“I have an obligation to get you to your destination. You have an obligation to pay. What else is there? We don't need 24 pages of legalese.”
Eclipse weathers the storm-for now
The very light jet industry wasn't exactly flying high last year. A major supplier told me last summer that he expected half of all VLJ makers to fold soon. By the end of 2007, he looked clairvoyant; first the Aviation Technology Group suspended work on the two-seat Javelin and then, early in 2008, after sputtering for almost two years, Adam Aircraft shut its doors. Diamond Aircraft recently went hat in hand to the Canadian government, seeking funds to help it develop its D-JET. (It got $19.6 million.)
When I visited Eclipse's headquarters in December, things weren't looking good for that company, either. Granted, it had produced more than 100 airplanes by then, but that was a far cry from its publicly stated goal of four per day. The company had just raised $30 million-from customers-to finance ongoing operations and feed its 1,600-person payroll. To date, only Cessna seems to be making a really successful go of VLJ production: the company delivered 45 of its Citation Mustangs last year-on time and largely problem-free-and plans to ramp up production to 150 per year by 2009. Meanwhile, Embraer is self-assuredly working toward mid-year certification of its Phenom 100.
Eclipse started the modern VLJ craze when Vern Raburn formed the company in 1998. The airplane was full of whiz-bang, incorporating significant advances in airframe design, engines, computerized avionics, manufacturing techniques and materials for an unheard-of low price: $775,000. (Nicely equipped, a new Eclipse is now up to $1.8 million.)
In 1999, I was working for a corporate jet component maker and sat in on an early Eclipse supplier meeting. Its executives said they wanted our product-for 10 percent of the normal price. I was encouraged to buy into the "vision." The vision I came away with was my company going broke chasing the contract and my boss's boot up my backside. Pass.
Other suppliers weren't so timid. Williams International signed on to provide a revolutionary lightweight jet engine, the EJ-22, and Avidyne was recruited to supply an integrated glass-panel avionics system. Neither of those elements worked on the Eclipse, forcing a major aircraft redesign, costly delays, price increases and an erosion of customer confidence. Eclipse had pitched and public disputes with other suppliers as well. When the company announced the airplane's provisional FAA certification in 2006, years of work and some redesign remained to be done. The avionics system was incomplete, the airplane wasn't approved for flight into known icing and the windows cracked and required frequent inspection and replacement.
Eclipse has worked through these vexing problems, albeit sometimes slowly. Avionics and airframe retrofits are scheduled for most in-service aircraft later this year at company service centers. Last August, the company also revamped its production line, doubling output. The quality coming off the line has improved, but production is still fewer than one aircraft per day. Even at that rate, it will make the Eclipse 500 the most ubiquitous private jet-eventually.
The economic side brightened significantly for Eclipse in January when it secured a new source of financing, Etirc Aviation, laying to rest rumors that Vern Raburn's baby might need to find wealthy foster parents. A subsidiary of European Technology and Investment Research Center, a Netherlands-based investment and development firm, Etirc Aviation invested "substantially" more than $100 million in Eclipse. That investment included a minority stake, the right to build an assembly plant in Russia (scheduled to begin operating late next year) and distributorship rights to sell, service and provide training for the Eclipse 500 in 60 countries in Eastern and Western Europe, Russia, the CIS and Turkey.
Nevertheless, the FAA's forecast of 4,500 light jets in the air by 2016 now looks wildly optimistic. As Eclipse and others have discovered, implementing new aviation technology is expensive and time-consuming. The attrition rate can be brutal and rarely do things go according to plan.