Words of Advice:

"We have it totally under control. It's one person coming from China. It's going to be just fine." -- Donald Trump, 1/22/2020

“We will not see diseases like the coronavirus come here..and isn't it refreshing when contrasting it with the awful presidency of President Obama."
-- Trump Press Secretary Kayleigh McEnany, 2/25/20

"I don't take responsibility for anything." --Donald Trump, 3/13/20

"If Something Seems To Be Too Good To Be True, It's Best To Shoot It, Just In Case." -- Fiona Glenanne

"Flying the Airplane is More Important than Radioing Your Plight to a Person on the Ground Who is Incapable of Understanding or Doing Anything About It." -- Unknown

"There seems to be almost no problem that Congress cannot, by diligent efforts and careful legislative drafting, make ten times worse." -- Me

"What the hell is an `Aluminum Falcon'?" -- Emperor Palpatine

"Eck!" -- George the Cat

Wednesday, November 28, 2007

Eclipse Jet- Spiralling In?

Eclipse Aviation is offering significant discounts to customers who can give them a cash infusion right now.

It seems they need cash badly, which is not a great sign. If you are an Eclipse customer and you agree to pony up an additional $625K now, you may ultimately save a few hundred grand on the delivery price. Of course, if Eclipse later craters, you get to stand in line with all of the other creditors and collect your pennies on the dollar.

Some of these VLJ makers, as well as a lot of the LSA makers, are going to crater big-time. This happens quite frequently in aviation at all levels of the game. There that old saying "if you want to make a small fortune in aviation, first start with a large fortune" for a reason.


BadTux said...

Let me get this straight. Their problem is that they have plenty of customers for their $1.5 million jet, to the point where they have a years-long waiting list, but cannot afford to ramp up production beyond 3 jets every two months to meet the demand due to lack of cash? Something doesn't ring right here... for example, it is usual and expected for companies to take out loans backed by parts inventory while in the process of building an expensive item (the parts are "in inventory" until the item is actually delivered to a customer). So parts should not be a cashflow issue if they were managing cashflow correctly. Workforce... well, getting qualified workers is always an issue. As is getting a building big enough to build these things. But still, sounds like some sketchy cashflow management going on there...

- Badtux the Suspicious Penguin

Comrade Misfit said...

Well, you have to understand that Eclipse is run by ex-Microsoft guys. You know, "MicroSoft, Home of Vaporware."

Problem they have is that Eclipse isn't Microsoft and now they are up against Cessna, which has several decades' worth of experience in making and delivering airplanes. If Cessna thinks they have to charge close to a million more to deliver a very similarly sized airplane than Eclipse, then my gut feeling is that Eclipse is fooling themselves and their customers.

BadTux said...

Well, indeed, the solution to waiting lists is to increase your prices until you don't have one anymore. Which would also solve their cashflow issues, I suspect :-}.

I'm not sure that Cessna is a good comparison here. Cessna is sort of like Mooney, in that they trade on their name to get a higher price for their aircraft than might otherwise be justified. Still, you're correct, it's probably not JUST the name that has their similar-sized jet so much more expensive...