I'm also concerned that the inbox (eclipsecriticng@gmail.com) continues to be peppered with news of 'challenges' for anyone interested in the assets or supporting the aircraft. I'll handle some of this with my 'Snippets' which I'll again remind you are lower grade 'water cooler' chat, rather than established fact. What I'm finding is that a considerable proportion of these 'bytes' of data actually turn out to be pretty accurate. That's why I share them with you, but please don't take any action unless you satisfy yourself, to your own 'standard of proof' before you put time or money at risk.
We have had a pretty miserable few days here in Ireland, with rain, followed by rain, and then some more rain. Hopefully the sun will make an appearance for the weekend and all our skies will be blue. With luck our world wide economic meltdown has reached the bottom and we can all start to make positive plans, instead of trying to manage downsizing.
Anyway, enough with my blathering. Herewith Phil's (revised) plan...
Shane
April 10, 2009
Dear Eclipse Aircraft Owners and Depositors,
The purpose of this letter is to ensure that all parties understand my plan for bringing Eclipse out of bankruptcy. We have made significant revisions to our plan based on discussions with the Eclipse Owners Group steering committee (“EOG”). We understand you have several plans to choose from, so our intent with this communication is to make sure our plan is clearly articulated.
It now appears that all alternatives are “for profit” plans. To our knowledge ours is the only plan that states the prices which owners will be paying. We are able to provide pricing because we have done considerable due diligence, including input from the Eclipse employees who have actually done the work. It is stating the obvious, but owners and depositors should demand a side-by-side comparison of all the plans, including the prices you will be charged. There should be no after-the-fact “price surprises”.
Objectives
Our objectives have always been and continue to be as follows:
• Purchase Eclipse assets and intellectual property out of Chapter 7 bankruptcy.
• Restore the brand with the objective of increasing the E500 resale price to $2.0 million.
• Upgrade the fleet to latest TC level over first 24 months.
• Resume production of new AC with upgraded avionics in the third fiscal year at 100 aircraft per annum with a price of $2.4 million.
Because this aircraft is so highly integrated, we believe ongoing production is needed to keep fleet support costs at a reasonable level per aircraft. Ongoing production will also result in a higher resale value for the aircraft and lower spares costs.
Details of our Plan
Key elements of the business plan are:
• Owners who invest at least $150,000 in New Eclipse will receive break-even pricing on their mods & upgrades.
Pricing for the key upgrades will be:
• Avio NG 1.5 + Garmin 400’s + FIKI $109,000
• Avio NG conversion (Avidyne to IS&S) $210,000
As discussed above, we did considerable due diligence on the costs to perform the mods & upgrades and believe them to be conservative. To protect the owners we are guaranteeing transparency on the mods & upgrades costs and will adjust our pricing up or down depending on the actual costs incurred versus our estimates.
• All mod work will be done by experienced ex-Eclipse personnel in the Albuquerque facilities. Over the next two years we will open 4-5 factory-owned service centers around the nation for ongoing service needs.
• Owners who do not invest in New Eclipse will pay a $100,000 per aircraft premium for their mods & upgrades.
• Depositors will also benefit from our plan. We will finish and sell the seven almost completed aircraft on the line for $1.765 million each. Depositors for these aircraft will be given priority to buy provided they invest an amount to be agreed upon. We also plan to finish and sell the next 12 aircraft on the line with depositors for these aircraft again being given first priority to buy provided they invest an amount to be agreed upon. We will use these profits and the mod profits from the non-investing owners to upgrade the aircraft avionics and reduce manufacturing costs for the restart of production in the third year.
• We will have an Aircraft Support Program (ASP) of $70,000 per year per aircraft for the first two years to cover the 60 engineering personnel we believe are necessary (a) to maintain the TC, (b) to support the fleet airworthiness, (c) to improve aircraft reliability, and (d) to support the mods & upgrades. The ASP price will decline to $25,000 per year in the third year when we restart production. All owners will have to be part of the ASP to receive support.
• Ongoing service will be provided at a 50% gross margin on a time and materials basis.
• The initial type rating will be priced at $14,000. Two day recurrent training will be $4,500.
