Eclipse Aerospace, the 'new' EAC?

Clearly efforts to attract funds continue apace, since any investor in this troubled sector requires proof (in the form of cash) that the owners will support the 'new' company. So, Mike Press is asking, politely, for $100,000 as evidence that his effort merits more funding than that of say, the EOG. Several parts of the communiqué below intrigue me, in particular the offer to purchase existing aircraft. If, as I suspect, this refers to the ex DayJet fleet I'm surprised that attention is being drawn to it in this way. After all, one of the key issues in restarting anything is how much revenue is possible from the current fleet. And we all have our opinions as to how many E500's are actually flying...

Anyway, read it, in full, and try and work out what Mike and his merry crew are up to. Whatever happens on the 24th of June, I wish each and every one of the bidders the very best.

Shane

TO: ALL ECLIPSE 500 OWNERS AND DEPOSITORS
FROM: MIKE PRESS (S/N 4) AND MASON HOLLAND (S/N 473)

Our last communiqué was on April 24, 2009. We would like to take this opportunity to give you an update on the status of our progress since that date. We have a lot of exciting news to cover in this document.

We would also like to present our offer to owners of current aircraft serial numbers 1-260, as well as our process for performing upgrades beginning on or about July 1, 2009. (Note: This communiqué discusses the service, support and modifications to be performed in the United States. We are still in discussions with our European partners and will provide an update on Europe in the near future.)

Current Status of Asset Acquisition
We are pleased to announce that we are now in the process of finalizing the legal documents required for the acquisition of the assets of Eclipse Aviation Corporation. Many of you have heard that there is a proposed sale date of the Eclipse assets on June 24, 2009. This sale assumes that a qualified bidder (such as ourselves) submits a properly drafted Asset Purchase Agreement (APA) and it is accepted through a short auction process managed by the bankruptcy trustee.

Based on our current estimates, we have the investment funds committed not only for the purchase of the assets but also for working capital to get the company restarted. Of course this is an estimate depending on whether there are any other bidders and how high the bid for the assets goes. We believe that it is in the owners’ best interests that only the strongest bidder is at the table so the balance of the investment raise that is not used for the acquisition could be applied to working capital. Therefore, by the June 24th closing date, we feel confident that if we are awarded the assets, we will be fully funded and ready to resume operations of the company.

In going through the legal paperwork, we have settled on a permanent name for our company moving forward. From this point forward, we will now be known as Eclipse Aerospace. Eclipse Aerospace will have two primary divisions, which include the production arm of Eclipse Aviation and a separate and distinct division, Eclipse Service Network, which will operate and manage the network of company owned and third-party service centers.

Progress On Modifications
FIKI Modification- We are excited to announce that we have received FAA approval to begin FIKI modifications immediately, regardless of whether we obtain the assets of Eclipse Aviation Corporation. Therefore, we are ready to start performing these modifications immediately in our Chicago ESN Service Center.

1.5 Modification- Immediately upon obtaining the assets of Eclipse Aviation Corporation, we will also be able to begin the 1.5 upgrade. Our ESN team has sourced all the necessary parts and FAA approvals were already obtained by the manufacturer prior to the bankruptcy. Therefore, we are confident that these upgrades can begin shortly after the assets are acquired.

AvioNG Modification- Immediately upon obtaining the assets of Eclipse, we will also be able to begin the NG upgrade. Our ESN team has sourced all the necessary parts and FAA approvals were already obtained by the manufacturer prior to the bankruptcy. Therefore, we are confident that these upgrades can begin shortly after the assets are acquired.

ETT Modification- We are in negotiations with third party vendors who will be able to perform the major airframe modifications for these aircraft. This will allow our company resources to focus on other modifications and aircraft refurbishments. It will also allow us to begin the ETT modifications earlier, and in parallel, with the other modifications.

