Lease Deal Helps Plane Expansion Take Off
By SIMONA COVELJuly 30, 2007; Page B4
William Herp needed several million dollars last year to expand his jet-taxi company. He wanted to buy a fleet of a new kind of small jet -- one that would transport businesspeople visiting clients, like a car service with wings.
With airports overflowing with weary travelers and interest in private planes on the rise, Mr. Herp believed the new jets' speed and access to smaller regional airports would lure small groups of business travelers and families who may have never chartered a plane. Instead of paying by the seat, groups could rent the planes by the hour.
But a new kind of jet for a new kind of business -- banks "would never touch it," says the president and chief executive of Concord, Mass.-based Linear Air, which was founded in 2004.
Lease With a Twist
So he began courting wealthy individuals to help finance his idea. His pitch: Buy the small planes -- classified as very light jets -- and lease them to Linear Air. The buyers would receive income from the lease and a sizable tax benefit from the plane's depreciation, plus the ego boost from saying they own a jet. Linear Air, in turn, would have access to the planes without taking on high-interest loans. And the planes' owners would likely become repeat paying customers.
While most small companies don't need to buy $1.7 million jets, Linear Air's solution, a twist on a sale-leaseback arrangement, could work for entrepreneurs who need capital but don't want to sell equity or take on debt.
Leasing, says Murray Low, an associate professor at Columbia Business School and the director of Columbia's Eugene M. Lang Center for Entrepreneurship, is a form of financing "entrepreneurs probably don't use enough. It's relatively low-cost financing without tying up the rest of the balance sheet."
Mr. Herp, 44, a former chief financial officer of a public company and a recreational pilot, knew the risks associated with buying planes -- expensive products that depreciate quickly. And he knew individuals would be more likely to take this kind of risk than most bankers, because banks prefer to lend to firms with a track record of success. Recent widespread troubles among traditional airlines have rendered bankers even more hesitant to finance a new kind of plane and a new kind of operation.
Linear Air, with 40 employees and $2.3 million in revenue last year, has six Cessna Caravans -- three leased and three that it owns. But Mr. Herp's dream was a fleet of very light jets. The four-passenger jet is about the same price as the Cessna but able to go farther and nearly twice as fast. Taking the plane, for example, from Boston to Elmira, N.Y., might cost $3,000. That's within reach for a group of four business travelers and less costly than a traditional charter flight.
The plan wasn't easy. The jets' manufacturer, Albuquerque, N.M., start-up Eclipse Aviation Corp., has run as much as a year behind on delivery, Mr. Herp says. And, the "air taxi" model, where planes rent by the hour, is still unproven.
Eclipse spokesman Andrew Broom says the production delays are due to normal "teething pains" for a start-up manufacturer.
"We learned from the experience buying the Caravans what criteria equipment-finance companies or banks use to lend money," Mr. Herp says, "and we realized quickly Eclipse wasn't going to meet that criteria."
Mr. Herp says several finance companies offered to lend him money to begin the purchases -- but nowhere close to the amount he needed to put down deposits on several planes. Sixty percent of the price of each plane is due six months ahead of its scheduled delivery.
"The pricing was unworkable," he says. Even with the loans, "we'd still have to go out and raise cash" by selling part of the business.
So, Mr. Herp and his investment bankers constructed a leasing arrangement. Under the agreement, wealthy individuals buy a plane from Eclipse and agree to lease it to Linear Air for a period of time. During that time, the owner gets a discount if he or she wants to use the plane and also can usually earn an accelerated depreciation write-off on his or her taxes.
Leasing is common for owners of corporate jets and other transportation equipment, says Rick Schroeder, a partner in commercial finance at law firm Davis Wright Tremaine LLP in Seattle. Typically, the owner of a corporate jet will turn to an aviation-finance company, which will buy the aircraft and lease it back to that original owner. Linear Air's arrangement is a twist on that idea. In Linear's case, the company never owned the jets but persuaded investors to buy them instead. Those investors are then required to lease the jets to Linear.
While most industries don't deal with rapidly-depreciating assets like planes, lots of small companies can avoid taking on loans by leasing some of their equipment, says Prof. Low.
In the case of Linear Air's arrangement, the jet owners are also likely customers. Prof. Low notes that tapping into a potential customer base "is one of the most attractive sources of financing." When customers help finance the business, "it makes them vested" in the company's success, he says.
A Slow Beginning
Linear Air's plan appears to be working -- slowly. While several hundred potential jet owners have requested more information about the leasing program through the firm's Web site, only two deals have been completed.
That's partly because of manufacturing delays. Eclipse planned to deliver the first jet to Linear Air in August 2006, but now the plane isn't expected to arrive until August or September of this year. Because so much money is due prior to delivery, a handful of potential buyers balked after hearing of the delays. "They take a step back. They say the timing has changed, so there's no reason to do the deal now," Mr. Herp says.
One investor who has completed a deal is Chris Covington, founder of Boston boutique investment-banking firm Covington Associates, which does work for Linear. Mr. Covington, who also is a pilot, says he was attracted by the potential investment income as well as getting priority on flights. As someone who charters planes somewhat regularly -- he's been shuttling his teenage son on college visits -- he expects to reserve the Eclipse jet as often as once a month, especially if he's traveling to a city that's hard to reach directly on a commercial flight.
Mr. Covington's plane was to be delivered in May, but is now expected in September. While the delay is "regrettable," he says, "I want them to get it right."
Write to Simona Covel at simona.covel@wsj.com
Monday, July 30, 2007
Friday, July 27, 2007
Buy an Eclipse on Ebay
Eclipse 500 Update: Oh Yeah, That Other Airplane
Eclipse held its second press conference of the week at EAA AirVenture on Wednesday morning to talk about the Eclipse 500 very light jet program, but CEO Vern Raburn is clearly still enamored of his brand-new single-engine Eclipse Concept Jet. "The response to the ECJ has just been spectacular," he said, in opening the conference. "It has far, far, far exceeded our expectations." The most common reaction from pilots who climb into the cockpit of the mockup, he said, is, "They say, 'This is the airplane I always wanted.' It elicits a very emotional response. It's staggering." Raburn then went on to update the progress on the Eclipse 500 twinjet. New copies of the 500 now on the assembly line will be delivered with a new color weather radar system made by Japan Radio Company, instead of the now-former Honeywell system. The JRC system will be more accurate and more reliable, he said. Also, Raburn said S/N 00038 will be auctioned off online via eBay, and whoever places the winning bid can take the jet home the next week, as soon as they deliver the check. Bidders must place a refundable deposit of $5,000. The auction opens at July 30 at 11 a.m. and closes at 8 p.m. on August 10 (Eastern Time).
The auction will provide an opportunity to buy an Eclipse 500 without having to wait until 2009 for a delivery position. "We'll let the market decide what that could be worth," Raburn said.
