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Eclipse Aviation, start to finish.
November 14, 2008 6:58 AM   Subscribe

Eclipse Aviation yesterday told all of its employees to go home and that they would not be paid for their past two weeks of work.

Eclipse has been seen since its inception as a revolutionary company, pioneering the development of the world's first very light jets - defined as a jet aircraft weighing less than 10,000 pounds gross and costing less than $4 million. Philip Greenspun (of photo.net fame) has reviewed many of these VLJs, including the Eclipse 500.

The concept was simple: build a fast, cheap twin-engine aircraft for the growing market of private owners and air taxi services. The company won the prestigious Collier Trophy in 2005 (a list of all winners up to 2006 here) before the Eclipse 500 had even been certified.

Controversy quickly set in about the company's practices. A blog was established to criticize just about every aspect of the company, from its business model to the design of the aircraft. After Eclipse Aviation Critic shut down, Eclipse Critic NG (named after the airplane's second avionics suite, the Avio NG - the original Avio was replaced after Eclipse dropped Avidyne as a contractor) stepped up to continue the discussion. Eclipse subpoenaed Google to obtain the IP addresses of several of the contributors to that site.

After replacing virtually all of their contractors, increasing the base price of the airplane from $800,000 to $1.5 million, and delaying deliveries, Dayjet - an air taxi service and Eclipse's biggest customer - shuttered its doors in September. Last month, Eclipse halted production of its aircraft, leading to yesterday's announcement that its employees would not be paid.

Unfortunately, Eclipse's business model is predicated on a rather "optimistic" assumption - 1,000 aircraft sales per year at an original cost of $800,000 per unit. The Teal Group (pdf) has rather a lot to say about the company, most of it negative:

The Eclipse program was designed from the outset to be revolutionary and unique. In Teal Group’s estimation, the people behind Eclipse have attained this objective. This program is the single worst aviation program Teal Group has ever covered.

It isn’t the aircraft itself. Rather, it was a business plan that makes no sense, except to attract investors who don’t know much about the aviation business. The plan called for 1,000 deliveries per year. As a reference point, in 2007 the world’s manufacturers delivered a total of about 4,000 turbine-powered aircraft of all types and models. This one company, an unknown start-up, proposed to grow that global figure by 25%, admitting that it couldn’t survive if it merely built 450 planes per year (100 aircraft more than any other turbine-powered aircraft model).
posted by backseatpilot (41 comments total) 7 users marked this as a favorite

 
I forgot to mention the controversy of the certification of the airplane, as well. A lot of people in the FAA felt that it was rushed through without due process because Eclipse was a pet project of the Bush Administration.
posted by backseatpilot at 7:04 AM on November 14, 2008


Seems like a lawsuit ready to happen. Hopefully the employees will get together, sue, get paid, and the company will be forced into the bankruptcy it so richly deserves.
posted by Mitrovarr at 7:10 AM on November 14, 2008 [1 favorite]


thanks for all the info about a company I'd never heard of previously. Interesting stuff. god-DAMN this Obama recession!
posted by Busithoth at 7:11 AM on November 14, 2008


Meanwhile, Eclipse's founder and former CEO, who was fired earlier this year, is becoming increasingly unhinged as he watches his baby go into its death spiral.

This is sad news in New Mexico, which hung its economic development hat on this company back in 2000. About 1,400 jobs, and tens of millions in taxpayer-funded investment appears to be on the ropes.
posted by M.C. Lo-Carb! at 7:14 AM on November 14, 2008


Great summary, thank you for this.
posted by prunes at 7:17 AM on November 14, 2008


It's sad that they failed and, who knows, there might really have been a brand new market for air taxi and owner flown VLJs. I never saw it and certainly not when the price tag ballooned.

I take some issue with: "It isn’t the aircraft itself." They didn't do themselves any favors with the management of the rollout and certification. A VFR-only air taxi is just not going to cut it. And didn't they end up throwing in a Garmin 496 because the PFD was so unreliable?

I know a lot of people think management at Eclipse was inept.
posted by MarkAnd at 7:17 AM on November 14, 2008


Bankruptcy is not a rich desert. Only lawyers feed, the workers are raw flesh, their bones left to dry.
posted by Mblue at 7:18 AM on November 14, 2008 [1 favorite]


In other news, CEOs and upper management types of Eclipse Aviation were seen on the French Riviera last week drinking 50 year old single malt, smoking cubans, and surrounded by the hottest women investor's money can buy. They could only stay a week however because of financial trouble with the company. Our hearts go out to their families who have to endure the embarrassment of having to choose between steak or lobster instead of getting them both. Somehow they will have to "make due" with only a meager 1 million dollar going out of business bonus instead of the standard 5 million dollar one many other do-nothing CEOs normally receive. Hard economical times for everyone..... Hard times indeed.

