistake RP IS now making (remember, he made BIG mistakes on this deal all along the way) is that he assumes the vendors will tag along and provide parts/assemblies/engines etc... at a higher price and lower volume... but where he is wrong is, there will be NO volume. If its not ZERO, it will be very, very low for a long long time. Well, they will be gone, soon... but you get the picture.

Suppliers promised 200 shipsets a year at X will be refusing. This plane now costs $3plus million to build all things considered, with real volume coinsidered, which is almost none.

I call ballgame over. I am enjoying RP shoing his true weasel brown color... and watching him try to wrestle 30 or so planes from buyers, and all the other BS he is involved with - for what?

A stupid problematic plane, with no more orders, no market at anywhere close to a B/E sales price, in a terrible global environment for anything like this jet.

Finally, everyone should remember that ETRICK IS A VLJ AIR TAXI PROMOTER. Charter is down dramatically, with the light jet category being down the most. The VLJ catgeory is so pathetic, it does not even rank. Props are down, too. So RP is the biggest clown left.

Enough said.

bill e. goat said...

Not to belabor the labor issue (?!?), nor to single you out- I wish there were more commentors "on your side of the fence" on this issue. There probably are- if so, I hope they would kindly post.

"As I said before. I'm all in favor of unions".

Not wanting to misrepresent your position, but I believe you are saying you are in favor of unions promoting work place safety. Kudos.

"If it is under right-to-work laws, where every one can choose to join or not a union..."

I also agreed with that sentiment- for decades. Actually, until I read your post about Brazil, and the mandatory nature of unions and professional associations.

Considering that, and in view of union-busting techniques during a boom economy, and the ability to circumvent the union during a bust economy, I realize the significance of "right to work": it doesn't mean "right to work"- it means "right to work for less"- it does NOT create more jobs- it creates the same job, at a lower wage*. Thanks for the enlightenment:) I had grimaced over that issue for years- now I see it in a different light- and not out of contrarian reaction.

(*I acknowledge that this is not 100% true- there is some additional hiring, if wages are lower; but I'd argue it's a diminishing return benefit- if wages are cut in half, corporations are not going to hire twice as many workers, and I'd argue it'a s losing proposition all the way down).

"...and the union behaves in a sustainably competitive posture vis-a-vis the state of its industry globally, then it all works great".

NO! This is where we part ways on unions- the union's function is NOT to ensure a corporation has the same labor cost as off-shore competitors, vis-a-vis the state of its industry globally.

RATHER, the function of the union is to ensure the corporation's profits are shared with those who generated those profits, vis-a-vis the state of the industry domestically.

It is up to GOVERNMENT to protect the domestic industry, and the domestic worker, from off shore competitors.

This is NOT the trendy view of late- all I can say is, the results are more dramatic than anything I can say, regarding the balance of trade and national debt.

In short, Government has been failing to govern. Dramatically so.

"The difference, however, is that NO UNION in Brazil or Korea and other places has EVER, EVER had contracts with the restrictive work rules and legacy retiree benefits that the UAW has. NONE".

Again, the function of a union is concerned with the state of the industry domestically (in their respective countries). And those domestic industries in Brazil and Korea have not historically had the profits to support such social infrastructure. In the US, they did.

Maybe not now- so I'd say let Detroit file bankruptcy, if that's what the stockholders prefer- that would hurt a lot of investors- but after all, that's capitalism- let the strong survive, right?

bill e. goat said...

"If long winded and boring, in part, at times- okay, most of the time"

"On this there is much agreement!"

WT- I'm wounded!
Hint noted- but "UNABLE"

(but promise to try :)

bill e. goat said...

Hi Fred,
Welcome Back !!

I'm glad nobody stole your car, nor through you out- (nor through you under the bus!!)

"The difference between a Mac and a PC ... (one is totally open and ruining more or less anyone trying to practice this kind of business ... the other one is proprietary and still making hell of a profit !"

Well, I'm tempted to use a proprietary and protectionist (and profitable), versus open unprotected and unprofitable analogy to the labor argument, but will honor my pledge to WT, and not go there :)

"the year-running deficit in US is more than the amount of debts France has accumulated since Louis XIV"

Hmmm, just imagine if the US federal budge were to continue under an uninterrupted reign to Bush XIV!! (Actually, with global warming concerns, we'd have to start shovelling Franklins into a nuclear reactor rather than incinerator- seems like we might have a "China Syndrome" of our own coming soon !! .)

(I concede- new admin is talking about beau coup cash incineration too...)
"In a country where 90% of problems came from peoples over-consuming , over-spending ,over-indebtedness ... (some call it : "buying things you don't need with money you don't have ...")