Exclusive Video: Eclipse 500 Video Update with Vern Raburn
Eclipse held its second press conference of the week at EAA AirVenture on Wednesday morning to talk about the Eclipse 500 very light jet program, but CEO Vern Raburn is clearly still enamored of his brand-new single-engine Eclipse Concept Jet. "The response to the ECJ has just been spectacular," he said, in opening the conference. "It has far, far, far exceeded our expectations." The most common reaction from pilots who climb into the cockpit of the mockup, he said, is, "They say, 'This is the airplane I always wanted.' It elicits a very emotional response. It's staggering." Raburn then went on to update the progress on the Eclipse 500 twinjet. New copies of the 500 now on the assembly line will be delivered with a new color weather radar system made by Japan Radio Company, instead of the now-former Honeywell system. The JRC system will be more accurate and more reliable, he said. Also, Raburn said S/N 00038 will be auctioned off online via eBay, and whoever places the winning bid can take the jet home the next week, as soon as they deliver the check. Bidders must place a refundable deposit of $5,000. The auction opens at July 30 at 11 a.m. and closes at 8 p.m. on August 10 (Eastern Time).
The auction will provide an opportunity to buy an Eclipse 500 without having to wait until 2009 for a delivery position. "We'll let the market decide what that could be worth," Raburn said.
Exclusive Video: Eclipse 500 Video Update with Vern Raburn
Phenom's first flight
Embraer's Phenomenal First Flight
Officials from Embraer's executive jet division were all smiles at AirVenture when they received word that the Phenom 100 very light jet made a one hour 36 minute first flight in Brazil. Aircraft S/N 99801 became airborne on Thursday at 10:55 a.m. local time, piloted by Embraer test pilot Antonio Bragança Silva and Eduardo Alves Menini. "This is a key milestone for Embraer," Embraer President and CEO Frederico Fleury Curado said. "When we unveiled the Phenom jets a little more than two years ago, we asserted to the business aviation community our commitment to be a long term player in the executive aviation market. The first flight of the Phenom 100 confirms this commitment." The flight crew, accompanied by flight test engineer Marcelo Toledo Basile, checked out the aircraft’s flight characteristics and systems operations. According to Embraer executive jets vice president Luis Carlos Affonso, during the flight the Phenom 100 reached 15,000 feet and the gear remained extended, which is not at all uncommon on a maiden jaunt.
Officials from Embraer's executive jet division were all smiles at AirVenture when they received word that the Phenom 100 very light jet made a one hour 36 minute first flight in Brazil. Aircraft S/N 99801 became airborne on Thursday at 10:55 a.m. local time, piloted by Embraer test pilot Antonio Bragança Silva and Eduardo Alves Menini. "This is a key milestone for Embraer," Embraer President and CEO Frederico Fleury Curado said. "When we unveiled the Phenom jets a little more than two years ago, we asserted to the business aviation community our commitment to be a long term player in the executive aviation market. The first flight of the Phenom 100 confirms this commitment." The flight crew, accompanied by flight test engineer Marcelo Toledo Basile, checked out the aircraft’s flight characteristics and systems operations. According to Embraer executive jets vice president Luis Carlos Affonso, during the flight the Phenom 100 reached 15,000 feet and the gear remained extended, which is not at all uncommon on a maiden jaunt.
Air taxi companies waiting in the wings
The others waiting in the air taxi rank
By Jeffrey Decker
Backers and operators of the numerous air taxi start-ups are eager for production of very light jets to accelerate so their business models can be put to the test and they can turn investment into profit.
In early July Linear Air received its first Eclipse 500, which the Massachusetts company intends to put into service immediately as the first Eclipse in air-taxi operation anywhere. “Our team couldn’t be more excited to be the first to offer the Eclipse to the travelling public,” says president and chief executive William Herp. Linear Air has another 30 on order to supplement its fleet of six eight-passenger Cessna Caravan single-turboprops.
The two latest Caravans arrived in the past three months, and their two-pilot crews operate from small airports near Boston and White Plains, New York. On 2 April operations began from Manassas, close to Washington DC’s Dulles International airport, and in June service expanded to central North Carolina. Linear also operates seasonally from San Juan, Puerto Rico, in addition to providing per-seat seasonal service to Nantucket from Boston and New York.
Since 2005, Linear has steadily expanded its service to over 500 destinations throughout Canada, the Caribbean and the north-east USA, extending down the Eastern seaboard. Within five years the company aims to have 1,000 pilots operating 300 aircraft.
While problems with pitot freezing have delayed the Eclipse’s entry into service, weather issues also contributed to the fall of Point2Point, an air taxi start-up in North Dakota. In May, founder John Boehle wrote to the city of Bismarck, announcing a restructuring due to “the inability of the airline to reliably dispatch aircraft due to inclement winter flying conditions”. He blamed delays in US icing certification for the Diamond DA42 Twin Star, which is already approved in Europe. Boehle also cited a lack of revenue.
Other potential start-ups are cautious. Pogo is planning to enter the market using Eclipses, but will not launch until the air-taxi sector is better established.
Magnum Jet is aiming for a 2008 start using the Adam A700, for which Adam touts a toilet and cabin space as its main advantages over the Eclipse.
There is no toilet on the Cirrus SR22, but that has not stopped SATSair from operating 26 of the four-seat piston singles and growing to 1,800 passengers a month from 1,000 in October last year. Vice-president Phil Quist says customers are glad to avoid major airports when they fly. “We are seeing new customers come to aviation. We continue to see new customers come into the air cab market that in the past would only drive to their meetings or vacation,” he says.
SATSair’s service area has grown to include all of Florida and reaches to Arkansas and Pennsylvania. It overlaps with the service area of Imagine Air, a smaller air-taxi service that stops midway through Florida in the south.
Haroon Qureshi, Imagine Air director of marketing and sales, says he does see other providers as competitors, but “with something like this in its infancy, with the market so huge, we really see it as helping each other out. We’re not going to be at each other’s throats for another 10 years.”
Imagine also operates SR22s, five currently, and intends to add three Eclipses, set for delivery in mid-2008. “If they perform how we like, we’ll put in a bigger order,” he says. A future Cirrus order could bring two more each month to build a total Imagine fleet of 120 aircraft in five years.
Service will expand steadily westward.The Lawrenceville, Georgia-based service launched on 10 April and booked its 100th three months later. Imagine does not always use price as a selling point. “Our pricing is competitive to the airlines on certain routes. Atlanta to Dallas, or Atlanta to California, we don’t compete with them on that. What we specialise in is saving people the hassle of the large airports by flying out of their back yard,” says Qureshi. Average passenger load has been 1.7 per flight in the three passenger seats in each Cirrus. Imagine does offer $199 specials to fill empty legs, and up to 20% off with pre-paid flight cards.
The European air taxi market, meanwhile, is estimated to be worth €1 billion($1.38 billion) annually, and interest was high at a conference on very light jets in Vienna in June. Stefan Vilner, chief executive of Dublin-based Jetbird, praised the 21 June launch of the Air Taxi Association (ATXA), saying: “We look forward to using our market leadership position with the ATXA to emphasise the importance of private air-taxi travel with the operational efficiencies of low-cost carriers.” Vilner also heads ELFAA, the low-cost carrier association in Europe. Although the company will not launch until 2009, Jetbird has orders for 100 Embraer Phenom 100s, which, its says, was selected partly because it has a lavatory on board. The service will be focused on London-Rome flights.
