Eclipse Begins Production of Model 550 VLJ
Sales professionals from more than 30 countries who attended the first International Eclipse Dealer and Sales Conference on May 31 may have noticed a not-so-subtle change to the buildings that house Eclipse Aerospace at the Albuquerque, N.M. International Sunport. Before the meeting, Eclipse CEO Mason Holland arranged for bucket loads of blue paint to be delivered to the company’s facilities, and painters quickly erased the bright orange that had been the hallmark of the old Eclipse Aviation and dabbed on the blue that is the color of Eclipse Aerospace. The rest of the company had already been converted, including employee shirts, podiums, brochures and anything else that smacked of the orange from the first iteration of Eclipse.
The dealer meeting held more surprises, as Holland had kept silent about an event for the assembled salespeople: the mating of the forward keel to the fuselage of Eclipse 550 Serial Number 1001, which will be delivered to a customer next year. “We’re in production with the new 550. It’s all eyes forward now,” Holland said.
The resumption of production of the twin-engine Eclipse very light jet is a significant step for the company that was formed to buy the assets of shuttered Eclipse Aviation, which filed Chapter 7 (liquidation) bankruptcy in February 2009. In August that year, Holland, an Eclipse 500 deposit holder who lost his money in the bankruptcy, and Michael Press, an Eclipse 500 owner and broker, won the bidding for the company, paying $40 million ($20 million in cash and $20 million in notes) for Eclipse Aviation’s assets. They renamed the company Eclipse Aerospace and announced intentions of supporting the 261 Eclipse 500s that were built and plans to explore resuming production.
The official announcement of production plans came at the 2011 NBAA Convention, where Holland and Press, executive v-p, said that Eclipse Aerospace would resume production of the new Eclipse 550, beginning in 2013. The $2.695 million (2011 $) Eclipse 550 has the same airframe and Pratt & Whitney Canada PW610F engines as the 500, with the Innovative Solutions & Support Avio IFMS avionics suite and new capabilities such as synthetic vision, enhanced vision, autothrottles, ADS-B out and Tcas.
Eclipse Aerospace plans to build the first 550s in Albuquerque, but next year it will shift manufacture of the airframe (fuselage, wings and empennage) to PZL Mielec in Poland. PZL is owned by United Technologies, parent company of Sikorsky, which in 2010 took a majority position in Eclipse Aerospace. United Technologies also owns engine manufacturer Pratt & Whitney Canada.
Many components needed to build the first 550s are already in stock in Albuquerque, having been included in the asset sale, including entire fuselages, wings and empennages. “The ones we don’t have, we’ll build,” said Holland. While Eclipse did manufacture fuselages in-house, using two gigantic friction-stir welding gantries to stitch together skin panels, the empennage was made by Hampson in Grand Prairie, Texas, and the wings by Fuji in Japan. Holland explained that Eclipse Aerospace and Fuji are “working cooperatively in transitioning the tools from Fuji back to [Eclipse],” and that Eclipse is buying some “stock Eclipse product from Fuji as part of the agreement.”
Tooling and equipment will be shipped to PZL as airframe manufacturing transitions to the facilities in Poland. Holland said that one of the friction-stir welding gantries will be disassembled and shipped to PZL while the other will remain in Albuquerque as a backup. “It will take months to disassemble one, put it on a ship, get it over there and reassembled and recertify it,” he said. “That’s a whole separate project that we’re launching.” Components manufactured by PZL will be shipped back to Albuquerque, the location for final assembly of the Eclipse 550.
Although United Technologies CFO Greg Hayes said during an April 24 earnings call that the company planned no further investments in Eclipse, this relates to investing direct capital in Eclipse Aerospace, according to Holland.
“PZL Mielec is simply acting as a supplier to Eclipse,” a Sikorsky spokesman told AIN. “We do not plan any further investment in Eclipse.”
“It is obvious that UTC will invest in Eclipse by way of the PZL contract and provide engines to Eclipse via P&WC,” Holland explained. “Both of these commitments require capital. In addition, Sikorsky is the largest shareholder of Eclipse Aerospace and as such will continue to support its investment as any prudent strategic shareholder would.”
Holland expects the initial production rate to ramp up to 50 to 60 Eclipse 550s a year, in 2014. The Eclipse and PZL facilities can handle a rate of 120 per year. “I’m profitable at 50 a year,” he said. “And I do a lot better at 120 a year. But 50 is our base build. And we’ve proved a case that at 50 per year we’ve got good, sustainable production.” The first Eclipse 550 should come off the assembly line about a year from now.
While the original Eclipse touted thousands of sales of Eclipse 500s and built 261 (1,400 were on order for the ambitious DayJet air-taxi operation), Eclipse Aerospace is treading more carefully. “We’re not crazy,” Holland said. “The market sucks. We’re not going to build a bunch of whitetails. We see a market for this regardless of the condition of the economy. We’re building into demand, whereas a lot of other companies are shrinking because they’re not seeing the demand so they’re still laying people off. We have to be careful that we don’t hire too fast, so that we’re throttling the experience and we’re building that airplane in the proper time frame to meet the production curve we want to hit. It’s a bit more of an art than a science. I think all of us thought 2012 would be a robust recovery year. It’s slower than everybody expected. The forecast is still good for 2014 through 2020.”
The Eclipse 550, Holland said, “is the only certified sub-$3 million twin-engine jet in the world today, and it’s probably the last one in the world that you’ll ever see because you just can’t build it any [less expensively] than the way we’re doing it. We’re a production company now. That’s magic. We’re excited about that.”
To generate similar excitement among potential Eclipse owners and pilots, Eclipse has been touring the U.S. with a refurbished Total Eclipse, featuring all the latest upgrades. “We’ve given more than 130 demonstration rides since January,” Holland said. “People are excited about it. No one has gotten out without absolutely loving it. Having your butt in the seat is powerful. Seventy percent of all flights in GA in the U.S. are 750 nautical miles or less with three or fewer passengers. And that is the market we go for. We say, own what you need for that 70 percent and charter what you need for that 30 percent. I think we have a compelling story.”