Please note this isn't 100% true. With the Bush administration having their hands in it.... It's only 90% true.
posted by Mastercheddaar at 7:20 AM on November 14, 2008 [1 favorite]


Wow, that sucks. But it does seem that if you work for a company building small planes, or RVs, or yachts, or any other luxury item that people are just absolutely not going to buy in this economy, then job stability is going to be something you're going to have to worry about. But working for two weeks and not getting paid? Oh hell no, that is criminal shit.
posted by billysumday at 7:25 AM on November 14, 2008 [3 favorites]


Someone who's not getting paid knows where the execs live. And someone knows how to organize a mob. And someone owns too many firearms. If I were responsible for this, I'd leave the state ASAP.

I also wouldn't be able to live with myself, but that's beside the point.
posted by uncleozzy at 7:26 AM on November 14, 2008


This is sad news for Albuquerque, where I lived for a year. High paying jobs ($68K ? in New Mexico?) are hard to come by.
posted by fieldtrip at 7:26 AM on November 14, 2008


James Fallows wrote an entire book that discussed the up and coming "air taxi" industry and drank heavily of the Eclipse Kool-Aid. This was in 2001. I kept waiting, and waiting...
posted by neat-o at 7:38 AM on November 14, 2008


Two weeks, huh? Last time I was laid off I effectively lost something like 3-4 months of pay. (I shouldn't be laid off this time, though. Government sector, baby!)
posted by DU at 7:43 AM on November 14, 2008


But it does seem that if you work for a company building small planes, or RVs, or yachts, or any other luxury item that people are just absolutely not going to buy in this economy, then job stability is going to be something you're going to have to worry about.

Eclipse wasn't sold as a luxury item, it was sold as a utilitarian air taxi. I knew a rich guy or two who wanted to buy an Eclipse as a fun toy, but couldn't because the air taxi orders were prioritized ahead of the rich guy orders.

1000 units a year doesn't sound so crazy when you consider that you need twenty or so Eclipses to replace a single 737. Now that fuel is cheap again and the economy is tanking, Eclipse might be an attractive takeover target, after the past debts have been settled. When air travel falls off to the point where even a 737 is too big for many routes, a handful of fully booked Eclipses looks very attractive.
posted by b1tr0t at 7:44 AM on November 14, 2008


With the Bush administration having their hands in it.... It's only 90% true.

To be fair, I was shocked to learn about how horribly the Clinton SuperCar initiative of the 90s failed.
posted by troy at 7:44 AM on November 14, 2008


Seems like a lawsuit ready to happen. Hopefully the employees will get together, sue, get paid, and the company will be forced into the bankruptcy it so richly deserves.

Um, it sounds like the company is already bankrupt, and the employees would just be one more creditor.
posted by delmoi at 7:50 AM on November 14, 2008


The past couple/few weeks have also seen large layoffs at Mooney and Cessna, companies that actually make reasonable planes (i.e., planes that don't use a portable Garmin GPS as a primary navigation instrument due to screw-ups getting the avionics certified). Eclipse spent forever trying to sell a jet that couldn't legally fly through a cloud.
posted by exogenous at 7:51 AM on November 14, 2008 [1 favorite]


Crash and fuckin' burn.
posted by gman at 8:04 AM on November 14, 2008


I grew up in Albuquerque, live a couple hours north at this point, and I really had no idea about this company until now. It sucks, but it's not smart for any location to hang "its economic development hat on this company" if their business model is completely unrealistic. I mean, I could stir up some capital and create some vapor producing firm, get on the society pages and convince the local pols, but eventually it's not going to work out for anyone. It's sad, but how did someone not see this coming, save some bloggers? It's like the sub-prime housing mess. It's only a surprise if you choose not to see.
posted by krinklyfig at 8:06 AM on November 14, 2008


"So that's it? So long and good luck?!"
"I don't recall saying good luck."
posted by Spatch at 8:07 AM on November 14, 2008 [4 favorites]


The past couple/few weeks have also seen large layoffs at Mooney and Cessna, companies that actually make reasonable planes (i.e., planes that don't use a portable Garmin GPS as a primary navigation instrument due to screw-ups getting the avionics certified). Eclipse spent forever trying to sell a jet that couldn't legally fly through a cloud.

I'm more hopeful about Diamond and Cirrus's VLJs as they've shown themselves companies that can actually bring a product to market. I still need to be convinced that there is a market for VLJs, though. It seems to me that the high performance piston singles have most of the VLJ advantages with lower initial and operating costs.