A deal for 180 Eclipses marked the birth of a still unnamed air taxi service that is to begin operation by the end of this year from a base in Turkey.The 120 firm orders and 60 options was placed by Eclipse’s eastern European distributor ETIRC, which is founding the service with Atasay, a luxury-goods company based in Turkey.
By Jeffrey Decker
Backers and operators of the numerous air taxi start-ups are eager for production of very light jets to accelerate so their business models can be put to the test and they can turn investment into profit.
In early July Linear Air received its first Eclipse 500, which the Massachusetts company intends to put into service immediately as the first Eclipse in air-taxi operation anywhere. “Our team couldn’t be more excited to be the first to offer the Eclipse to the travelling public,” says president and chief executive William Herp. Linear Air has another 30 on order to supplement its fleet of six eight-passenger Cessna Caravan single-turboprops.
The two latest Caravans arrived in the past three months, and their two-pilot crews operate from small airports near Boston and White Plains, New York. On 2 April operations began from Manassas, close to Washington DC’s Dulles International airport, and in June service expanded to central North Carolina. Linear also operates seasonally from San Juan, Puerto Rico, in addition to providing per-seat seasonal service to Nantucket from Boston and New York.
Since 2005, Linear has steadily expanded its service to over 500 destinations throughout Canada, the Caribbean and the north-east USA, extending down the Eastern seaboard. Within five years the company aims to have 1,000 pilots operating 300 aircraft.
While problems with pitot freezing have delayed the Eclipse’s entry into service, weather issues also contributed to the fall of Point2Point, an air taxi start-up in North Dakota. In May, founder John Boehle wrote to the city of Bismarck, announcing a restructuring due to “the inability of the airline to reliably dispatch aircraft due to inclement winter flying conditions”. He blamed delays in US icing certification for the Diamond DA42 Twin Star, which is already approved in Europe. Boehle also cited a lack of revenue.
Other potential start-ups are cautious. Pogo is planning to enter the market using Eclipses, but will not launch until the air-taxi sector is better established.
Magnum Jet is aiming for a 2008 start using the Adam A700, for which Adam touts a toilet and cabin space as its main advantages over the Eclipse.
There is no toilet on the Cirrus SR22, but that has not stopped SATSair from operating 26 of the four-seat piston singles and growing to 1,800 passengers a month from 1,000 in October last year. Vice-president Phil Quist says customers are glad to avoid major airports when they fly. “We are seeing new customers come to aviation. We continue to see new customers come into the air cab market that in the past would only drive to their meetings or vacation,” he says.
SATSair’s service area has grown to include all of Florida and reaches to Arkansas and Pennsylvania. It overlaps with the service area of Imagine Air, a smaller air-taxi service that stops midway through Florida in the south.
Haroon Qureshi, Imagine Air director of marketing and sales, says he does see other providers as competitors, but “with something like this in its infancy, with the market so huge, we really see it as helping each other out. We’re not going to be at each other’s throats for another 10 years.”
Imagine also operates SR22s, five currently, and intends to add three Eclipses, set for delivery in mid-2008. “If they perform how we like, we’ll put in a bigger order,” he says. A future Cirrus order could bring two more each month to build a total Imagine fleet of 120 aircraft in five years.
Service will expand steadily westward.The Lawrenceville, Georgia-based service launched on 10 April and booked its 100th three months later. Imagine does not always use price as a selling point. “Our pricing is competitive to the airlines on certain routes. Atlanta to Dallas, or Atlanta to California, we don’t compete with them on that. What we specialise in is saving people the hassle of the large airports by flying out of their back yard,” says Qureshi. Average passenger load has been 1.7 per flight in the three passenger seats in each Cirrus. Imagine does offer $199 specials to fill empty legs, and up to 20% off with pre-paid flight cards.
The European air taxi market, meanwhile, is estimated to be worth €1 billion($1.38 billion) annually, and interest was high at a conference on very light jets in Vienna in June. Stefan Vilner, chief executive of Dublin-based Jetbird, praised the 21 June launch of the Air Taxi Association (ATXA), saying: “We look forward to using our market leadership position with the ATXA to emphasise the importance of private air-taxi travel with the operational efficiencies of low-cost carriers.” Vilner also heads ELFAA, the low-cost carrier association in Europe. Although the company will not launch until 2009, Jetbird has orders for 100 Embraer Phenom 100s, which, its says, was selected partly because it has a lavatory on board. The service will be focused on London-Rome flights.
A deal for 180 Eclipses marked the birth of a still unnamed air taxi service that is to begin operation by the end of this year from a base in Turkey.The 120 firm orders and 60 options was placed by Eclipse’s eastern European distributor ETIRC, which is founding the service with Atasay, a luxury-goods company based in Turkey.
Tag Aviation VLJ Flying Club
Monday, July 23, 2007
TAG Aviation USA Supports VLJ Flying Club
OSHKOSH, Wis., July 23 /PRNewswire/ -- VLJ Flying Club, working with program manager
TAG Aviation USA, has accepted the first of ten Eclipse 500 Very Light Jets scheduled for delivery to the VLJ Flying Club.
VLJ Flying Club, TAG Aviation USA and the Eclipse jet are located in booth #299-300 at EAA AirVenture Oshkosh this week.
"The delivery was on June 6, and we're excited to see the arrival of this first aircraft, which is owned by the founder of the VLJ Flying Club and fully managed by TAG," said Matthew Sheble, TAG's Program Manager for the VLJ Flying Club Program. "This proof-of-concept demonstrator gives us the opportunity to show the market not only what Eclipse does to enhance business productivity and personal travel options, but also show the advantages of the TAG managed VLJ Flying Club concept."
TAG Aviation will support the VLJ Flying Club as a sales agent for Eclipse aircraft shares and as the aircraft management company providing assistance to the Owners with their FAR Part 91 operations, including aircraft scheduling, maintenance management, accounting, reporting and standards oversight.
The next VLJ Flying Club Eclipse delivery is scheduled for late 2007. As one of the world's leading business jet management organizations, TAG Aviation is among the first to manage a VLJ. The VLJ Flying Club is a collaboration between TAG Aviation USA and aviation investor Rolf Illsley.
"The Eclipse is the first of this new generation of aircraft to lower the capital investment barrier to business jet ownership," stated Illsley. "The VLJ Flying Club's combination of shared ownership and aircraft management further lowers the barrier for the business jet user."
The VLJ Flying Club is a shared ownership program operated under FAR 91 scaled to daily, rather than hourly, travel use. Each aircraft is flown under the operational control of the Owner under FAR Part 91 by a full-time, professional, two-pilot crew. Quarter share owners will have exclusive use of their aircraft for at least fifty days each year, under an equalized access scheduling system, without restriction on daily flight hours. The simplified financial structure sets a share purchase investment, monthly fees based on share size, plus daily trip and hourly flight fees. Aircraft will be based where the Owners are located.
Sheble explained, "Our research indicates the VLJ will serve both business and recreational markets. The VLJ business traveler will be regionally- focused, needing to visit several office or plant sites in as short a time as possible, on a monthly or weekly basis. The recreational traveler might have a second home that's five hours by car, but less than an hour by jet and near one of the thousands of local airports accessible to the VLJ."
