Production and deliveries challenge jet OEM start-ups

 - March 28, 2007, 8:02 AM

Given their current predicaments, Eclipse Aviation and Sino Swearingen share some similarities. Both start-up OEMs have found the money and overcome the adversity to earn type certificates for their jets despite major setbacks and industry naysayers. At press time Sino had delivered just one airplane (17 months after type certification), Eclipse had just delivered its second (nearly six months after type certification) and neither company had the full FAA production certificate that it needs to crank up assembly and delivery. Furthermore, neither company would elaborate to AIN on exactly why there is still no production certificate and why airplanes aren’t flowing out the door and into buyers’ hands.

Eclipse made headlines last month for splits with two key partners: Avidyne, supplier of the Eclipse 500’s highly integrated and much touted Avio avionics/FMS/radios system (see article on page 64); and United Airlines, announced as Eclipse’s pilot training provider in November 2004. It was shades of Williams again (from which Eclipse split in November 2002 over concerns about the original EJ22 engines), only this time much deeper into the project. The resignation of Eclipse’s CFO late last year prompted founder and CEO Vern Raburn to emphasize in a letter to customers that the departure of 62-year-old Peter Reed after seven years with the company was “in no way whatsoever related to the health of Eclipse Aviation.”

Eclipse insisted last month that the split with Avidyne would affect neither production nor the delivery schedule, a degree of optimism met with skepticism by industry observers.

The company’s production schedule as of last month called for delivery of 12 aircraft in the first quarter (that is, by the end of last month), 59 in the second quarter, 120 in the third quarter and 211 in the fourth quarter, for a projected total output of 402 aircraft this year. Last month Eclipse told AIN that 60-percent progress payments were now due on airplanes through S/N 191. Under the terms of the purchase agreement, this progress payment is due six months before delivery.

To sweeten the proposition, Eclipse pledged various levels of compensation for delays beyond the current delivery schedule, ranging from simple interest payments and a waiver of CPI-W price adjustments to a discount on JetComplete support, free jet fuel during training in the customer’s airplane and a free additional pilot type rating.

Raburn said in a letter to customers last month that “our production issues relate to the manufacturing process, and are not founded in Eclipse 500 design flaws. At their core, these are issues with internal processes and staffing, although parts shortages and quality problems have absolutely contributed to the delay.” 

There was speculation last month that Pratt & Whitney Canada was not under contract to provide enough PW610Fs to power this year’s Eclipse production projections, but the Canadian company told AIN that it is “pacing with the customer and is able to deliver up to 1,000 PW610/615s in calendar year 2007.” (The PW615F powers the Cessna Citation Mustang, the first fully certified VLJ, and Cessna plans to deliver 40 this year.)

In light of the recently released Bush Administration plan for funding the FAA (see page one), one seasoned player in business aviation suggested to AIN that perhaps Administrator Blakey’s appearance at EAA AirVenture Oshkosh last summer to hand Raburn an ill-defined provisional type certification for the first VLJ was setting the stage for the dire predictions of clogged airports and airways that the agency is using to justify its now public position on user fees and tax increases. Also, Raburn testified before the Senate Committee on Commerce, Science and Transportation aviation subcommittee last September 28: “Eclipse Aviation has successfully designed, developed, certified and is now manufacturing and delivering the world’s first VLJ, the Eclipse 500.” The first Eclipse 500 was delivered three months later, on December 31.