Why would I ever buy an Eclipse (bad example) when I could buy a Pilatus?
posted by MarkAnd at 8:08 AM on November 14, 2008


(I cannot buy either, I should note.)
posted by MarkAnd at 8:09 AM on November 14, 2008


The coming Piper jet apparently looks to be really nice, according to some reports from the AOPA Expo. Supposedly Piper is actually looking to hire people to work on the thing.
posted by exogenous at 8:21 AM on November 14, 2008


It seems to me that the high performance piston singles have most of the VLJ advantages with lower initial and operating costs.

I think you mean turboprops... the highest performing pistons still don't come close to turboprops and Pilatus doesn't even offer a piston-powered model. Still, the basic premise holds true - turboprops are vastly more efficient, cost per flight hour wise, than comparably sized turbojets/fans.
posted by squorch at 8:58 AM on November 14, 2008


If they'd attached those jet engines to flying cars and jetpacks they'd be bigger than Google right now.
posted by blue_beetle at 9:02 AM on November 14, 2008


Either that, or they'd be getting sued by a badly injured coyote.
posted by happyroach at 9:15 AM on November 14, 2008 [3 favorites]


the highest performing pistons still don't come close to turboprops

Well, a turboprop Pilatus PC-12 NG will cruise at 280 knots (PDF), whereas the piston Mooney Acclaim Type S will cruise at 240 knots and burn a lot less fuel. Of course, the Mooney won't carry nearly as much (not even close), and you'll be on an oxygen mask instead of in a pressurized cabin.
posted by exogenous at 9:26 AM on November 14, 2008


I got really excited by James Fallows' pieces. Not Kool-Aid, per se, but it sounded sweet. And the worse big airports got, the better these sounded. *sigh*

Here's a fresh Fallows post with links to the older stuff: http://jamesfallows.theatlantic.com/archives/2008/11/the_eclipse_watch_cont.php
posted by wenestvedt at 9:35 AM on November 14, 2008


"Why would I ever buy an Eclipse (bad example) when I could buy a Pilatus?"

Well, for one thing, I just don't think I'd be able to sleep at night knowing I bought my plane from the guy that killed Jesus.

Well, somebody else actually DID it, but he gave the orders.
posted by Naberius at 9:38 AM on November 14, 2008 [1 favorite]


It sucks, but it's not smart for any location to hang "its economic development hat on this company" if their business model is completely unrealistic.

Unfortunately, so many cities are so desperate for jobs and economic growth that they'll jump at the chance to land and hang their hats on any kind of entrepreneurial start-up, no matter how dicey.
posted by Thorzdad at 10:04 AM on November 14, 2008 [1 favorite]


Who needs jets when we have flying cars?
posted by gottabefunky at 10:06 AM on November 14, 2008


I think you mean turboprops... the highest performing pistons still don't come close to turboprops and Pilatus doesn't even offer a piston-powered model. Still, the basic premise holds true - turboprops are vastly more efficient, cost per flight hour wise, than comparably sized turbojets/fans.

I was actually making two separate points which I did with imprecision:

1. The owner operated VLJ has few advantages over the piston single (Cirrus, Columbia [now Cessna], Diamond [once the DA50 comes out], Mooney, etc.) given the typical mission.
2. The average air taxi operation is still better served with any number of turboprops.

Sorry I didn't do that better.
posted by MarkAnd at 10:37 AM on November 14, 2008


the employees would just be one more creditor.

In bankruptcy laws, employees are absolutely not just one more creditor - they are the very first in line, then the bondholders, then everyone else (at least, this is how I learned it 20 years ago, I couldn't find a good web source in my hurry...)
posted by lupus_yonderboy at 11:18 AM on November 14, 2008


Exellent post, thanks,
posted by Stonestock Relentless at 11:50 AM on November 14, 2008


Sorry but this is a much larger story than just Eclipse.

I interviewed Ed Iacobucci for a couple of hours over the phone when he was about to launch DayJet and it was absolutely fascinating. It was a whole new approach to air travel which Ed had spent around 2 years modeling in a huge data center before he even started to build the company.

The idea was to model and replace traditional corporate travel at a competitive price which made use of small jets, one pilot and a hugely sophisticated planning system. It was all based around the logistics tech. And before you cry 'stupid', Ed is not an idiot, he built and sold off Citrix and is an engineer rather than a sales guy.

I'm not sure what happened, but it seems a combination of Eclipse incompetence (or bad luck or over optimism?), unfortunate timing and a looming economic meltdown scuppered the whole shebang. And since DayJet was the number one customer (with a shed load of pre-orders on the books) it's no surprise that Eclipse is now going west.