Aircraft Buy Back and Refurbishment Program
We have a number of owners who wish to sell their airplanes to our new company. We are negotiating terms with each of these owners on an individual basis. As we take possession of these aircraft, we will update the aircraft to full functionality, refurbish the paint and interior as needed, perform a full inspection, and make them available as Eclipse pre-owned aircraft complete with a warranty from the factory. These highly desirable aircraft will be offered first to deposit holders of the past company at substantial savings over a new production aircraft.

Offer presented to Owners of serial numbers 1-260
We have been in discussions with the Eclipse Owners Group Steering Committee (EOG), and proposed numerous ways we could work together in a future endeavor. Unfortunately, all of our suggestions have been rejected, and there have been no counter proposals from the EOG. Therefore, we would like to reach out to each owner and extend the following offer:

We are now taking deposits for modifications of aircraft. For each aircraft owner that submits a
refundable deposit to our escrow account prior to the deadline, (to be used solely as a credit towards the completion of modifications and service), the owner will receive:

• Priority Service – We will schedule upgrades for FIKI, AVIO NG, and NG 1.5,
beginning immediately, in the order in which the forms and deposits are received.
FIKI modifications will begin at ESN’s Chicago facility on June 1, 2009.

• Discount – Each aircraft owner who places a deposit prior to the deadline will receive
a 20% discount off of the retail price of all parts for the modifications. We have not
established a retail price for the upgrades yet, but we have stated in previous
communications that we will set a reasonable retail price based on industry standard
markups.

• License to Assets – Each aircraft owner who places a deposit prior to the deadline
will receive a royalty-free, perpetual license for the components of the type certificate
and intellectual property needed to provide service and upgrades to their aircraft on
an ongoing basis should our effort fail in the future. This license will remain in full
force and effect at the cost of our company until such time as the fleet reaches a total
size of 750 aircraft, at which time the license will expire.

The deposit amount is $100,000 regardless of what upgrade is needed. All deposits will be placed in a third party escrow account and are fully refundable until and unless we win the Eclipse assets. The deposits will be used to secure your place in line for modifications only. Once we have established the final price for the modification, you will be presented with a quote, and upon your acceptance of the quote and no more than 60 days prior to your scheduled modification date, your deposit will become nonrefundable and used to order parts as well as provide working capital for the modification effort. This offer is open up to May 31, 2009, which is the deposit deadline.

If you would like to place your deposit and be placed in the scheduling queue, please contact Ken Ross or Cary Winter of our ESN team to request the deposit form. The contact information is listed below.

Summary
Our Eclipse Aerospace team stands committed from day one to provide a “Customer First” experience in restarting Eclipse Aviation, immediately offering service and upgrades, and eventually restarting production of the Eclipse 500 over the course of the next several years. Our business plan has been very clearly defined, our financials are in order, and members of our team are receiving great acceptance and co-operational spirit in dealing with the appropriate departments within the FAA and other regulatory bodies.

In addition, our team is in communication with all the major suppliers, and we are planning a supplier summit to be held in early June in Albuquerque. At that time we will begin a major effort to reestablish parts inventory and make parts available to owners on the most cost effective basis possible.

This cooperative effort of our investment group, the current owners of Eclipse Aircraft, suppliers, and future owners of Eclipse aircraft has been fantastic. We appreciate everyone’s participation, and we hope that within the next several weeks, we will be able to see a positive end to this part of the process that will keep your aircraft in service and ultimately bring the Eclipse back into production.

Should you have any questions about how the upgrades will be performed and in what order, or if you wish to secure your position for upgrades, please do not hesitate to contact members of our ESN team, Ken Ross and Cary Winter, using the following contact information. If you have any questions about investment opportunities, the structure of our company, or the escrow account for the deposits, please feel free to contact Mason Holland or Mike Press using the contact information below.

We look forward to working with you.