Each aircraft in the VLJ Flying Club program can support a shareholder group of up to four. Owners will self schedule, providing ownership groups with a defined scheduling system as well as personal assistance with travel management and support.
Jake Cartwright, TAG Aviation USA President and CEO, continued, "VLJ Flying Club harnesses TAG's thirty years of management experience and expertise on behalf of each Owner. We've adapted our experience and expertise to provide an integrated aircraft and travel management program in a service package tailored to VLJ capabilities and economics. The VLJ Flying Club represents not only the safest and practical VLJ shared ownership program, but a great value, as well."
In additional to Sheble, the VLJ Flying Club is supported by TAG Aviation sales, operations and client services personnel on behalf of the aircraft Owners.
TAG Aviation USA Supports VLJ Flying Club
OSHKOSH, Wis., July 23 /PRNewswire/ -- VLJ Flying Club, working with program manager
TAG Aviation USA, has accepted the first of ten Eclipse 500 Very Light Jets scheduled for delivery to the VLJ Flying Club.
VLJ Flying Club, TAG Aviation USA and the Eclipse jet are located in booth #299-300 at EAA AirVenture Oshkosh this week.
"The delivery was on June 6, and we're excited to see the arrival of this first aircraft, which is owned by the founder of the VLJ Flying Club and fully managed by TAG," said Matthew Sheble, TAG's Program Manager for the VLJ Flying Club Program. "This proof-of-concept demonstrator gives us the opportunity to show the market not only what Eclipse does to enhance business productivity and personal travel options, but also show the advantages of the TAG managed VLJ Flying Club concept."
TAG Aviation will support the VLJ Flying Club as a sales agent for Eclipse aircraft shares and as the aircraft management company providing assistance to the Owners with their FAR Part 91 operations, including aircraft scheduling, maintenance management, accounting, reporting and standards oversight.
The next VLJ Flying Club Eclipse delivery is scheduled for late 2007. As one of the world's leading business jet management organizations, TAG Aviation is among the first to manage a VLJ. The VLJ Flying Club is a collaboration between TAG Aviation USA and aviation investor Rolf Illsley.
"The Eclipse is the first of this new generation of aircraft to lower the capital investment barrier to business jet ownership," stated Illsley. "The VLJ Flying Club's combination of shared ownership and aircraft management further lowers the barrier for the business jet user."
The VLJ Flying Club is a shared ownership program operated under FAR 91 scaled to daily, rather than hourly, travel use. Each aircraft is flown under the operational control of the Owner under FAR Part 91 by a full-time, professional, two-pilot crew. Quarter share owners will have exclusive use of their aircraft for at least fifty days each year, under an equalized access scheduling system, without restriction on daily flight hours. The simplified financial structure sets a share purchase investment, monthly fees based on share size, plus daily trip and hourly flight fees. Aircraft will be based where the Owners are located.
Sheble explained, "Our research indicates the VLJ will serve both business and recreational markets. The VLJ business traveler will be regionally- focused, needing to visit several office or plant sites in as short a time as possible, on a monthly or weekly basis. The recreational traveler might have a second home that's five hours by car, but less than an hour by jet and near one of the thousands of local airports accessible to the VLJ."
Each aircraft in the VLJ Flying Club program can support a shareholder group of up to four. Owners will self schedule, providing ownership groups with a defined scheduling system as well as personal assistance with travel management and support.
Jake Cartwright, TAG Aviation USA President and CEO, continued, "VLJ Flying Club harnesses TAG's thirty years of management experience and expertise on behalf of each Owner. We've adapted our experience and expertise to provide an integrated aircraft and travel management program in a service package tailored to VLJ capabilities and economics. The VLJ Flying Club represents not only the safest and practical VLJ shared ownership program, but a great value, as well."
In additional to Sheble, the VLJ Flying Club is supported by TAG Aviation sales, operations and client services personnel on behalf of the aircraft Owners.
Sunday, July 15, 2007
Eclipse news from Vern Raburn
ECLIPSE 500 UPDATE: July 6th, 2007 Update:By CEO, Vern Raburn
Things are busy at Eclipse as we continue to accelerate our manufacturing ramp and gear up for another exciting EAA AirVenture show. As always, I look forward to seeing many of you in person in Oshkosh, and to sharing the highlights of what is sure to be a very productive summer with the rest of you in the weeks ahead.
As I reflect on the first half of this year, I think about both the significant problems and very significant progress we have made. In particular I'd like to highlight the aircraft deliveries and improvements that Eclipse Aviation has made in the second quarter of 2007. I would also like to give you an update on how we are progressing on a number of other Eclipse 500 fronts.
Aircraft Manufacturing & Deliveries Since our first aircraft delivery on December 31, 2006, our primary objective has been a ramp-up to our production goals. As I have previously discussed this process proved to be far more difficult then we estimated it to be. Following the receipt of our production certificate early in the second quarter, we have spent the past few months focusing on our successful transition into a production company.
I'd like to provide a quick snapshot of our delivery progress. In the first quarter of this year, we received certificates of airworthiness and delivered four Eclipse 500s. In the second quarter we certified 26 aircraft, bringing our total for the first half of the year to 30 aircraft, and our overall total to 31. If you review the quarterly production numbers released by GAMA (General Aviation Manufactures Association) you will see that we have only reported 17 aircraft for the second quarter. GAMA uses as a measurement point the actual sale of the aircraft, not the certification of the individual aircraft. Internally we measure the final delivery and sale of the aircraft, but from a manufacturing standpoint we consider the aircraft complete when the Certificate of Airworthiness is issued. As our processes continue to improve the difference between the two points will decrease. In fact, we expect to deliver over 20 aircraft during July.
As does any manufacturer that strives for greatness, we have established internal monthly performance targets to guide our efforts. Based on the track record of deliveries highlighted above, I am happy to report that we met our target for the last two months of the second quarter.
The ramp in production throughput is a result of the tremendous improvement we have seen in our production flow. Our new vice president of manufacturing Todd Fierro - who came to us from Ford Motor Company - was instrumental in leading significant process improvements and industrial engineering efforts. That work and more has enabled increases in both production rates and quality. In fact, we are now consistently breaking our own records for cycle times and quality.
In terms of our manufacturing staff, we continue to aggressively build our team. Our manufacturing training classes at Central New Mexico Community College (CNM) are filled to maximum capacity. We have the capability to train up to 90 people in three separate classes every 12 weeks. This increase in employees has helped us boost our production hours, and we now have night shifts throughout all manufacturing plants.
We will continue to notify customers of their expected delivery dates six months prior to delivery, and update all customers on deliveries by quarter. The delivery numbers outlined in this quarterly report will also be provided to GAMA (www.gama.aero), but I wanted you - our loyal customers - to see them first.