Well, you see, we use the other 10% for lottery tickets and ding dongs. (?Circus and bread?)

(Least Fred and our other European friends confuse us with ding bats,
Ding Dong

Least our domestic ding bats not understand the reference to circus and bread,
Bread and Circuses

"Since Washington stopped to send blank checks to Ukraine , the Orange coalition (Bought and installed by the C.I.A.) has managed to ruin the country, in return and because they are bankrupt"

Well, I guess we've succeeded in exporting "democracy", US style :)

Actually, I was stunned with happy dismay over the Orange Revolution. The Wikipedia article pretty much sums up the perception of events on this side of the pond.
Orange Revolution in Ukraine

(And, BTW, I was stunned with happy dismay over Germany reunification- generally thought to be on schedule for 2020-40, back in the 1980's).

So some things do go right- sometimes even more right than we dare hope for.

I hope 2009 is another example of this for all of us !!

bill e. goat said...

"You maths types out there will have notice that 296 less 261 does not make 28, but then we are talking EAC here. They never could make the numbers add up..."

Thanks for the continued good coverage of the court proceedings.

(Personally, I'm looking forward to some other court proceedings...)

"Wedge got an 'initial' $1 million severance...How many of the company officers will do jail time for fraud?"

I don't know- but I think Wedge will be able to buy a lot of cigarettes...

"That's why Peg resigned then. She was being ignored by EVERYONE"

(I think Peg was being "ignored" to the tune of $1M per year as well :)

"Roel Peiper commented under oath about how many vendor contracts would be assumed by EclipseJet. He responded by saying "none of them".

Hmmmm- an honest man.

"Roel dumped on Wedge, big time. EASA delays are due to 'arrogance' in refusing simple mods requested by the Europeans".

Hmmmm- an honest man.

"The matter was only resolved when Roel stepped in. He also claims to have provided between 260 and 300 orders from his area..."


"Will Roel repair Wedgies 'loan' FPJ when it breaks?"

If I were Wedge, I think I'd switch to a Mustang.

(Besides, Cessna would probably provide one for free out of gratitude).

"In short, how long do YOU think this circus will last"?

Until the ding dongs, er, bread, runs out !!

baron95 said...

airtaximan said...
you'll be as wrong as you are right.

The world has become a very fast moving place, and keeping up or staying one step ahead is really tough... everyone screws up now and again. All systems and institutions can become part of the problem, or part of the solution.

ATM, That is, by far, the smartest comment I've read in this Blog. You are of course correct. I may borrow the concept, and will find good use for it. Thanks for the post.

bill e. goat said...

As Shane noted, those with an affinity for numbers...

"...35 airframes which are in assembly, probably all of them have paid up 10% and 60% deposits on them...35 planes @ +/- $1M paid up = around $35M...this is more than the cash ETRIC is offering for the whole company."

Good analysis.

bill e. goat said...

"The best way is to take some money out of the company, divide it, sell all or parts of it and drop it when bk is looming. The bank, that gave you the money,
wants something back..."

I don't know if Eclipse was well structured for a "sell off"- I'm glad for the owners and employees it stayed intact. FauxTrix was the only thing which could have been spun off- but I think it was already out of "spin".

"BTW: If EAC in ABQ is TU, the price for (used) Mustangs will increase!"

Good point!

Along those lines...
Folks have pointed out Ken was bilked out of a couple/few $100K. But if the new price is $3M-ish, I reckon he came out okay, even if he has to pop for $300-400K in upgrades himself.

But he's on the lucky side of this equation. The guys with planes "on the line" might still have a chance in court, but there's a few hundred unhappy depositors out there. And a few dozen unhappy suppliers.

I suspect NOBODY will sell Eclipse ANYTHING on credit- so they are going to need a LOT of cash to start back up. I figure them to be a niche player, a few dozen airplanes per year- being subsidized by the Russians just to keep the line "warm".

How long will the Russians keep the cash incinerator stoked? Probably depends on global oil prices. (Guess you could say it's an oil-fired furnace?)

baron95 said...

Shane said... Depositors will get coupon equal to their deposit.

Better than what I anticipated. He may hold on to more orders than had been predicted here (which was ZERO).

1. A sub group of objectors to the sale, calling themselves "Work In Progress" are claiming that s/n 261 and up to s/n 296 are NOT the property of EAC, but belong to them. These are all the 28 aircraft that were actually in production on the filing date.

