The fat is the fire in Albuquerque. Flush with a fresh cash infusion little more than a month ago, company founder, CEO and president Vern Raburn now is looking at a 90 day window during which Eclipse must ramp up production from a few units per month to one aircraft per day in order to stabilize the firm’s cash flows.
Production rates have been hampered by several setbacks, slowing output to a crawl when it should have been pushing 30 to 45 aircraft per month by now. Company resources continue to drain with little income from aircraft deliveries.
In addition, a much needed drag reduction modification kit that will enable the aircraft to reach its promised 370 KTAS cruise speed is 90 days overdue. It’s now slated for certification at the end of July, in time to be installed on serial number 39 and subsequent aircraft. And Avio NG, a critical avionics upgrade that will provide weather radar functionality, an optional third AHRS interface and FMS hosting, has slid from mid July to the end of October. Company insiders say they expect production rates to hiccup during the switchover from Avio to Avio NG at about serial number 140, an assertion that Raburn strongly denies. He claims that virtually all provisions for the new avionics kit already are installed in the aircraft.
Raburn better be right. Eclipse shareholders are growing increasingly impatient with the pace of production and continuing negative cash flows. But, once production rates reach 40 to 45 units per month, revenues increase, component prices go down and large inventories of parts in Eclipse’s warehouse in Albuquerque should shrink – more in line with Raburn’s vision of high-rate production efficiencies and lean manufacturing practices. He believes he can do that by the fourth quarter,
But, even if Eclipse reaches a 40 unit production rate by the end of 2007 and 45 units per month by early 2008, it still has plenty of IOUs to customers. Flight Into Known Icing certification awaits natural icing conditions late this year or during winter 2008. FMS functionality won’t be available until first quarter 2008, so operators are stuck on airways while they manually tune VOR radios. Eclipse must swap the current GPS sensor for a WAAS capable receiver so that pilots will be able to fly LPV / LNAV / VNAV WAAS approaches. And an XM satellite radio weather capability must be added, among other promised features.
Can Raburn pull Eclipse out of its nose dive? If all goes according to the new schedule, the firm is well positioned to make aviation history. But, Eclipse, like many other general aviation firms, has missed most of its major deadlines in the past, so there’s no precedent to give stockholders faith in the new schedule. By the end of 2007, Eclipse’s fate may be decided for better or for worse.
It wouldn’t be wise, though, to bet against Raburn. Several of his key managers say the worst crises are behind the company. And a few key shareholders, known for their benevolence toward Raburn and Eclipse, aren’t about to let the company crash after it’s flown so far into uncharted territory, creating a whole new class of affordable turbofan aircraft. So, its' far from certain that the latest cash infusion will tide over Eclipse while it ramps up production rates. But, that's not likely to derail the program.