Pitot/AOA SystemWe completed certification flight testing on the improvements to the pitot/AOA system earlier this week. The FAA testing was conducted in a humid/rainy environment in actual Instrument Meteorological Conditions (IMC) and cold soaking at altitude. Nine of the 10 test flights were conducted after subjecting the probes to a humid mist on the ground for at least one hour. All 10 flights were successfully completed without any anomalies. We have submitted the final report to the FAA and certification will follow shortly. The AD will be revised to include the installation of the modifications as a terminating action to lift the day/VFR and two pilot restrictions. Our expectation is that we will have approval to start modifications of the aircraft very shortly. The service bulletin that will allow us to begin retrofitting the fleet is written and we have the initial ship sets of parts in stock. At this time, we anticipate the in position production line cut in will begin at aircraft 65, with earlier aircraft receiving the new pitot/AOA system before delivery.
Although I'm glad to report that this problem is behind us there are lessons to be learned. The Eclipse 500 was one of the most tested aircraft to be certified in the last 20 years. We accumulated over 3,400 hours including typical operational flights using a marketing aircraft. There was extensive and thorough FAA involvement including approval of the test plans for the airdata/pitot/AOA system that resulted in an unrestricted Type Certification of the aircraft. Yet this problem was caused by fairly unique meteorological conditions that went undetected even though we did numerous tests in Texas, Florida and even the Climate Test Chamber at Eglin Air Force Base. Perhaps the fact that we live and work in a high desert environment contributed to the problem. So the fact that the problem went undetected is not the lesson, but how we as a company have responded to the problem is.
The early Citation CJs have had well over 100 service bulletins issued to correct design and reliability issues. These included very serious issues such as runaway pitch trim that caused the loss of a CJ and generated three different ADs. The point is not that CJs are bad aircraft. They are in fact great aircraft. But virtually all newly certified aircraft have had problems inherent in the design that were not discovered in the certification testing. How the company supports those aircraft when the problem is discovered is the important issue. From the time we discovered this problem to having the fix certified will be less then 3 months. In addition, we will have the fleet retrofitted in another 60 days and I have kept all of you fully informed of the problem and progress. Thus this process is part and parcel of the growth and maturing of Eclipse Aviation. And I'm proud of the company's response to this difficult issue.
Performance ImprovementsCertification flight testing is on track to be completed this week, and we are expecting certification of the performance improvements within the next couple of weeks. The final certification date will be dependent on the FAA's approval of the AFM changes and other certification documents. We have submitted 44 of the 56 documents requiring FAA approval, and 41 of these are already FAA approved. The remaining 12 documents will be submitted in the next few days. As previously announced, the new performance numbers have been met and will be reflected in an updated AFM. The FAA is required to amend the Type Certification Data Sheet within 30 days of certification completion. A service bulletin will be issued shortly after certification and aircraft retrofitting will begin. We are still on track to cut the performance modifications into the production line at aircraft 39. In fact, aircraft 39 is currently in final assembly with all of the performance modifications incorporated.
Registration Number SizeLastly, I want to update you on the change in the size of the registration number on all Eclipse 500s. As part of our type certificate data sheet that we received on September 30th of last year, the FAA approved six-inch registration numbers via note 8 on the TCDS. However, the FAA reversed that decision and is now requiring registration numbers that are as large as practical on all Eclipse 500s. Working with the FAA we have defined a maximum sized area on the tail for the placement of the N numbers. If your N number is something like N1K then the numbers will be 12 inches in height. But if your N number is something like N777WW then the height will be closer to 9.5 inches. Our plan is to paint the larger registration number on your plane when you return for the performance modifications. Beginning with aircraft #29, all Eclipse 500s are being delivered with the larger N numbers. Sincerely,
Vern RaburnPresident and CEOJuly 10th, 2007 Update:By CEO, Vern Raburn
Business
Eclipse 500 in EuropeI want to start with a quick update on our recent travels in Europe. We essentially launched the Eclipse 500 in Europe with a three month marketing tour flying N505EA across the Atlantic in April. This aircraft went to Europe with all the performance improvement modifications and has consistently demonstrated all of our projected performance in every flight regime. This trip confirmed our expectations, there is unprecedented interest the Eclipse 500 in other parts of the world. We have now introduced N505EA to audiences in Germany, France, Switzerland, and the UK - and the response has been overwhelmingly positive. Most recently at EBACE, we announced that we have successfully closed Europe's largest VLJ aircraft order for 180 aircraft. The next stop for the Eclipse 500 is Italy before returning home to re-enter the flight test program to support Avio NG efforts. I look forward to sharing a more comprehensive review of our European tour in the coming weeks,
TrainingThe first Flight Training Device (FTD) has been certified by the FAA and we are currently planning its installation in Albuquerque to start customer training in simulators. This training will begin with the opening of our new training facility at Double Eagle II Airport which is scheduled for late July. This nearly 42,000 square-foot facility will be the first building on our campus on the West Side of Albuquerque, which will become our permanent home within the next few years.
Rightfully so, our early customers are very concerned with the wait between aircraft delivery and the start of their training - so are we! Unfortunately, we did not adequately plan our staffing levels and have thus fallen behind schedule. Frankly, the miscalculation occurred in the number of FAA employees and company pilots that have been required to obtain type ratings. The much larger number has resulted in an unplanned utilization of training slots that would have been used for customer training. There was no choice in the order of who was trained since all the FAA and company pilots needed to be trained before we could start the customer training program. In an effort to accelerate pilot training and make up for this delay, we are aggressively hiring more instructors and finding ways to increase throughput. We have recently contracted with an experienced ground school training partner (Global Jet Services, our maintenance training partner) to assist this portion of the training course. This in turn has freed up our ground school instructors to handle additional flight training. We expect that by the end of summer our capacity will be at the levels required and the backlog will be eliminated. So customers taking delivery in late summer and beyond will not see any delay between the delivery of their airplane and the start of their training.
Service & MaintenanceOur first Eclipse Service Center (ESC) outside of Albuquerque, in Gainesville, FL, recently received its FAR Part 145 certificate and will hold a grand opening ceremony on June 15th. This ESC will serve the Southeast region of the country and will be able to service up to 12 Eclipse 500 aircraft at a time. The technicians in this facility will be equipped to perform both scheduled and unscheduled Eclipse 500 maintenance, as well as work on the Pratt & Whitney Canada PW610F engines. This also marks a significant achievement for Eclipse because we have been granted FAA approval to certify all of our Part 145 repair stations through a single FAA Flight Standards District Office (FSDO) based in Albuquerque, which is unique for an airframe company. This office will be responsible for monitoring all repair station activity, including the application and certification processes for future repair stations. With our plans for service center expansion in 2007, this streamlined process will allow us to efficiently place new facilities quickly into operation. Albany, New York and Van Nuys, California are next and they are scheduled to be ready for occupancy and operational in the 3rd and 4th quarters of 2007.
I have found it very interesting that one of the common "faults" that Cessna loves to point out about Eclipse is that we will not be able to support our customers after they receive their aircraft. That led me to research the truth about Cessna's entry into service of the Citation. The facts are very revealing. The first Citation entered service in 1972. It took Cessna nearly four years before they had three Citation Service Centers operational. It was another five years before the 4th Citation Service Center came on line. Cessna required nine years and over 700 Citations delivered before they had four Citation Service Centers operational. Eclipse will have four Eclipse Service Centers operational within nine months of the entry into service of the E500. I think the facts speak for themselves as to which company is truly committed to world class customer support. Model DifferencesSome customers continue to refer to "A" and "B" models of the Eclipse. I am totally puzzled by this continued misperception. I have committed Eclipse Aviation to a path of not only continual improvement of the Eclipse 500 but to retrofitting existing Eclipse 500s to the same level as aircraft currently coming off the production line. The reason for this commitment is due in no small part to the comments I have received from you. Frankly, this is going to be a difficult strategy to follow. Not only will it be expensive for the company, especially as the installed base grows, but there will inevitably come a day when an improvement will be such that we simply cannot retrofit every aircraft in the field. But in the near term, I can assure you that there are no and will be no "A" or "B" models of the Eclipse 500. They will all be one model.