They can claim all they want, but won't succeed. Eclipse positions were not even related to serial number, so there is not even a sure way to tie planes in assembly to specific buyers, and even it there were, it would be irrelevant. Until property is transferred to buyers (at closing) it belongs to Eclipse, and since Eclipse is in Ch11, it belongs to the creditors. In fact, it is possible to make the claim, that all airplanes delivered to owners in the 3 months prior to filing should be returned to the company/creditors.

bill e. goat said...

Hi Baron,
I already have an ill feeling about your comment to ATM ! :)
Cheers for now!

baron95 said...

Why? It was very sincere. At any moment in time we can find people on the right and wrong side of an issue switch places, as developments and volatility accelerate.

It was a very perceptive remark on ATM's part.

bill e. goat said...

I was kidding.
I do come here to have fun, as well as be educated.
(And to educate).

And if the blog succeeds in changing someone's mind, I consider it a worthy hobby.

(Especially because such a change of mind is usually not done in the vacuum of no opposing views; so I would consider the switch to be the result of a persuasive argument, and reasoned consideration.)

With capable opposing arguments, it is kind of like high school debate class.

(Except I think we're not always as well behaved as the teenagers .)

Cheers for now,

bill e. goat said...

and btw, I'd point out, ATM's concluding remark was:

"blaming the unions, IMO is a waste of time. To me, its like blaming the higher quality of life and higher cost of living for falling employment".

Well put!
Baron, have you changed your mind yet?

fred said...

hi billy-chèvre ...

i suppose you found-out (already) that i am very interested in Geopolitics ...

it explain a lot more on today + and - than it seems at first glance !

much more related to the Fpj than you would thought of ...

Fpj being the wrong product at a wrong time in a wrong place BUT presented with lots of successful circumlocution ...

Julius was right : a good way of making fast-bucks is to sell a firm after some improvements of organization ...

an idea , a bit of guts , a load of cash , lots of hypes , the favorable time ...

where did EAC got it wrong ? ;-))

Shane Price said...

Bill E. Goat,

How long will the Russians keep the cash incinerator stoked?

Roel swore (literally) in court that the 'Russian' money is tied EXCLUSIVELY to the factory, and that neither ETRIC or EAC were ever getting any cash from that deal. This leaves us with a choice.

1. We believe what he said (and what some of the Russian commentary stated) and the money is linked to the factory. This is my position.

2. We don't believe him, and ask where the money went, or is going. My problem with this is very simple.

What money? There is no sign of it, anywhere.


The discussion about the 'Work in Progress' group:-

They can claim all they want, but won't succeed. Eclipse positions were not even related to serial number, so there is not even a sure way to tie planes in assembly to specific buyers, and even it there were, it would be irrelevant.

I agree their claim has little or no chance of success. However, the Court 'docket' lists serial numbered aircraft alongside the associated purchasers. EAC made no attempt to deny this point in court, so I have to assume that (at some point) a serial number is assigned to a specific customer.

What's also 'amusing' is that there are 'gaps' in the serial number range. I count 27 aircraft (s/n 260 was 'rescued' by the court) in ABQ when Chapter 11 happened. This from a company that had reduced production to 'one per week' in August, from a target of 2 per DAY. Where are all the other airframes? Have those 'gaps' in the serial number range been finished and delivered? Don't think so.

No, it was all part of a bigger plan. Take as many 60% payments as you can, for as long as you can. This will lock people in, so that, post Chapter 11, they are 'pot committed' and will pay you even MORE money.

Hell, one of the '60%ers' who contacted me had a serial number north of 1500, and paid his 'progress payment' in December 2007 as part of that 'heist' to raise money.

This is actually quite interesting. People who had contracted to pay something in the region of $1.5 million in total, sent EAC something in the region of $900k. Now, EAI will want ANOTHER $1.8 million to deliver an FPJ, assuming Roel does honor the full value of the deposits with the 'coupon' idea.

Remember, this chap has a serial number well past 1500. At 22 FPJ's a month (best ever rate) it will be 2014 before he gets delivery. Does he hold on to his coupon, and start saving? Or does he shop around for 'good value' in the second hand marketplace for something like a Mustang, hoping that the coupon has value in a few years when the market recovers and FPJ's are selling for a multiple and he can sell it.

What would you do?


julius said...


Better than what I anticipated.

absolutely correct - also my point of view.
There is no time for emotions for the fpj-fans like Ken:
the process-in-work material is the base for the ramp "up" of the production and for later update businesses!

Perhaps, the "coupons" should be transferable - i.e.: if "s/n 265 owner" wants to get rid of "his fpj" he may pass the "s/n plus coupon" to someone else for money.