In order to schedule your modification and request a deposit form please contact:
Ken Ross: phone- (847) 325-1180 or e mail- ross@eclipseservicenetwork.com
Cary Winter: phone- (847) 325-1177 or e mail- winter@eclipseservicenetwork.com

For all other questions or comments please contact:
Mason Holland: mason.holland@eclipseaerospace.net
Mike Press: mike.press@eclipseaerospace.net

Questions and Answers about this Communiqué

How safe is my money if it is not in escrow and you're using it for
day-to-day operations?
The dollars on deposit for modifications will remain in an escrow account until the official sale of the company. If Eclipse Aerospace wins the bid, these deposits (only with your approval of the quoted price and in no event prior to 60 days before your scheduled modification) will then be released in order to obtain parts from suppliers and to staff and re tool the Service Centers. In the alternative, you may request a refund.

Isn't this what happened with Eclipse? What's to stop you from using the deposit money and never providing my upgrade?
No, old Eclipse did not use escrow accounts and did use deposits for working capital as they were collected. We are funding an escrow account and will not release your funds from the account until you have approved the final price for the upgrades and have a scheduled date for your modifications no more than 60 days out.

Why even collect the deposits now if they are refundable?
It is important to our investor group to ascertain the true need for establishing a separate holding company which will provide the perpetual license for the TC and IP on an individual basis. Therefore, we are making this offer as part of the purchase of the assets of Eclipse. Those who feel this is an important value point for them should strongly consider this offer and participate.

In addition, we are also trying to quantify the demand for the upgrades and plan accordingly for them during our first 6-12 months of operations. One of our main goals from day one is to get aircraft 1- 260 fully conforming including all modifications as soon as possible.


What are the details of the license to the assets?
Simultaneously with or shortly after the purchase of the assets from the Trustee, Eclipse Aerospace intends to place the Type Certificate and certain intellectual property into a separate holding company (separate and distinct from the assets of Eclipse Aerospace). Each aircraft owner who has made the deposit for modifications prior to May 31, 2009 will be issued a royalty-free, perpetual license for the components of the type certificate and intellectual property needed to provide service and upgrades to their aircraft on an ongoing basis should our effort fail in the future. In addition, this license will transferable with the aircraft when and if it is ever sold.

What if I do not send in a deposit by May 31?
You will still receive service and we have no intent of charging service access fees. You will simply be charged our retail pricing (not eligible for the discounts above), your place in line for modifications will be scheduled after those who had placed deposits for the deadline, and you would not receive the royalty free perpetual license for your aircraft.

Villains, Victims and an Honorable Crew

Since in the future the blog may be used by historians researching the Eclipse saga, we thought it might be appropriate to highlight those most responsible for the dastardly deeds and some who suffered the consequences, as well as 'the few' who tried to point out what was going astray. Stan and I co-operated to put this together (isn't the interweb a wonderful thingy) and we both trust you'll enjoy discussing our logic.


If, that is, there is any logic in this convoluted story!

The Villains


1. Easy one this. Vern Raburn, who wanted to make his mark on aviation. He did, as the biggest scam artist in its' history, with a self confessed more than '$1 billion' burned!


2. Roel Pieper, the slippery old Dutchman thought he could pull a fast one and steal an airplane company. He ended up with a tarnished image and a plane load of legal troubles.


3. Al Mann, a member of the board since day one. Should have asked more questions, demanded more answers and taken an active rather than a passive role.


4. Kent Kresa, also on the board. Like Mann another pushover who failed in his role.


5. Harold Poling, the third independent member of the board. Like Mann and Kresa, never showed any backbone, never made any attempt to pull back on the stick even though the nose was pointed straight at terra firma. These guys didn't even pull the trigger on Vern. It was Pieper, in one of his few 'good' decisions, who showed Vern the door.


6. Marion Blakey, head of the FAA. She undoubtedly compromised the integrity of the FAA with her machinations. Sadly she, proved herself to be just another one of the thousands of dirt bags in government, putting self interest above doing the right thing.