Technical
Avio NG Avio NG is progressing but continues to be slightly behind the original schedule I informed you of earlier this year. A significant milestone was reached recently when one of our flight test jets was successfully modified with Avio NG equipment and powered up for the first time. Within the next week, we will begin installing Avio NG in a second flight test aircraft, with plans to begin flight testing Avio NG in this jet later this month. Once safely home from Europe, N505EA will become the 3rd aircraft modified with AvioNG and will join the first two as part of the FAA and EASA certification test fleet. With these three planes modified as planned, the revised schedule should hold steady but recovery to the end of July target is unlikely. I'll provide you with a more accurate certification and in service date next month.
Performance ImprovementsOne of the flight test aircraft with all of the performance improvements installed recently departed for Texas to test performance at sea level in hot conditions. We anticipate certification of the modifications soon. The first production aircraft to incorporate all the performance improvement package is serial #39, which is currently in primary assembly and will be moved to final assembly later this month. We will start scheduling the retrofitting of aircraft serial #1 through #38 in July. Customer Care is the contact group for scheduling, but please do not call now as they will not be able to begin scheduling for some time. I will send out another letter specifically on this topic in early July giving specific instructions to those affected.
Pitot/AOA SystemAs we informed you in early April, the Eclipse 500 experienced three in-flight events in which pitot pressure was lost on both the left and right primary flight displays (PFDs), with the MFD still functioning with the 3rd source. We found that internal condensation was collecting and freezing in the pitot tubing due to the aircraft's departure from a highly humid environment. In testing we were able to simulate the condition by injecting steam into the lines on the ground and reproducing the failure in flight. We have completed a new design that has been submitted to the FAA for certification this month. We expect this change to be available for production and via a retrofit in July and will communicate the retrofit plan to those customers affected when ready. This modification will remove the VMC only and dual pilot limitations.
Windshield and Cockpit Side WindowsWe also informed you a few months ago about an initial fix to the fatigue cracks in the outer layer of the acrylic of the windshield and cockpit side window. Extensive coupon testing has now been conducted on the new design. While further testing is needed on the full-scaled fatigue test article, the inspection and replacement intervals have increased dramatically and the certification process on the new design will begin this month. When the new windshield and side windows are installed, the inspection interval for these windows increases from every 50 flights to a new inspection every 300 flights. We have also approved a procedure that allows the inspection to be conducted with a prism, eliminating the need for the removal of the windshield. The replacement interval has also increased from 100 flights for the windshield and 250 flights for the cockpit side windows, to 1,500 flights and 600 flights respectively. Customers that are affected by these changes and updates will be notified with an updated Aircraft Maintenance Manual revision. These retrofits will be performed at the time of scheduled replacement intervals, starting in mid-July.
Customer Technical Communications (CTC)The discussions above covering the Pitot/AOA and Windshield issues will be communicated in much technical depth through a CTC. The CTC for each item will be distributed to the customers for whom their aircraft serial number is actually affected by the problem and change. As a company policy we will not send the CTC to customers whose aircraft have the change implemented in production and are therefore not affected. However, all of our customers will continue to receive summary letters like this one, as we are committed to providing all of our customer's insight and understanding of the maturing of the Eclipse 500 aircraft and our determination to provide you with the very best product possible.
Moving forward, I will continue with the increased communication pledge I made early this year, and as we continue to move into a more predictable and repeatable pace of operations the frequency of these communications will also become more predictable. Of course, if something significant comes up in the interim, I will send out a special communication. Naturally, the celebration of an occasional significant delivery milestone will also be communicated.
As is I sit and look at the delivery hangar and production flight test ramp in front of my office every day, I see significant progress at Eclipse Aviation. We are getting better on many fronts. With our Production Certificate in hand, we are steadily increasing the production ramp and the number of aircraft delivered. Someone commented recently that the day I don't know the serial number of a new airplane taxing by my office for its' first flight will be a good day. The inference being that I will not be able to keep up with the production rate. Of course, they don't realize we'll have to be at production rate of a Toyota before that could possibly occur!
We are not where I know this company can be by any stretch but I believe that in the second half of 2007, you will also see this progress and I look forward to sharing it with each of you.
Sincerely,
Vern RaburnPresident and CEO
Things are busy at Eclipse as we continue to accelerate our manufacturing ramp and gear up for another exciting EAA AirVenture show. As always, I look forward to seeing many of you in person in Oshkosh, and to sharing the highlights of what is sure to be a very productive summer with the rest of you in the weeks ahead.
As I reflect on the first half of this year, I think about both the significant problems and very significant progress we have made. In particular I'd like to highlight the aircraft deliveries and improvements that Eclipse Aviation has made in the second quarter of 2007. I would also like to give you an update on how we are progressing on a number of other Eclipse 500 fronts.
Aircraft Manufacturing & Deliveries Since our first aircraft delivery on December 31, 2006, our primary objective has been a ramp-up to our production goals. As I have previously discussed this process proved to be far more difficult then we estimated it to be. Following the receipt of our production certificate early in the second quarter, we have spent the past few months focusing on our successful transition into a production company.
I'd like to provide a quick snapshot of our delivery progress. In the first quarter of this year, we received certificates of airworthiness and delivered four Eclipse 500s. In the second quarter we certified 26 aircraft, bringing our total for the first half of the year to 30 aircraft, and our overall total to 31. If you review the quarterly production numbers released by GAMA (General Aviation Manufactures Association) you will see that we have only reported 17 aircraft for the second quarter. GAMA uses as a measurement point the actual sale of the aircraft, not the certification of the individual aircraft. Internally we measure the final delivery and sale of the aircraft, but from a manufacturing standpoint we consider the aircraft complete when the Certificate of Airworthiness is issued. As our processes continue to improve the difference between the two points will decrease. In fact, we expect to deliver over 20 aircraft during July.
As does any manufacturer that strives for greatness, we have established internal monthly performance targets to guide our efforts. Based on the track record of deliveries highlighted above, I am happy to report that we met our target for the last two months of the second quarter.
The ramp in production throughput is a result of the tremendous improvement we have seen in our production flow. Our new vice president of manufacturing Todd Fierro - who came to us from Ford Motor Company - was instrumental in leading significant process improvements and industrial engineering efforts. That work and more has enabled increases in both production rates and quality. In fact, we are now consistently breaking our own records for cycle times and quality.
In terms of our manufacturing staff, we continue to aggressively build our team. Our manufacturing training classes at Central New Mexico Community College (CNM) are filled to maximum capacity. We have the capability to train up to 90 people in three separate classes every 12 weeks. This increase in employees has helped us boost our production hours, and we now have night shifts throughout all manufacturing plants.
