In the works:Peering Into The Crystal Ball

 - February 6, 2007, 3:50 AM

The stock market is on the upswing, initial public offerings were up this year for the first time since 2000 and the business aviation industry is recovering, but finding investment capital continues to be the biggest obstacle for companies hoping to bring new turbine business airplanes to the market. And for good reason–the last start-up company to build, certify and deliver a business jet was Learjet in 1964.

Investors still seem skittish about plunking money down on speculative turbofan aircraft projects proposed by start-up companies, with the notable exception of Eclipse. The main reason that investors typically avoid the airplane manufacturing industry is because aircraft development programs require long-term commitments with returns on investment possible only after years of waiting–if ever.

However, this has not stopped some wealthy entrepreneurs from using their fortunes to form their own company and launch a turboprop single or very light jet (VLJ)–or even both in the case of Epic Aircraft parent company Aircraft Investor Resources.

Once a year, the editors of AIN try to predict the outcome of the current programs for entry-level business jets and turboprop business/ utility airplanes. We look at the progress of the program versus the promises given, the aircraft design and projected performance and the financial status of the company before we make an unbiased “guesstimate.” Obviously, we allow some leeway for technical or financial snags, as well as other outside forces that could affect a program.

It should be noted that these predictions equate to taking a snapshot of the current situation, since a change in program funding or progress would certainly alter the outlook, either positively or negatively. As a result, we strongly discourage potential investors from using this forecast to decide whether to invest in any of the companies listed.

There are two new aircraft–the Excel-Jet Sport-Jet and the Tam-Air Epic Jet, which are both VLJs–listed on the crystal-ball chart itself (see right). While it’s too soon to tell the long-term prospects of these two VLJs, we’ve given first flight of both a greater than 50-percent chance. Excel-Jet plans to roll out and fly its jet this month, and the Epic Jet shares about 80-percent commonality with the Epic LT turboprop single, which first flew in July as originally promised.

And four aircraft–the Aerocourier, Archedyne NauticAir 450, MaverickJets Leader and Chichester-Miles Leopard Six–have been removed and added to the “On the Shelf”
list (see box). Putting an aircraft “on the shelf” means only that the company is not currently working on the design. If this status reverses, the aircraft will again be added to the In The Works roster.

Very few of the ratings have changed since last year, though most of those that did were for the worse (rating upgrades or downgrades are depicted on the chart with an up or down arrow, respectively). The most notable change in ratings is with the Safire Jet, which was downgraded to a less than 25-percent chance of success because the company ran out of funding, subsequently shut down in June and was evicted from its facility in September. Safire president Camilo Salomon still claims his company is close to a funding deal (he has said this repeatedly since June), though it seems that a more likely outcome would be transfer of the company’s intellectual assets to another firm, either through sale or bankruptcy.

Likewise, we’ve downgraded the Explorer 500T/500P/750T to the same status, due to the company’s perpetual hunt for funding. If there’s no further progress over the next 12 months, we’ll probably relegate this turboprop single program to “On the Shelf” status next year.

The slight downgrades for both the Diamond D-Jet and Sino Swearingen SJ30-2 were given because of program delays. This summer Diamond postponed the D-Jet’s first flight by one year to October next year, prompting us to be more cautious about whether even the revised date is firm.

And while we believe the SJ30-2 will have a market niche if it earns certification, the company continues to delay the certification date for a program whose roots can be traced to the mid-1980s. Earlier this year certification was slated by year-end 2004, but now the date has been pushed out to late next year. Further, the program has been marred by an accident last year involving one of its test airplanes. The SJ30-2 program is at least five years overdue, and the question now is how long buyers will wait before they take their business elsewhere.

We considered downgrading the Avocet ProJet due to the company’s failure to secure a design and production contract with partner Israel Aircraft Industries late last year as promised, but IAI general manager of new programs Ofer Shifris convinced AIN that his company is committed to the twinjet program. He said the two companies are making progress on their agreement, which includes securing a third partner for aircraft assembly and product support. An announcement will be made in the next couple of months, according to Shifris. So, for now, the even-money rating stands unchanged from last year.

The two ratings upgrades went to one company–Grob. The company’s G140TP turboprop single is expected to gain certification this month, prompting us to give the higher rating for certification and production.

Likewise, its G160 turboprop single has flown, giving more fuel for it to gain certification. Despite the higher ratings in the certification and production category, we’ve retained the 50-50 chance that either aircraft will enjoy long-term success, defined as having 100 aircraft produced and the airplane model still in production in 10 years.

Not surprisingly, the only aircraft on the chart to have a 75-percent or greater chance across the board are the Cessna Mustang and Eclipse 500 VLJs. Cessna would actually get a 100-percent chance of success if we had the rating, since the company consistently delivers on its promises. Eclipse also gets the high rating due to its securing the necessary funding and holding orders for 1,400 Model 500s, in addition to options for about 700 more. Further, we believe that the company has adequately addressed the pilot training and insurance issues that could impede other VLJ programs.