7. Nick Sabatini, now retired FAA high-level manager. Played kiss-ass politics rather than sticking up for the long standing, safety based, principles of the FAA.


8. John Hickey, career FAA mid-level manager. Sold his soul to the devil by bending if not breaking the rules at the behest of his superiors.


9. John Hickey's hand picked MIDO inspectors used to replace the Ft. Worth MIDO team. The new group of wimps, signed off on questionable manufacturing practices and overlooked problems during the inspection of new aircraft (none of which the Ft. Worth group would accept).


10. James Campbell, known on the blog and elsewhere as Capt. Zoom. Became Vern's dupe and the main conduit for the propaganda emanating from Albuquerque. Even today, Zoomie would claim it was all good journalism, despite being listed as a creditor owed $80,000. Yeh, that's real 'quid pro quo' journalism.

The Victims


1. Al Mann, again. Tops this list because he lost the most money. Just too gullible for his own good.


2. All the suppliers (except Pratt & Whitney). Got suckered into the hype with disastrous results for themselves and their employees. P & W well it's hard to feel sorry for them, they have dealt with enough start up programs. They should definitely have known better.


3. Eclipse employees who hung on until the bitter end. Not easy to find replacement jobs in the collapsing economy, not easy to sell their houses if forced to relocate.


4. The owners. The dream of owning a jet on the cheap overcame their rational thinking. Now with their dreams AOG or nearly AOG, they face an uncertain future. Well not quite uncertain, if one considers anguish as a probability.


5. The depositors. Perhaps they are the lucky ones, who only lost their deposits. They're not paying insurance or hangar rent or being recruited by the various coalitions wanting them to $ign up. This group probably sleeps a lot better than the owners, as they've taken their write-offs and can move on.


6. New Mexico taxpayers. Stuck with worthless notes paid for with million of dollars of hard earned taxpayer monies.


7. Albuquerque taxpayers. Stuck with a bunch of worthless IRB's secured by most of Eclipse's hard assets like friction stir welding machines, a gold plated flight test telemetry center, tools, assembly fixtures, furniture, buildings and whatever else Eclipse management could pawn off on the unsuspecting.


8. Brian Barents. Hoped his role on the board would pave the way to finance his dream, a supersonic business jet. The $3 billion Eclipse loss burst that bubble and serves as a reminder that starting a new aviation company is not easy especially when new technology is involved. For the record, there is a rumor floating around that he will be making a big announcement this month.


9. National Aeronautic Association committee who selected the 2005 winner of the Collier trophy. This pathetic group did not even follow the Association's ground rules for selecting a winner. The award is intended for those who have accomplished something. Not pie-in-the-sky bullshit that Vern was putting out that the committee gobbled up like contestants in Nathan's hot dog eating contest.


10. The aviation community as a whole. What was billed as a revolution that would change the aircraft industry, change the way we travel, turned into an embarrassment to us all.


The Honorable Crew


1. Stan Blankenship, who launched the original Critic Blog way back in April 2006, before blogging was popular. His very first headline posited the principle concerns about what was then the 'great white hope' for many in GA.


2. Our very own Honor Roll, reproduced below. These guys (and gals, for all I know) were singled out by EAC lawyers, no doubt instructed by Vern Raburn, with the spurious notion that NDA's had been breeched. Thanks to our next 'good man', EAC were opposed in court, Vern got fired and EAC dropped the suit days later.


3. Rich Lucibella, aka 'Gunner', who paid for his own, very excellent lawyer Norman Malinski to defend the blog in it's hour of need. To go paraphrase Winston Churchill, never was so much, owed by so many, to so few.

4. A few journalists, including Karen DiPiazza, who's singular focus on Vern's machinations got her into trouble with a whole range of people. She stayed on it though, and wrote several telling articles, most notable about the 'Midway' throttle quadrant accident.


