Eclipse Aviation officials have announced it is reducing its workforce by 38 percent in "an effort to achieve financial stability as soon as possible." Eclipse Aviation employees at Albuquerque, N.M.; Gainesville, Fla. and Albany, N.Y. facilities are affected. The move comes just two weeks after Eclipse announced layoffs of 200 employees, most of whom were temporary production line workers. Total employment now stands at 1,100, compared with 2,000 earlier this year.

"I am confident this action will set the company on the path to profitability so that we can continue to lead the very light jet category," CEO Roel Pieper said.

Next Monday and Tuesday, Eclipse top management plans to hold meetings with 130 top employees to discuss future plans for the business. Tuesday and Wednesday, it will meet with vendors to work out terms and conditions of pared-down supply contracts for the remainder of 2008 and possibly longer. Vendors who plan to do business with Eclipse face a substantial reduction in parts procurement rates as the firm slows down aircraft production to approximately one aircraft per week through the end of the year. Notably, Eclipse has been developing potential second sources for procurement of some key parts, a strategy that would allow the firm to replace some legacy problem vendors, sources close to the company told the Aviation Week Intelligence Network.

The production slowdown will delay deliveries of new Eclipse 500 aircraft equipped with all post-certification IOUs resolved, including flight into known icing [FIKI] certification and fitting the aircraft with dual Garmin GPS 400W navigation systems, among other upgrades. Terms and availability of FIKI and GPS400W retrofit kits, plus Avio NG and aero performance improvement package upgrades for older aircraft, are being reviewed.

Next Thursday, Eclipse plans to contact customers regarding company restructuring, further delays in delivery dates and additional options for installing avionics and aero modification upgrades. Eclipse, for instance, may allow customers, at their own expense, to take their aircraft to third-party authorized service centers for installation of upgrades and then seek reimbursement from the company at a later date.

In the coming weeks, Eclipse's layoffs and its continuing financial woes could affect customer confidence. Eclipse announced a $450,000 price increase in late May 2008, but the firm gave customers a 90-day window during which they could cancel their contracts and request refunds. Friday's announcement of 650 people being laid off and next week's expected key employee and vendor summit meetings may cause some customers to consider cancelling their orders. The potential cash-flow drain associated with refunding some customer deposits could further strain company finances.

Photo of DayJet Eclipse 500: DayJet