As The [Eclipse]
Twenty years from now, historians will look back on the rise and fall of Eclipse Aviation and try to write the story. If somehow the company stays together and we're all flying EA500s in 2028, they will write about the comeback of the century that will have taken place.
But if those historians pull up digital copies of today's headlines, they will have seen an obituary on a company that flamed out. Either way, they had better be wearing their seat belts, because the saga of this flamboyant company is a helluva wild ride.
We all know the story – upstart VLJ maker promises to sell their cutting edge small jet for under a million. There was no shortage of pessimists who said Vern Raburn was walking the plank. As the drama unfolded, that price tag rose, and continued rising as the turbulent company fought through endless litigation, setbacks, FAA certification woes and manufacturing glitches.
Of late, the company has struggled to even pay their employees, and has been hanging by the corporate equivalent of their fingernails. That was, until today, when the story broke that everyone in general aviation expected. This is from Aviation International News, but it is being reported worldwide by just about everyone with a keyboard:
"Just days after Eclipse Aviation achieved two key milestones–EASA and Avio NG 1.5 certification–the pioneering VLJ manufacturer this morning filed for Chapter 11 protection in U.S. Bankruptcy Court in Delaware. At the same time, Eclipse Aviation entered into an agreement to sell “substantially all of its assets” to an affiliate of Etirc Aviation of Luxembourg. Eclipse also filed a debtor-in-possession motion with the court, to allow a group of existing share- and noteholders to fund “normal business operations” with up to $20 million until the company is sold in a public auction in January."Without going into the legalese, the declaration today does nothing but stave off wolves that sit hungry outside the factory door, and only puts off what seems to be the inevitable. Again, from AIN:
"The sale to Etirc Aviation, while agreed upon, is not guaranteed and depends on the outcome of the public auction. The debtor-in-possession financing is an asset-preserving move that helps keep the company operating and the current 954 workers employed during the bankruptcy. If Etirc Aviation isn’t the successful bidder for the assets, the debtor-in-possession funds would have to be repaid by the winning bidder."As Wall Street implodes, we hear more and more about major companies going out in a flame of chapter 11 glory. It would take a team of tax attorneys to explain it all, but AIN's reporting does a great job of breaking down Eclipse's bankruptcy filing to the brass tacks:
"The bankruptcy filing includes a list of creditors holding the largest unsecured claims, totaling $702.6 million and includes a long list of debtors. A primary reason for the bankruptcy, according to an Eclipse filing, is that the company “continued to lose larger than expected sums of money on each aircraft manufactured and has not reached cash flow positive in its operations.” In its bankruptcy filing, Eclipse estimated total liabilities at more than $1 billion."So after the public auction, someone will own what is left of a very good idea...Eclipse Aviation. As one who has always hoped they would succeed, this news hits hard at a time when we get daily barrages of this kind of ugly financial news that rips our aviator's hearts out. What went wrong at Eclipse will be a topic to ponder for years, but we must not forget what good this company did too...my two cents:
Eclipse Aviation shall forever be known as the company that started the VLJ and PJ "revolution" if and when it finally comes. Frankly, most of us thought we'd see ramps full of small turbine ships by 2009, but as our suck economy crawls along the floor, it appears that entries from Cirrus, Honda, Piper and Embraer are moving very slowly and cautiously to market. Seems nobody is all that excited about rushing their bird to the showroom floor at a time when nobody is buying.This coming year will be like a cage fight among the makers. Those with fists of steel and the ability to stagger through a continuous pummeling will survive, and those who are riding a wing and a prayer may see their turbine projects vaporize.
And as I write this, I have to think about the huge number of delivery position holders for EA500s who tonight must be dividing their time between tearing their hair out and beating their heads against a wall.