Eclipse Aviation is dead, long live Eclipse Aviation.  The assets of the bankrupt company will go to the highest bidder, probably ETIRC Aviation the major shareholder.  The company will be sold through competitive auction to be finalized in January 2009.  ETIRC has placed the highest bid to date.   “In the face of unprecedented economic challenges, it is clear that the sale of the Eclipse business through the Chapter 11 process is the right course of action to maximize the value of the business, secure its future and protect the best interests of Eclipse’s stakeholders, including customers, suppliers, employees and creditors,” said Roel Pieper, CEO of Eclipse Aviation. “The successful sale will position the business for aggressive global expansion, allowing the company to fulfill its promise and solidify its position as the world’s leading manufacturer of VLJs.”  

     Eclipse Aviation raised the price of their aircraft to $2.15 million in June 2008 because they were unable to produce the aircraft in the volume their business model required.  In its next life Eclipse may again aim for a lower price tag.  If the buyer of Eclipse’s assets is able to purchase the machining, plans and rights for a very low price I’d expect that they will be able to produce the airplane for less.  Perhaps much less because they also have turned their customers into “unsecured creditors.”     It seems that Roel Pieper’s plan is to continue with production and attempt to sell the Eclipse 500 aggressively in Europe.    The company was given enough financing to continue operations throughout the sale period.

 

     Any guesses for how many Eclipse 500 aircraft will be produced in 2009?  Enter your best guess about how many of these little jets will be produced worldwide in 2009 and the winner will receive a digital copy of an original ME-262 operator’s manual signed by my father-in-law Erich Wuensch, WWII German fighter pilot.  As an added bonus Herr Dr. Dr. Wuensch will discuss with you some of his flying tales over the telephone, in English, German or Czech.   Entries must be submitted by the end of January 2009.  Just leave a comment to this blog with your guess.  He has some cool stories.

 

     With the recent loss of much personal wealth in the world the demand for air taxi services has been reduced but as the economy recovers the need for air taxi travel will grow again.  In the mean time there are still 20,000 private jet and turboprop aircraft in the US alone that still need gainful employment.  Business people still need to get to meetings and airline travel is becoming slower and more aggravating.   Driving still takes a long time.   Existing Air Taxi operators are looking for paying passengers and they are doing everything they can to get your business.

 Find your next flight on Taxijet.com.

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Press Release issued by Eclipse Aviation today:

Today, Eclipse Aviation started a new era in its relatively short existence. Eclipse filed for protection in a Delaware court under Chapter 11 of the U. S. Bankruptcy Code. The company is using Section 363 of the U.S. code to sell its assets and a lead bidder, an affiliate of ETIRC Aviation, has filed an offer to purchase the business out of reorganization. As part of this filing, there is sufficient debtor-in-possession (DIP) financing to allow the company to operate until the sale is finalized in January 2009. The process allows for the current company operating under protection to continue the manufacture and support of the Eclipse 500.

While this is an extraordinarily difficult thing to face, it was the best possible choice before the Board of Directors, the senior lenders and the executive management team.

The implications of this action are many and certainly complicated for everyone involved. While we have modeled many different scenarios, at this time, until the sale is finalized, the old company cannot disclose the final plans for things like production, suppliers and deliveries in 2008 and 2009.

This letter will attempt to outline the immediate scenarios for each constituency amongst the customer groups.

Customers who have taken delivery of their aircraft:
During the sale process, the new company intends to operate as a going concern to support the Continued Airworthiness of the fleet. However, there is a different path of interaction between customers and the company operating in reorganization.

Warranty - Warranties are no longer covered by the new company, post petition. Any and all maintenance work performed on aircraft will be on a time and materials basis during debtor-in-possession operations. The new company must decide if it will honor any part of past warranties. Any outstanding warranty claims submitted pre-petition will not be honored by Eclipse or the new company.

If your aircraft is currently in an Eclipse service center for maintenance, the new company will continue to work on it and return it to service, on a time and materials payment basis.

JetComplete^® - JetComplete contract obligations are no longer being honored in this phase. It is too early to tell if a new aftermarket product will be offered by the new company. This means that Jeppessen and XM services (for the Garmin 496) will no longer be offered and paid by Eclipse on your behalf once your current subscriptions expire. Iridium services will be maintained by the new company for DSU purposes. Customers will be able to go directly to Jeppesen for service coverage so they are not grounded by out of date databases.

Pratt & Whitney Canada - Those with engine coverage as part of JetComplete will no longer have coverage through JetComplete or PWC under JetComplete. Please contact PWC for coverage in the Eagle Service Plan (ESP).