It's a shame, because Ed is no shyster.
posted by Duug at 2:08 PM on November 14, 2008 [1 favorite]


Now that fuel is cheap again

Have you heard the story of the frog in the pot?
posted by adamdschneider at 3:23 PM on November 14, 2008 [1 favorite]


Mmm...Pilatus PC-12. One of the best small planes I've had the pleasure of flying on. Fast, too.

A hell of a lot more comfortable (and cheaper to purchase and operate) than a Lear 35, although slower.

I can only imagine how cramped these VLJs are...

And turboprop twins are slooooooooooowwww (unless you're comparing it to something like a Cessna 172)
posted by wierdo at 4:52 PM on November 14, 2008


Hmmm. I'm guessing they're not going to be presenting a technical paper at Aerotest on Wednesday afternoon, then...
posted by Nice Guy Mike at 7:13 PM on November 14, 2008


An update - the paychecks are coming, please come back to work.

My last job was at one of Eclipse's former suppliers, and I can certainly tell you one of the biggest issues with the company is management. I'm a huge VLJ proponent, and the air taxi concept makes me drool, but there are some serious hurdles to overcome yet.

First, at the time I was working for one of their suppliers, they had replaced something like 90% of all of their original contractors - engines, airframe parts, you name it. They were absolutely unbearable to work with, mostly because they had very stringent requirements that unfortunately seemed to change on an almost daily basis. So, you're designing to a moving target and your customer is breathing down your neck wondering why you're late and over budget. Not a good work environment.

The certification problems were also something we discussed quite a lot at work. So many shortcuts seem to have been taken that I would personally think twice about taking off in one of those aircraft. Certifying a day-VFR-only aircraft for passenger revenue service is just stupid, too.

This is probably the best example of how management was working under Vern Raburn - at one of the big trade shows a couple years ago, Eclipse flew in their prototype 400 model. This was an airplane that had previously been unknown to everyone - it was such a secret project at the company that the board of directors didn't even know it existed. People at the company were furious at Raburn because it was his pet project and the company was already hemorrhaging cash at that point and here you have several millions more being poured into this concept aircraft.

In my opinion, people like Eclipse in much the same way people like Apple - the products have sleek design and a shiny user interface and those that drink the Kool-Aid are more than willing to overlook the deficiencies. Form over function. Other similar aircraft don't have the sex appeal, but they're reliable (and certified!), faster, have a longer range, and generally outperform the Eclipse in every category. As much as I think Greenspun is a huge blowhard, his review page that I linked above is a pretty good summary of what was available in the VLJ market a year or two ago.

As far as the air taxi services go, I love the idea. I would love to drive out to my local airport and grab a flight to the airport near where my family lives. Unfortunately for air taxis, economy scales with size and small airplanes are simply not as efficient as larger ones. Cost per passenger mile is smaller on a jumbo jet than it is in a VLJ. Granted, you get to skip the security hassles and the waiting around in airports, and you land at a point closer to your final destination than you would flying into a hub, but right now even business travel (which air taxis were really targeting) is all about the cheapest flight you can find.

An example - before the Clipper Connection shut down, I could take a flight from Bedford, MA to Trenton, NJ on a puddle jumper turboprop. A similar flight on Delta from Logan to Trenton on a regional jet was half the cost, and the Clipper Connection didn't fly on weekends! It's a no-brainer in that case. Even if I could find four other people to share a ride in an Eclipse, at $3000/hour for the airplane a flight to Jersey would be way out of my price range.

I do think air taxis are an excellent alternative to the airlines, but they're going to be very limited in scope when they finally do find a market. These airplanes are technological marvels, but they still can't fly coast-to-coast or transoceanic, which will really limit their usefulness. Also, to fly all these new customers around you're going to need a lot of pilots - a lot of green, inexperienced pilots who are not going to be able to fly these light jets in the same weather that the airlines can handle. And people are once again going to complain that they've been sitting in the airport for three hours and the sky is bright blue right here why can't we go now?! and wonder if not taking the airline flight was really worth it.

Anyway, that's my rant. I've got a bit of a unique perspective on this company and the industry in general, I think, and all of my ex-coworkers and I have just been waiting for Eclipse to collapse. While I don't wish harm on anyone, I'm sure that the lawsuits resulting from the first fatal Eclipse crash will really root out all the shortcuts and shady practices that were used to bring this airplane to market.
posted by backseatpilot at 7:14 PM on November 14, 2008 [2 favorites]


Yet another aircraft fails to take off from a moving conveyor belt.
posted by Wolof at 3:13 AM on November 16, 2008


Update: Eclipse Aviation filed for Chapter 11 bankruptcy protection in Delaware this morning.
posted by M.C. Lo-Carb! at 8:21 AM on November 25, 2008


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