Adam buyer focuses on A700 jet
Now that AAI Acquisition has purchased the assets of bankrupt Adam Aircraft, the number-two priority is to finish the FAA certification process for the A700 very light jet, according to Jan D’Angelo, the former director of international and fleet sales for the aircraft manufacturer. D’Angelo is part of a group of former Adam Aircraft employees that joined with Russia’s Industrial Investors to form AAI Acquisition and buy Adam Aircraft. The number-one priority, D’Angelo said, “is safety and regulatory compliance. That never changes.”
When D’Angelo and his colleagues entered the Adam facilities at Centennial Airport in Englewood, Colo., after the April 15 purchase was finalized, everything was dusty, he said. “It’s been idle for two months. It will take some time to get things in order.” AAI Acquisition paid $10 million, in addition to funds to secure leases on the Adam properties at Centennial Airport.
AAI isn’t taking on Adam’s facilities in Ogden, Utah, and Pueblo, Colo. The Ogden location closed before Adam Aircraft filed Chapter 7 bankruptcy on February 15, and Pueblo was down to two employees. D’Angelo said that AAI had to move truckloads of equipment from Ogden to Englewood and do a lot of cleanup work and preparation to restart the A700 program. On May 1, AAI planned to begin hiring full-time employees, and the workforce is expected to grow to a peak level of 300, down from 800 before Adam Aircraft ran into difficulties raising money late last year.
Details about the new company, its name and who will be CEO were not yet released by the time this issue went to press. To restart the A700 program, D’Angelo said, the new company will need to reapply to the FAA for the A700 type certificate. AAI consulted with the FAA during the due diligence process and the agency said the company would have to start over, but that certification should occur on a timely basis if AAI is able to pull together some of the original team members using the same facilities and processes as before.
AAI’s goal is to achieve certification of the A700 by the end of next year, and it also plans to try to obtain production certification shortly thereafter so that deliveries will not be delayed. “I know it’s going to be tough,” said D’Angelo. “But if you want something to hang your career hat on at the end of the day, [like] getting it certified by the end of 2009, everybody would be incredibly proud of that accomplishment.”
D’Angelo has been in close contact with all the Adam Aircraft deposit holders. While AAI’s purchase of Adam Aircraft’s assets nullified all of those purchase agreements and provided no refunds of deposits, D’Angelo wants to work with those buyers to try and secure new orders. “I told everybody that’s going to work best. Once we’re successful, we recognize the position you’re in, and we’ll try to find ways to move forward.” It would be much less expensive to make it attractive for the former buyers to place new orders than trying to secure completely new orders, he reasoned.
D’Angelo met Industrial Investors managing director Eugene Andratchnikov when he was working on a sale to the Moscow-based company. Adam Aircraft founder Rick Adam and D’Angelo gave Andratchnikov and Industrial Investors president Sergei Generalov a factory tour last summer, just before Adam resigned from the company in August. When Adam Aircraft went bankrupt, D’Angelo had been working on a request for proposal from Industrial Investors for an A700 fleet purchase.
It’s too early to say what will happen to the FAA-certified twin-engine, piston-powered A500, said D’Angelo. Only about half a dozen A500s were delivered to customers, and most need some additional work to make them fully functional. The A500 received an FAA production certificate, but that will not transfer to the new company, according to D’Angelo, and if the A500 goes back into production, AAI will have to reapply for production certification. AAI does now own the A500 type certificate. “We’re going to have to do a trade study,” said D’Angelo, “to see where we’re going with that program.” Meanwhile, he concluded, “everybody is pretty excited about going back to work and putting this together.”