The non-auction has proven RP's strong position.
Is there anybody who really will pay some cash to the deposit holders? Why did this organisation not show up at the auction?

Are the "new" fpj safer, better than the old ones????

Hmmmm - not my issue, but it's just like at end of 2006.


P.S.: What's the value of a work in process part? Oh, no problem: I send back the wings to Japan and get a lot of money.....

airtaximan said...

I think Baron is correct regarding the contracts and perhaps even on the right legal side of this issue...BUT, I maintain that judges often look for fairness, and throw a slightly whacky twist into the mix.

In this case, everyone needs to be a little sympathetic to the owners in waiting. I for one, believe there will be a "smoking gun" related to the deposits, positions and especially the bilking of the position holders of their 60%-ers. I think its fair to say that EAC knew they had no prayer of delivering hundred and hundreds of planes in year one or even year two. I think there was misrepresentation up the wazoo.

Anyhow, I think a judge will be mindful of this, and understand that these owners names are on their planes. If anyone can come up with an email or letter, or contract that refers to "your plane"... this should be enough.

Baron, now that I think of it, the issue of transfering title is for a completed plane - these owners are asking for the incomplete plane, so its a bag of parts with their names (literally) inscribed on it.

Seems like an easy decision for a judge.

Given the tricky nature of ETRICK, if I were a judge, I would not want to hand him $35M in paid up deposit value on planes in assembly with other peoples names written on them. Perhaps that's why I am not a judge.

I once won a lawsuite for a completely differnt reason that I thought. The judge said, "you lose on this and this... but, he loses on THIS!" and awareded me MORE than what I was asking for.


Anyone think RP, VR et als will be sued personally after the royal shafting everyone is getting?

Deep Blue said...

Coupon value = zero; one might say its NPV = zero.

The aircraft to be delivered? Who is going to build them and with what parts?

Even if built, what level of fidelity/QC? Training? After-market? Parts? And who would finance this aircraft with a retail price higher than appraisal with immediate deterioration in residual value?

Black Tulip said...

Could the value of an Eclipse be equivalent to the amount of electricity required to reduce the bauxite ore to its metallic aluminum?

Shane Price said...

Black Tulip.

As much as that?


Shane Price said...

Deep Blue,

You raise an interesting point about Training. Part of the BK makes it clear that the SIM's in ABQ did NOT belong to EAC. This begs a number of questions:-

Will thy be happy to 'rent' the simulators to EAI, or will they insist on getting paid cash? Last I heard, they had left the facility, taking the 'keys' with them.

If the answer to the above is no, will customers be trained in FPJ's, and if so, where are they going to come from?

WHICH FPJ will be supported, for training purposes, Avio or AvioNG?

Hmmm. I'd sure like to know, before I parted with any MORE of my hard earned cash.

Luckily for me, I read Stan's original blog before I lost a lot of money.


WhyTech said...

"Even if built, what level of fidelity/QC? Training? After-market? Parts? "

Yes, but even if built, given the sordid history of this acft/company, who is going to place an order secured by a deposit until all of these issues are well and obviously resolved? A sort of vicious cycle.

Anonymous said...

BT –

There you go getting technical again. The value is certainly insufficient to pay the 20 Mule Team to haul the ore to the foundry. Have you seen the price of mule* food lately?

*Note - I sooo wanted to use the common term for Equus asinus, but I couldn't use that term and Wedge in the same post for danger of confusion.


Shane –

The Fuzzy Math applies, in part because EAC built several aircraft out of sequence. S/N 266 in specific was on display at AirVenture as a representative “production configuration aircraft” with all of the then expected AvioNG, FIKI, and EASA mods (of course, more were required later).

From the Court documents, S/N 266 is the subject of the Vermeer Mfg objections/actions with the Court.

Their claim ... how can it be WIP if it is certified and has been flying for over 6 months.

As you pointed out earlier, they have delivered all of the finished AvioNG 1.4 aircraft … and seem to have made a conscious decision to not deliver any “final avionics configured” aircraft.


Regarding the $28M cash at closing (sure wish I could hear that when I sell my house) … after the note holders share of the burial fees, that leaves them between 4-5 cents on the dollar for their years of support and secured debt. Wonder how Wedgie will spin THAT at the OK Corral … I mean symposium in Texas next month.

Finally, regarding the Opinicus simulators and HigherPower training team. From the Court records, EAC and Opinicus reached an agreement prior to the sale hearing. Details unknown at this point.

The question on whether they will make HigherPower whole, and employ them going forward is questionable/doubtful.