We will continue to notify customers of their expected delivery dates six months prior to delivery, and update all customers on deliveries by quarter. The delivery numbers outlined in this quarterly report will also be provided to GAMA (www.gama.aero), but I wanted you - our loyal customers - to see them first.
Pitot/AOA SystemWe completed certification flight testing on the improvements to the pitot/AOA system earlier this week. The FAA testing was conducted in a humid/rainy environment in actual Instrument Meteorological Conditions (IMC) and cold soaking at altitude. Nine of the 10 test flights were conducted after subjecting the probes to a humid mist on the ground for at least one hour. All 10 flights were successfully completed without any anomalies. We have submitted the final report to the FAA and certification will follow shortly. The AD will be revised to include the installation of the modifications as a terminating action to lift the day/VFR and two pilot restrictions. Our expectation is that we will have approval to start modifications of the aircraft very shortly. The service bulletin that will allow us to begin retrofitting the fleet is written and we have the initial ship sets of parts in stock. At this time, we anticipate the in position production line cut in will begin at aircraft 65, with earlier aircraft receiving the new pitot/AOA system before delivery.
Although I'm glad to report that this problem is behind us there are lessons to be learned. The Eclipse 500 was one of the most tested aircraft to be certified in the last 20 years. We accumulated over 3,400 hours including typical operational flights using a marketing aircraft. There was extensive and thorough FAA involvement including approval of the test plans for the airdata/pitot/AOA system that resulted in an unrestricted Type Certification of the aircraft. Yet this problem was caused by fairly unique meteorological conditions that went undetected even though we did numerous tests in Texas, Florida and even the Climate Test Chamber at Eglin Air Force Base. Perhaps the fact that we live and work in a high desert environment contributed to the problem. So the fact that the problem went undetected is not the lesson, but how we as a company have responded to the problem is.
The early Citation CJs have had well over 100 service bulletins issued to correct design and reliability issues. These included very serious issues such as runaway pitch trim that caused the loss of a CJ and generated three different ADs. The point is not that CJs are bad aircraft. They are in fact great aircraft. But virtually all newly certified aircraft have had problems inherent in the design that were not discovered in the certification testing. How the company supports those aircraft when the problem is discovered is the important issue. From the time we discovered this problem to having the fix certified will be less then 3 months. In addition, we will have the fleet retrofitted in another 60 days and I have kept all of you fully informed of the problem and progress. Thus this process is part and parcel of the growth and maturing of Eclipse Aviation. And I'm proud of the company's response to this difficult issue.
Performance ImprovementsCertification flight testing is on track to be completed this week, and we are expecting certification of the performance improvements within the next couple of weeks. The final certification date will be dependent on the FAA's approval of the AFM changes and other certification documents. We have submitted 44 of the 56 documents requiring FAA approval, and 41 of these are already FAA approved. The remaining 12 documents will be submitted in the next few days. As previously announced, the new performance numbers have been met and will be reflected in an updated AFM. The FAA is required to amend the Type Certification Data Sheet within 30 days of certification completion. A service bulletin will be issued shortly after certification and aircraft retrofitting will begin. We are still on track to cut the performance modifications into the production line at aircraft 39. In fact, aircraft 39 is currently in final assembly with all of the performance modifications incorporated.
Registration Number SizeLastly, I want to update you on the change in the size of the registration number on all Eclipse 500s. As part of our type certificate data sheet that we received on September 30th of last year, the FAA approved six-inch registration numbers via note 8 on the TCDS. However, the FAA reversed that decision and is now requiring registration numbers that are as large as practical on all Eclipse 500s. Working with the FAA we have defined a maximum sized area on the tail for the placement of the N numbers. If your N number is something like N1K then the numbers will be 12 inches in height. But if your N number is something like N777WW then the height will be closer to 9.5 inches. Our plan is to paint the larger registration number on your plane when you return for the performance modifications. Beginning with aircraft #29, all Eclipse 500s are being delivered with the larger N numbers. Sincerely,
Vern RaburnPresident and CEOJuly 10th, 2007 Update:By CEO, Vern Raburn
Business
Eclipse 500 in EuropeI want to start with a quick update on our recent travels in Europe. We essentially launched the Eclipse 500 in Europe with a three month marketing tour flying N505EA across the Atlantic in April. This aircraft went to Europe with all the performance improvement modifications and has consistently demonstrated all of our projected performance in every flight regime. This trip confirmed our expectations, there is unprecedented interest the Eclipse 500 in other parts of the world. We have now introduced N505EA to audiences in Germany, France, Switzerland, and the UK - and the response has been overwhelmingly positive. Most recently at EBACE, we announced that we have successfully closed Europe's largest VLJ aircraft order for 180 aircraft. The next stop for the Eclipse 500 is Italy before returning home to re-enter the flight test program to support Avio NG efforts. I look forward to sharing a more comprehensive review of our European tour in the coming weeks,
TrainingThe first Flight Training Device (FTD) has been certified by the FAA and we are currently planning its installation in Albuquerque to start customer training in simulators. This training will begin with the opening of our new training facility at Double Eagle II Airport which is scheduled for late July. This nearly 42,000 square-foot facility will be the first building on our campus on the West Side of Albuquerque, which will become our permanent home within the next few years.
Rightfully so, our early customers are very concerned with the wait between aircraft delivery and the start of their training - so are we! Unfortunately, we did not adequately plan our staffing levels and have thus fallen behind schedule. Frankly, the miscalculation occurred in the number of FAA employees and company pilots that have been required to obtain type ratings. The much larger number has resulted in an unplanned utilization of training slots that would have been used for customer training. There was no choice in the order of who was trained since all the FAA and company pilots needed to be trained before we could start the customer training program. In an effort to accelerate pilot training and make up for this delay, we are aggressively hiring more instructors and finding ways to increase throughput. We have recently contracted with an experienced ground school training partner (Global Jet Services, our maintenance training partner) to assist this portion of the training course. This in turn has freed up our ground school instructors to handle additional flight training. We expect that by the end of summer our capacity will be at the levels required and the backlog will be eliminated. So customers taking delivery in late summer and beyond will not see any delay between the delivery of their airplane and the start of their training.
Service & MaintenanceOur first Eclipse Service Center (ESC) outside of Albuquerque, in Gainesville, FL, recently received its FAR Part 145 certificate and will hold a grand opening ceremony on June 15th. This ESC will serve the Southeast region of the country and will be able to service up to 12 Eclipse 500 aircraft at a time. The technicians in this facility will be equipped to perform both scheduled and unscheduled Eclipse 500 maintenance, as well as work on the Pratt & Whitney Canada PW610F engines. This also marks a significant achievement for Eclipse because we have been granted FAA approval to certify all of our Part 145 repair stations through a single FAA Flight Standards District Office (FSDO) based in Albuquerque, which is unique for an airframe company. This office will be responsible for monitoring all repair station activity, including the application and certification processes for future repair stations. With our plans for service center expansion in 2007, this streamlined process will allow us to efficiently place new facilities quickly into operation. Albany, New York and Van Nuys, California are next and they are scheduled to be ready for occupancy and operational in the 3rd and 4th quarters of 2007.
