Can Eclipse fly a second time?
When Eclipse Aviation went bust, Mason Holland was left with a position on an aircraft that would never be made. Instead of waving goodbye to his deposit, he bought the company. Now with the backing of Sikorsky Aircraft, the CEO of Eclipse Aerospace says customers making deposits won’t have to take such measures.
When Eclipse Aviation filed for Chapter 11 bankruptcy in
2008, Mason Holland was one of the unlucky few who had placed a deposit for an
Eclipse 500 he would likely never see.
“Deposit holders were working out what they were going to
do, and new owners were working out who they were going to sue,” he says.
Like many, Holland called the man who had sold him the
position on his non-existent aircraft, Mike Press. But instead of threatening a
lawsuit, he offered him a business proposition.
The pair formed a new company, Eclipse Aerospace, and
acquired the assets of Eclipse Aviation for $40 million in an August 2009
auction. Theirs was the only bid.
Now Eclipse Aerospace is planning a new aircraft, the
Eclipse 550, and has been taking orders since the National Business Aviation
Association (NBAA) convention held in Las Vegas in October. The aircraft is
scheduled to enter service in 2013.
“We’re very happy,” says Holland, “we’re seeing a pretty
good flow of orders every week.”
Until now the business had two operations. Its first job was
to provide service and support for the 260 Eclipse 500s already flying. The
second was the Total Eclipse, an upgrade
package available to existing owners.
“We put in new avionics, a new interior and a new paint job,
and give customers a like-new, fully warrantied aircraft,” says Holland.
The production of a new aircraft is a real step forward for
Eclipse, whose name will forever be associated with one of the worst financial
failures in the history of business aviation.
Eclipse Aviation once employed 1,800 people, and had around
2,500 orders for its Eclipse 500. It planned to revolutionise the industry by
selling its light jet for less than $800,000, a price based on a wholly unrealistic
production rate of 1,000 jets per year.
Its biggest customer was DayJet, the air taxi operator that
having taken delivery of 28 of its reported 1,400 orders, filed for
administration a few weeks before Eclipse Aviation itself went bankrupt.
Holland says a new production aircraft was always the
ultimate goal of Eclipse Aerospace, and this was given a significant boost in
February with the completion of a minority equity investment by helicopter manufacturer
“We were shopping around for a partner that could build
airplanes and had a deep supply chain,” says Holland.
That supply chain will be critical to the Eclipse 550. Much
of its production will take place at a Sikorsky facility in Poland, while
Eclipse Aerospace will carry out final assembly at its Albuquerque site in New
Sikorsky is a subsidiary of United Technologies, which is
also parent company to Pratt & Whitney, the manufacturer of the Eclipse 550’s
PW610F turbofan engines, which also power the Eclipse 500. The majority of
Eclipse 500s were financed by United Technologies’ finance arm, including the
fleet operated by DayJet.
Holland is bullish about the market for his new aircraft.
“We can hit the margins we want by producing 50 aircraft per
year, but we have the capacity for 100 per year,” he says. “Do I see demand of
200 or 300 per year happening? No. But 50 to 100 per year, absolutely.”
“The whole industry sees the market getting stronger in the
next 10 years. In 2009 people were saying things would be better by the end of this
year or early 2012. I thought it would take longer than that, we should see an
uptick next year, but the real recovery should come in 2013 and 2014, which is
why we’ve decided to start production in 2013.”
Holland also sees a US market that is suited to the very
light jet. “In the USA 70% of business aviation flights are shorter than 750
nautical miles and the average journey has fewer than three passengers.” In a
cost-sensitive market, he argues, private jet users have realised that there is
no need to take anything bigger.
And Eclipse Aerospace’s CEO believes the new 550 is well
positioned to take advantage. “The 550 is the only single or twin-engine jet in
the market for under $3m, so we have an acquisition cost advantage. But we also
have an operating cost advantage – we have the most efficient jet in the
market, 35% more fuel efficient than a Citation Mustang.”
Holland says that he is confident that a smaller
manufacturer, backed by a major aerospace company, will be successful. And that
customer’s deposits will be safe.