Recall that EAC only needed simulators and a training center due to the sheer numbers of jets roling off the line. At the realistic rates going forward, they can simply offer training in the customer’s own aircraft just like the rest of the lower-tier manufacturers.

Black Tulip said...


Interesting post. Does your last comment imply that the insurance companies will be content with non-simulator based training, either initial or recurrent?

Anonymous said...

For the historically adept ... yes I know that the OK Corral is actually in Tombstone, Arizona … and that the fight didn’t really happen IN the OK Corral, but “The Shootout at Harwood's Lumberyard” doesn’t make good ad material.

OK Corral just seemed to fit ... over confident gun-slingers loved by the masses collide with the law ... friends come to rescue on both sides … a few killed, a few run away.

Perhaps the Eclipse story will be similar. About 30 seconds of sound and fury that lives on in American lore symbolizing the testosterone of the wild west.

And, yes ... Doc Holiday's girlfriend was known as Big Nose Kate. I am not sure where I am going with that.

Anonymous said...

BT -

Regarding insurance ... not at all.

Just restating blog knowledge that training in the aircraft is possible and legal.

How the insurance underwriters handle this is TBD.

We can probably look for information from those E500 owners who received their type-rating in the jet before the sims were available. How are they being treated compared with “equally qualified” owners who did receive the sim curriculum?

This training –insurance nexus is just another one of those Wedge disasters.

Wedge really pushed the integrated training and mentor pilot concept as THE process necessary for realistic insurance rates. Now that the insurance industry is on board with that, what is the likelihood they will back down … fundamentally accepting (what Wedge pontificated was) more risk at the same premium in this new economy?

Several years ago I saw a $46,000 quote for mentor pilot insurance. That was for a seasoned, high-time, retired military aviator with type ratings in lots of jets. The rate in 2009 could easily be 1.5 times that. Can the average E500 owner manage expensive insurance on top of expensive parts and expensive service?

Cirrus found a way around the insurance costs. Maybe EclipseJet can do so as well.

Ok, that was a joke.

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

Snippet Time

1. Seems the remaining EAC Management are treating the remaining Staff to a lesson in Mushroom Theory.
Keep them in the dark and feed them bulls*#t.
This treatment is having the natural result. As soon as the staff can, they are leaving.

2. Several depositors who've contacted me during these proceeding have made similar remarks. Roel has zero, repeat ZERO chance of getting more money from them, especially in the form of a price increase. One went so far as to remark that he was heading off to buy a second hand Cessna. As in, right that moment. He still needed a jet, after all.

3. Officials in the City of Albuquerque are running for cover. Word down New Mexico way is that it will take at least 6 months to get suppliers back on side, before 'production' can resume in any meaningful way. This will mean, at best, temporary layoffs and some suspect it will lead to the relocation of the plant in it's entirety.


4. Message to depositors, in case you have not been following the plot here. All sales contracts are void, and your money is gone. You may get a coupon, but you will have to pay the new price of AT LEAST $2.5 million, plus whatever options you wanted. EASA customers will pay more.


airtaximan said...

Shane, please refer to the coupon as a "reverse-coupon" from now on:

Coupon = discount
Reverse-coupon = $1Million or more increase.

'nough said

airtaximan said...

we should activate FC, and survey the bloggers:

how many deliveries will ever occur of the ea50 post BK?

how many ea400?

My guess zero and zero

Joe Patroni said...

B95.......I'm not meaning to be critical, but I'm curious to know where you got such a hard-on for the UAW/IAM?

Please do not lump the UAW together with the IAM, at least those IAM guys that work for the OEMs in ICT.

UAW= rigid work rules, jobs banks, "give-backs over our dead bodies"

IAM= None of the above, at least from my experience (both in the bargaining unit, and management).

I was bitched at all the time by some higher up the food chain, mainly for not writing guys up for stupid stuff (like letting them work in T-shirts, instead of their 100% polyester work shirts in 140 degree plus tailcones in July August).

At the same time, all my terminations STUCK, because I played it by the contract, vs. going off half-cocked and firing someone just because they had a personal beef with him.

There was bad management A LONG TIME before there was bad unions.

As for the "one hole/hour IAM rate" comment,......what kind of hole are you talking about?. There are any number of close tolerance fasteners on an airplane that would be CHEAP to drill at a fastener an hour, vs. the time/materials that it would take to fix the problem, if you screwed up the hole.

You'll be glad to hear that I, being an overpriced, underworked American got my walking papers last week....

Strangely enough, it seems that people in Asia and the Middle East are willing to pay a lot more for my experience and training than US operators.

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