• We will spend the next two years reducing the E500 manufacturing costs by working with the suppliers and reducing labor hours. We have studied the E500 production costs in the Eclipse data room and believe our cost targets are achievable. We have also had positive discussions with many of the key suppliers, including Pratt & Whitney Canada. These suppliers have agreed to work with us to support our effort to make future production of the aircraft profitable.
• We will not restart new production unless approved by the Board of Directors which will include at least one owner. Further, owner investors will have the option to sell their shares back to New Eclipse for $150,000 if they do not agree with the Board decision to restart production.
• We will place the aircraft IP in escrow to protect the Eclipse owners if the company fails prior to restarting production, subject to certain conditions including how much the owners actually invest.
Summary
In essence, our plan is a hybrid where we offer break-even pricing for the first two years as we bring the fleet up to the latest TC level. The plan then transitions to a “for profit” as we restart production.
New Eclipse Acquisition LLC
Open Letter to Eclipse Owners and Depositors
April 10, 2009
Dear Eclipse Aircraft Owners and Depositors,
The purpose of this letter is to ensure that all parties understand my plan for bringing Eclipse out of bankruptcy. We have made significant revisions to our plan based on discussions with the Eclipse Owners Group steering committee (“EOG”). We understand you have several plans to choose from, so our intent with this communication is to make sure our plan is clearly articulated.
It now appears that all alternatives are “for profit” plans. To our knowledge ours is the only plan that states the prices which owners will be paying. We are able to provide pricing because we have done considerable due diligence, including input from the Eclipse employees who have actually done the work. It is stating the obvious, but owners and depositors should demand a side-by-side comparison of all the plans, including the prices you will be charged. There should be no after-the-fact “price surprises”.
Objectives
Our objectives have always been and continue to be as follows:
• Purchase Eclipse assets and intellectual property out of Chapter 7 bankruptcy.
• Restore the brand with the objective of increasing the E500 resale price to $2.0 million.
• Upgrade the fleet to latest TC level over first 24 months.
• Resume production of new AC with upgraded avionics in the third fiscal year at 100 aircraft per annum with a price of $2.4 million.
Because this aircraft is so highly integrated, we believe ongoing production is needed to keep fleet support costs at a reasonable level per aircraft. Ongoing production will also result in a higher resale value for the aircraft and lower spares costs.
Details of our Plan
Key elements of the business plan are:
• Owners who invest at least $150,000 in New Eclipse will receive break-even pricing on their mods & upgrades.
Pricing for the key upgrades will be:
• Avio NG 1.5 + Garmin 400’s + FIKI $109,000
• Avio NG conversion (Avidyne to IS&S) $210,000
As discussed above, we did considerable due diligence on the costs to perform the mods & upgrades and believe them to be conservative. To protect the owners we are guaranteeing transparency on the mods & upgrades costs and will adjust our pricing up or down depending on the actual costs incurred versus our estimates.
• All mod work will be done by experienced ex-Eclipse personnel in the Albuquerque facilities. Over the next two years we will open 4-5 factory-owned service centers around the nation for ongoing service needs.
• Owners who do not invest in New Eclipse will pay a $100,000 per aircraft premium for their mods & upgrades.
• Depositors will also benefit from our plan. We will finish and sell the seven almost completed aircraft on the line for $1.765 million each. Depositors for these aircraft will be given priority to buy provided they invest an amount to be agreed upon. We also plan to finish and sell the next 12 aircraft on the line with depositors for these aircraft again being given first priority to buy provided they invest an amount to be agreed upon. We will use these profits and the mod profits from the non-investing owners to upgrade the aircraft avionics and reduce manufacturing costs for the restart of production in the third year.
• We will have an Aircraft Support Program (ASP) of $70,000 per year per aircraft for the first two years to cover the 60 engineering personnel we believe are necessary (a) to maintain the TC, (b) to support the fleet airworthiness, (c) to improve aircraft reliability, and (d) to support the mods & upgrades. The ASP price will decline to $25,000 per year in the third year when we restart production. All owners will have to be part of the ASP to receive support.
• Ongoing service will be provided at a 50% gross margin on a time and materials basis.
