Current affairs, future outcomes?

It's been a month since Eclipse Aviation Corporation joined the ranks of 'ex companies' in Chapter 7 bankruptcy. At that time it was anticipated (mostly by owners of the aircraft) that there would be a queue of willing, cash rich bidders, who would make quick and decisive offers, allowing all their problems to vanish, post haste.

Oh, how the scales have fallen from their eyes. Instead of a rapid sale and the normal 'business as usual' messages, all they are hearing from the various groups that form, dissolve and reform is waffle. What must be really disturbing for the senior note holders (who do, after all, own the assets) is the quixotic nature of some of these bidders. So far, not one 'real' company has stood up and said they WANT to buy the assets, with REAL money.

A few 'straws in the wind' for your consideration:-

1. Controller lists over 30 Cessna Mustang aircraft (or positions) all of them in or about the published 'asking' price. 27 Embraer Phenom 100 positions are on offer, several of which use the word 'sacrifice' in their offer and yet the FPJ manages only 11 ads, ALL of which are for existing aircraft and NONE even approaching the last 'list' price of $2.15 million. An earlier 'snippet' which noted several FPJ's changing hands in the $600k range has since been reinforced by reports of similar exchanges. This tells me the market for FPJ's has tanked.

2. The 28 DayJet aircraft (which most people seem to have forgotten) are about to hit the market as the finance company which owns them seeks some recovery. Word is that these aircraft are valued well below a million dollars each, and will be sold promptly. This is bad news for anyone thinking of 'restarting' production, since the DayJet birds represented a potential source of revenue, as well as providing potential customers with a cheaper alternative.

3. Once they were 'free' of EAC, numbers of people have contacted me with interesting historical details. It seems the real cost of building the FPJ never dropped below $2.3 million dollars, even during the 'volume' days last summer. Current best estimates are that the bird will cost something like $2.5 million to build in low (1 per week) numbers, possibly dropping a little if the rate rises. The killer appears to have been the totally unrealistic number of build hours being spent on each one. Consensus is about 4,000 hours per aircraft, without fixing squawks. No matter which way you try to do this, you need to sell FPJ's at something north of $2.5 million to make a profit, and closer to $3 million to offer an ROI to the moneymen. I submit that this will be very hard work, even for ex Chairman/CEO of EAC, Roel Pieper, who's joined in Mike Press's mini owners group.

4. Current press coverage of the 'revival efforts' are overwhelmingly negative, even from former supporters, some of whom ended up as (unpaid) creditors. Most find it hard to make the numbers add up or feel the much hyped market for the VLJ's has now evaporated. This has to influence prospective investors, who are also readers our discussion. One thing is clear. The fantasy of volume production and sale of a 'cheap' twin engine jet is truly a busted flush.

5. The only 'good news' concerns the 19 'caretakers' employed in ABQ, who are still getting paid.

To conclude, it appears to me that some people (especially FPJ owners) are still not getting the message. I'm reliably informed that the note holders will sell, by whatever means, very soon. It could even get to an auction on the steps of the Courthouse. I hope that's not the final outcome, but whatever happens I'm very reluctant to promote the idea that FPJ 'production' can restart in Albuquerque, New Mexico. Whatever chance there is of this it will have to be at a) a much reduced labour cost and b) without the endless cycle of trying to fit together parts that simply don't.

Spring has arrive here in our Emerald Isle. My thoughts naturally turn to exploring the many secret places dotted around, especially those where one can retire of an evening to a convivial local pub for a pint (or three...) of our very own Guinness. Remember that you can always contact me on the blog email, eclipsecriticng@gmail.com, with any view, opinions or information relevant to our discussions.

Shane