5. The long serving blog correspondents, many of whom are now in contact with each other. You guys (and gals) have illuminated our lives over the past three years, with wit, wisdom and more than your fair share of common humanity. Our sincere thanks to each and every one of you.


Stan Blankenship (and a few lines from Shane Price)
May 2009


The 'Honor Roll', just in case anyone forgot...

TURN-AND-BURN
COLDWETMACKARELOFREALITY
NINER ZULU
BLACKTULIP
FLIGHTCENTER
GADFLY
AIRTAXIMAN
FLIGHTGUY
ECLIPSO
RINGTAIL
METALGUY
TURBOPROP-PILOT
BRICKLINNG
FREEDOMSJAMTARTS
EXEAC
EASYBAKEPLANE
PLUMER
VOVA_K
AIRSAFETYMAN
CARLOS
FRED
BILL E.GOAT
MOUNTAINHIGH
PLASTIC_PLANES
AGROTH
EXPILOT
THE REAL FRANK CASTLE
WHYTECH
ISPACE

The tail end of Eclipse?

OK that's a pretty weak play with words, which I'm sure you'll forgive me for, eventually.

Some pretty damming correspondence reaches me, from several sources, about the number of instances (16, by one report) of this problem. While investigations continue, the issue would appear to be caused by 'incorrect procedures' either with a low battery initial start or wet restart. The delamination, which can be seen on the photo (top right) of the inside at about the 6.30 position, is (according to witnesses) clearly caused by excessive heat in this one location. Note that the exterior shot makes it clear that a visual inspection from outside fails to pick up the problem.

But now things get more interesting. Not only are there multiple instances in the fleet, but there does not seem to be any quick (or low cost) way to fix it. Clearly Eclipse Aviation are no longer in a position to provide technical assistance. Third party shops stuck with the problem are concerned about the consequences of a) devising a repair themselves and b) implementing and documenting it outside the normal approval cycle. This is perfectly understandable in the circumstances.

Which leads to my salient point.

What else will cause an FPJ to go AOG? We're aware of the DayJet birds, many of which had 'history' when they were flying and are unlikely to have 'improved' during (in some cases) almost a year of storage. Any PFD or MFD failures, especially on later AvioNG (IS&S displays) will certainly give an owner or pilot the jitters and leave them will little or no recourse. I'm reminded of the discussion, many moons ago now, of how the FPJ had been designed from the outset for heavy duty use. Pity they failed to design the company the same way...

The number of aircraft currently grounded, for a variety of reasons, is salient to our discussions. Clearly, the value (whatever remains) in the brand is lowered for each one that fails to fly. I'm aware of several that are 'hidden' away, sometimes in hangers but just as often on some out of the way field. It's a situation that's been building since before the Chapter 11 announcement on the 25th of November last. I'm confident that a number of these (excluding the DayJet birds) were not technically incapable of flight, but are those who's owners have decided to await upgrades. I think we should make a serious effort to a) identify those tails that have NOT flown for (just picking a number) 100 days and b) shift out those that are 'incapable' of flight.

This is not merely an academic exercise, but has real world value for any purchaser. After all, if 10 FPJ's are AOG, it's less than 5% of the fleet, and would not be worthy of further comment. But if its 50, 60 or even close to 100, then all this talk about '260 produced' rings very hollow, very fast.

Events (or lack thereof) have limited our supply of other news. Piper Aircraft is in new ownership, Adams Aircraft (version 2.0) has closed down. Cessna (and a number of others) have announced major cutbacks and/or program cancellations. Cash, for any type of investment, is very hard to source in almost any part of the world. Until we start to see some sort of economic lift it's unlikely we'll see a purchase of the assets of our very 'own' VLJ company in ABQ, New Mexico.

But I have been wrong before, and, unlike some others associated with this saga, I'm happy to admit my failings. Let's keep our fingers crossed that the Al Mann v Roel Peiper lawsuit is not a real spanner in the works, but merely a bit of local colour.

Shane