• The initial type rating will be priced at $14,000. Two day recurrent training will be $4,500.
• We will spend the next two years reducing the E500 manufacturing costs by working with the suppliers and reducing labor hours. We have studied the E500 production costs in the Eclipse data room and believe our cost targets are achievable. We have also had positive discussions with many of the key suppliers, including Pratt & Whitney Canada. These suppliers have agreed to work with us to support our effort to make future production of the aircraft profitable.
• We will not restart new production unless approved by the Board of Directors which will include at least one owner. Further, owner investors will have the option to sell their shares back to New Eclipse for $150,000 if they do not agree with the Board decision to restart production.
• We will place the aircraft IP in escrow to protect the Eclipse owners if the company fails prior to restarting production, subject to certain conditions including how much the owners actually invest.
Summary
In essence, our plan is a hybrid where we offer break-even pricing for the first two years as we bring the fleet up to the latest TC level. The plan then transitions to a “for profit” as we restart production.
We believe this hybrid plan is the best path forward for both owners and depositors. New Eclipse will consist of employees solely dedicated to the Eclipse program – their priorities will not be diffused by other products or programs. I have run aircraft manufacturing companies for 28 years and I assure you that New Eclipse will be run lean and efficiently.
Provided enough owners decide to support my plan, I am confident we will be able to raise the additional funds to purchase the Eclipse assets and IP and to provide our working capital needs. I have been contacted by many aircraft owners and outsiders that want to invest in a New Eclipse provided we have a plan to restart production and the support of the aircraft owners.
In summary, you are making a big decision on your aircraft and you deserve a side-by-side comparison of the plans, including hard data on the prices you will be charged and who will be running the organization. A decision should not be made on who puts out the best press release and there should be no after-the-fact surprises.
Provided enough owners decide to support my plan, I am confident we will be able to raise the additional funds to purchase the Eclipse assets and IP and to provide our working capital needs. I have been contacted by many aircraft owners and outsiders that want to invest in a New Eclipse provided we have a plan to restart production and the support of the aircraft owners.
In summary, you are making a big decision on your aircraft and you deserve a side-by-side comparison of the plans, including hard data on the prices you will be charged and who will be running the organization. A decision should not be made on who puts out the best press release and there should be no after-the-fact surprises.
Regardless of which plan you choose to support, you need to do it quickly. We get daily reports of key engineers who have accepted jobs at other companies. Since this aircraft is highly integrated, it will be difficult to provide timely ongoing support if we lose these key people. Accordingly, time is of the essence.
Please feel free to contact me should you need additional information or have questions on our plan. If you believe my plan has merit, please contact the EOG to express your support for my plan.
Regards,
Phil Friedman CEO, New Eclipse Acquisition LLC
phil@harlowair.com
(702) 449-8312
Please feel free to contact me should you need additional information or have questions on our plan. If you believe my plan has merit, please contact the EOG to express your support for my plan.
Regards,
Phil Friedman CEO, New Eclipse Acquisition LLC
phil@harlowair.com
(702) 449-8312
217 comments:
«Oldest ‹Older 201 – 217 of 217Not stupid ATM, spot on.
To believe that, as I do, it does assume that the original kit is designed to the intents of the reg's so that there is as little risk of failure in test as possible, and that the real needs of the reg's are addressed.
But beginning with that assumption, your statement is accurate IMO.
Sure would like to see a picture of twin Epic but I couldn't find one.
On the one hand the requirements of the regs are in many respects a pretty low bar. For example the endurance tests required by the engine cert regs are an order of magnitude lower than what a reputable manufacturer sets as marketable reliability standard. So on that count the compliance with the airworthiness code should be a byproduct of the companies internal design goals.
On the other hand, it take a huge amount of organisational knowledge to certify even a part 23 SER. There are plenty of things in the regs that seem counterintuitive to an inexperienced team, and can be a road block to a top team. The devil is in the details, if you look very closely at the detailed requirements of e.g. an endurance test, in terms of time at temps/ px / power /torque, they are very severe tests.
As far as I can tell the Columbia is the closest thing to a homebuilt project reaching certification under current regs. It would be interesting see how many Lancair IV parts are also in essentially unchanged form Columbia parts. I would suspect there weren't many.