I have found it very interesting that one of the common "faults" that Cessna loves to point out about Eclipse is that we will not be able to support our customers after they receive their aircraft. That led me to research the truth about Cessna's entry into service of the Citation. The facts are very revealing. The first Citation entered service in 1972. It took Cessna nearly four years before they had three Citation Service Centers operational. It was another five years before the 4th Citation Service Center came on line. Cessna required nine years and over 700 Citations delivered before they had four Citation Service Centers operational. Eclipse will have four Eclipse Service Centers operational within nine months of the entry into service of the E500. I think the facts speak for themselves as to which company is truly committed to world class customer support. Model DifferencesSome customers continue to refer to "A" and "B" models of the Eclipse. I am totally puzzled by this continued misperception. I have committed Eclipse Aviation to a path of not only continual improvement of the Eclipse 500 but to retrofitting existing Eclipse 500s to the same level as aircraft currently coming off the production line. The reason for this commitment is due in no small part to the comments I have received from you. Frankly, this is going to be a difficult strategy to follow. Not only will it be expensive for the company, especially as the installed base grows, but there will inevitably come a day when an improvement will be such that we simply cannot retrofit every aircraft in the field. But in the near term, I can assure you that there are no and will be no "A" or "B" models of the Eclipse 500. They will all be one model.
Technical
Avio NG Avio NG is progressing but continues to be slightly behind the original schedule I informed you of earlier this year. A significant milestone was reached recently when one of our flight test jets was successfully modified with Avio NG equipment and powered up for the first time. Within the next week, we will begin installing Avio NG in a second flight test aircraft, with plans to begin flight testing Avio NG in this jet later this month. Once safely home from Europe, N505EA will become the 3rd aircraft modified with AvioNG and will join the first two as part of the FAA and EASA certification test fleet. With these three planes modified as planned, the revised schedule should hold steady but recovery to the end of July target is unlikely. I'll provide you with a more accurate certification and in service date next month.
Performance ImprovementsOne of the flight test aircraft with all of the performance improvements installed recently departed for Texas to test performance at sea level in hot conditions. We anticipate certification of the modifications soon. The first production aircraft to incorporate all the performance improvement package is serial #39, which is currently in primary assembly and will be moved to final assembly later this month. We will start scheduling the retrofitting of aircraft serial #1 through #38 in July. Customer Care is the contact group for scheduling, but please do not call now as they will not be able to begin scheduling for some time. I will send out another letter specifically on this topic in early July giving specific instructions to those affected.
Pitot/AOA SystemAs we informed you in early April, the Eclipse 500 experienced three in-flight events in which pitot pressure was lost on both the left and right primary flight displays (PFDs), with the MFD still functioning with the 3rd source. We found that internal condensation was collecting and freezing in the pitot tubing due to the aircraft's departure from a highly humid environment. In testing we were able to simulate the condition by injecting steam into the lines on the ground and reproducing the failure in flight. We have completed a new design that has been submitted to the FAA for certification this month. We expect this change to be available for production and via a retrofit in July and will communicate the retrofit plan to those customers affected when ready. This modification will remove the VMC only and dual pilot limitations.
Windshield and Cockpit Side WindowsWe also informed you a few months ago about an initial fix to the fatigue cracks in the outer layer of the acrylic of the windshield and cockpit side window. Extensive coupon testing has now been conducted on the new design. While further testing is needed on the full-scaled fatigue test article, the inspection and replacement intervals have increased dramatically and the certification process on the new design will begin this month. When the new windshield and side windows are installed, the inspection interval for these windows increases from every 50 flights to a new inspection every 300 flights. We have also approved a procedure that allows the inspection to be conducted with a prism, eliminating the need for the removal of the windshield. The replacement interval has also increased from 100 flights for the windshield and 250 flights for the cockpit side windows, to 1,500 flights and 600 flights respectively. Customers that are affected by these changes and updates will be notified with an updated Aircraft Maintenance Manual revision. These retrofits will be performed at the time of scheduled replacement intervals, starting in mid-July.
Customer Technical Communications (CTC)The discussions above covering the Pitot/AOA and Windshield issues will be communicated in much technical depth through a CTC. The CTC for each item will be distributed to the customers for whom their aircraft serial number is actually affected by the problem and change. As a company policy we will not send the CTC to customers whose aircraft have the change implemented in production and are therefore not affected. However, all of our customers will continue to receive summary letters like this one, as we are committed to providing all of our customer's insight and understanding of the maturing of the Eclipse 500 aircraft and our determination to provide you with the very best product possible.
Moving forward, I will continue with the increased communication pledge I made early this year, and as we continue to move into a more predictable and repeatable pace of operations the frequency of these communications will also become more predictable. Of course, if something significant comes up in the interim, I will send out a special communication. Naturally, the celebration of an occasional significant delivery milestone will also be communicated.
As is I sit and look at the delivery hangar and production flight test ramp in front of my office every day, I see significant progress at Eclipse Aviation. We are getting better on many fronts. With our Production Certificate in hand, we are steadily increasing the production ramp and the number of aircraft delivered. Someone commented recently that the day I don't know the serial number of a new airplane taxing by my office for its' first flight will be a good day. The inference being that I will not be able to keep up with the production rate. Of course, they don't realize we'll have to be at production rate of a Toyota before that could possibly occur!
We are not where I know this company can be by any stretch but I believe that in the second half of 2007, you will also see this progress and I look forward to sharing it with each of you.
Sincerely,
Vern RaburnPresident and CEO
Saturday, July 14, 2007
Another twist on the per-seat, on-demand model
An interesting podcast describing BusinessJetSeats' new service:
www.avweb.com/podcast/podcast/195568-1.html?kw=AVwebAudio
www.avweb.com/podcast/podcast/195568-1.html?kw=AVwebAudio
Eclipse Pitot tube issue
Progress on Eclipse Pitot and Production PlansEclipse Aviation has submitted a final report to the FAA detailing tests of a pitot/angle-of-attack probe fix for the Eclipse 500 VLJ and expects FAA approval shortly. An Airworthiness Directive (2007-13-11) effective June 27 limits operations to day VFR with two pilots due to a moisture freezing problem that occurred during three test flights. Ten test flights with the new pitot/AOA probe system in humid/rainy IMC and cold-soaking at altitude “were successfully completed without any anomalies,” according to Eclipse. The service bulletin for the upgrade is already written and parts are in stock. Flight testing of the performance improvements, including larger tip tanks and aerodynamic and engine modifications, is complete and certification should take place “within the next couple of weeks.” Plans remain on track to incorporate the mods beginning with S/N 39, which is in final assembly and has already received the upgrades. Eclipse delivered 26 jets during the second quarter and expects to deliver 20 this month
Thursday, July 12, 2007
Monday, July 2, 2007
Quality supplemental lift is getting harder to find
According to today's Business Aviation, "quality supplemental charter lift is becoming harder to find for fractional providers and established charter operators because of rising calls for on-demand flights from customers trying to avoid airline travel and higher utilization from airplane owners who have their airplanes on a management company's certificate".
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