The Columbia company went bankrupt.
Has the team at Epic ever certified a plane as a team? I have been involved in certification with good but relatively inexperienced companies, you often see "harmless" details which got delegated to newer engineers with little supervision/control coming back to bite the project really hard (multi month program slips).
The sheer volume of work which has to done in parallel to certify a product will kind of blow apart the small tight design team that these top home-building firms have.
I am not saying that certification is a holy grail which magically makes a design better and safer (Ecorpse is a final nail in that coffin) but it is the law, and historically homebuilt companies who cross the line into certification don't survive to enjoy the fruits of their hard earned experience.
The heros of A/C design (Messerschmidt, Heinkell, Anderson, Tank, Heinemann, Yakevlev, Mitchell) were all parts of very strong teams, and all had a large number of A/C designs flying before they designed the models which got them really fame. If you look closely at the successful design teams, there is a lot of continuity (Tank developing his skills within the Heinkel organisation, Bölkow with Messerschmidt etc).
If you look at Vans development through his models, and now testing the certified market with an industry certified LSA you can see a classic conservative successful aircraft designer.
Epic must have a pretty amazing team to get as many different models flying in the short time they have been at it, but I can't see how their skill set relates that closely to being a successful certified A/C manufacturer.
FJT, the VP Engineering and Cert for Epic came from Diamond and Columbia. His name is Dieter Kohler and he is top notch.
I have also dealt with several of their engineers on an individual basis supporting a consulting client - it is a solid team and I believe with the right enhancements they are more than capable of certifying any of their products.
As some additional info, consider that Quest Aircraft recently delivered the first 'missionary' aircraft (1 of every 10 aircraft is delivered at cost - no profit - to provide reliable and safe aircraft to flying missionary operations worldwide).
Quest was started in 2001, a small team (~50 total) designed and certified a brand new 10 seat bush-capable turboprop aircraft in (think Caravan meets TBM, they fall in love and have a handsome son). The Kodiak was certified in mid 2007 and they have now delivered 11 aircraft. Current employment is about 250.
Epic is similarly sized right now.
There are specialist consulting houses that provide near turnkey certification assistance, with costs as low as $30-50M for a solid design.
It does not have to take 1200 people, a decade, or $3B to bring a new product to market - in fact, I would say it would nerver require that except through malfeasance or gross incompetence from Mohagoney Row.
well, another thought, on cert.
Seems like considering the regs wile designing a plane (even to be built as a kit) is a smart thing to do.
I do not think it would detract from safety, quality, or any consumer perspective value, such as cost... even development time/cost.
Maybe this is ignorant? Tell me.
My thinking is, mistakes from not knowing the regs can be overcome by making sure your team knows them, and keeping the in process.
If someone makes a mistake, that's another thing. Call it an escape.
Bottom line, why not design with the regs in the process... even IF you are a kit builder.
Now, if you are truly EXPERIMENTAL, and would just like to prove some design is airworthy...I can sorta understand... especially if the config is not being marketed just "experimental"...
But, if you are looking to place your product in the hands of customers, why not design for cert, as well?
From Turboprop_pilot:
"Sure would like to see a picture of twin Epic but I couldn't find one."
TP,
I wonder if AINonline jumped the gun on a press embargo. I can't imagine that would be the case, but other than in an AINalert yesterday, I haven't been able to find a thing about the two new aircraft.
I've received email updates regarding Sun 'n Fun from AOPA and AVweb today with no mention (that I've noticed) of Epic. I don't think Aero-News has carried anything, either. You would think the aviation press would be all over this given that there's not a whole lot of new stuff to talk about in terms of airframes right now.
Thanks for the insight Coldwet.
Quest is a good example of focus on the best product for it's niche. Smart concept using a simple design, no new technologies, rivetted alloy, a PT-6, and strut braced wings. Should have been "relatively" straight forward to certify.
As I said, the track record of Epic is very impressive.
I don't quite follow "There are specialist consulting houses that provide near turnkey certification assistance, with costs as low as $30-50M for a solid design"
According to Flieger magazine, it cost Diamond €50M to certify their Mercedes based diesel engine alone.
No way is even a top design team like Epic going to get a TC for a composite, pressurised turboprop by paying $30-50M to a "specialist consulting house".
That is a Powerpoint presentation type statement. Looks smart, sounds hollow.
That "certification is easy" hubris was an Ecorpse specialty and seems like a one of the reasons Stan started this blog.
Take one look at Epics employment pageThey need a director of structural testing (means they don't have one)
They need a manager of avionics .
They need lead certification engineers in three areas. Propulsion, wing and fuselage (seems an atypical split there).
All they need is to fill one of these key posts with a lemon who says all the right things in the meetings and is great in powerpoint, whose failings will likely only become clear once you come down to the wire, and the TC which is so close can slip a year or two into the distance in a flash.
I believe Ecorpse found a couple of such lemons.
This is not an Epic critics blog. They seem to be doing everything right. An we have never bashed ethical companies here have we?
They are off to a great start, and I hope they can make a successful transition to certified products, but lets give them the time and space to build a certification team, make mistakes on the first project, miss a few milestones, and come back stronger with the new product NG, and the twin.
If the Epic team was not working in parallel on seven programs that we know of, for both home built and possibly certified markets, but was only focused on a riveted alloy strut braced unpressurized plane, then your confidence would be well placed.
"Seems like it would be pretty cost-effective and easy to manufacture..."
Maybe, but kit plane "factories" (owner/builder)typically build a total of one airplane, and dont much care how much labor goes into it. It would seem that kits are not optimized for volume production of finished airplanes, and this might make scaling volume in a single factory cost prohibitive without considerable additional production/process engineering.
ATM They sheer performance of the highest performance homebuilts will be sacrificed to conform to the regs.
Speed sells homebuilts, although the number of low time Lancairs 235'/320's for sales shows that speed alone is a poor indicator of pilot satisfaction. You end up A/C will almost no stability and almost no ability to carry ice flying IFR. Deadly combination.
Me:
"I’m going to go on a bit of a BEG tangent here :-), "
WhyTech:
"That was a pretty mild tangent. No one does tangents like Billy!"
WhyTech,
Good point! There's a lot of free education around here. :-)
From bill e. goat:
"Agroth,
Thanks for the link to the Grob Strato-2C, that's COOL !!"
BEG,
No problem. :-) Thanks for all (almost all, anyway ;-)) of your links, as well. As I mentioned to WhyTech, lots of good education around here.
PiperJet = PipeDreamJetI admit it sounds very cute but I would not be so quick about dismissing all those 'other' aircraft. For example I see no reason why PiperJet can't ultimately be a success. If Cessna could build and sell the Mustang then why Piper can't do it too? PiperJet at least offers proportional pricing versus performance to what Mustang offers, I see no disproportion here that would suggest they can't do it.
This whole Putin stuff really made me burst in almost uncontrollable laughter from the very start. If you have to rely on good will of an ex-KGB officer to make your project succeed then you are really in deep trouble.
Who's paying the people that still work in albuquerque? The 530i in the lot isn't chump change.
Couple points FJT,
First, EASA actually charges for all certification work, so costs there are not representative of cert. costs in the US. Imagine if you had to pay for all FAA involvement.
Second, I know of the companies that do 'hired-gun' cert work, and $30-50M for certification of a well designed plane is well within the realm of possibility, IF the applicant designed to the reg's and has margin in the areas where there is risk for test (static and fatigue testing, and a few other key areas).
As an example, my areas of expertise (logistics, publications, reliability/maintainability) would represent as little as $1.5-3M in a total program, with ongoing expenses of perhaps $300-500K.
Remember, the initial design will itself represent anywhere from $10-50M depending on the company.
New post up.
Suffice to say, I think we finally know (for sure) who's going to make some money out of this sorry mess.
You guessed it, the lawyers.
As usual...
Shane
WT,
thanks for the insightful comment.
somehow, I was thinking kit = easy to build... like snap together...
I know nothing about this market, and suspected it was just a way to get non-cert planes in the hands of owners...
I suspect, I am way off, and you are right.
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