Spare parts - Debtor-in-possession financing will allow for spare parts to be supplied for continued airworthiness, providing the supplier is willing to continue providing parts to Eclipse while in reorganization. In the event a supplier is not willing to supply parts, the new company will be forced to find an alternate source.

Eclipse service centers - All Eclipse service centers will continue to operate while in debtor-in-possession for service, maintenance events and continued airworthiness.

Authorized service centers - At this time, Eclipse Aviation does not have any authorized service centers although a new service model could be implemented by the new company.

Post Delivery Commitments including modifications - Modification plans at the expense of Eclipse will not be honored in this phase of operations. Eclipse intends to sell services and/or the parts kits to all customers who request to have the final configuration installed on their aircraft. The new company will determine how to provide these mod services to the customer base after the sale.

The third party service centers that were intended to perform these mods will be given every chance to fulfill that opportunity for the new company and the Eclipse 500 customers.

Flight Training and maintenance training - Flight training will continue as planned including recurrency training but while in the debtor-in-possession phase, it is no longer part of the purchase price of the aircraft. The new company must determine what type of structure and inclusion in the delivered price can be maintained. Because JetComplete contracts are no longer valid, those requiring and scheduling recurrent training will pay the retail price of that service. Maintenance training classes will continue as required or requested.

Customers who have paid any deposit including the 60% deposit:
Those customers who have paid a deposit for an Eclipse 500 are unsecured creditors of Eclipse Aviation.

If there is a way to offer consideration to those affected depositors, it will be reviewed for consideration but it is not known at this time if it will be assumed by the new company.

Customer who have asked for a refund:
Customers who have asked for a refund are now an unsecured creditor of Eclipse Aviation.

Eclipse 400 customers:
Customers who have asked for a refund are now an unsecured creditor of Eclipse Aviation.

Those customers that have not asked for a 400 refund are an unsecured creditor of Eclipse Aviation and must wait until the new company decides whether to honor those deposits. The new company will determine if the Single Engine Jet Concept is a viable aircraft for today’s market.

We truly understand that these are tremendously difficult times for you and for our employees. However, please be aware that there is not anything we are holding back from this communication so additional facts or answers will not be available from the teams staffing the phones.

The new company will continue the customer call events to update all customers on status and progress. The next one will be scheduled by the Customer care team.

Michael McConnell
Eclipse Aviation Corporation
President & General Manager
Customer Division

—————————————————-Eclipse Aviation Seeks Court Approval for Restructuring under 363 Sale Procedures and Debtor in Possession Financing

Affiliate of ETIRC Aviation, VLJ maker’s largest shareholder, announces offer to purchase Eclipse

ALBUQUERQUE, NM - November 25, 2008 - Eclipse Aviation^®, manufacturer of the world’s first very light jet (VLJ), announced today that it is seeking court approval for debtor-in-possession (DIP) financing and procedures for the sale of substantially all of its assets under Section 363 of the U.S. Bankruptcy Code. The proposed sale will enable the business to continue as an industry leader in the manufacture and sale of VLJs with lower costs and reduced debt liabilities.

Eclipse filed for Chapter 11 protection in U.S. Bankruptcy Court in Delaware this morning, simultaneously announcing an agreement for the sale of its assets for a combination of cash, equity and debt to an affiliate of ETIRC Aviation S.a.r.l., Luxembourg, subject to higher and better offers. ETIRC Aviation, a principal driver of the VLJ industry in Europe, is currently Eclipse’s largest shareholder. ETIRC Aviation’s Chairman Roel Pieper has been the acting CEO of Eclipse since July 2008 and has served as Eclipse’s Chairman since January 2008. The proposed sale is subject to competitive bidding through a public auction, which is expected to be completed and a sale finalized in January 2009.

“In the face of unprecedented economic challenges, it is clear that the sale of the Eclipse business through the Chapter 11 process is the right course of action to maximize the value of the business, secure its future and protect the best interests of Eclipse’s stakeholders, including customers, suppliers, employees and creditors,” said Roel Pieper, CEO of Eclipse Aviation. “The successful sale will position the business for aggressive global expansion, allowing the company to fulfill its promise and solidify its position as the world’s leading manufacturer of VLJs.”

Also announced today, a group of existing Eclipse shareholders and note holders will provide Eclipse with post-petition, debtor-in-possession (DIP) financing. This financing will provide Eclipse with sufficient resources to continue normal business operations through the closing of the sale. Eclipse has filed a motion with the Court to approve the financing with a request for an expedited hearing to avoid business interruption. Once approved, this financing along with other relief requested from the Court, will position Eclipse to pay wages and salaries, honor employee benefits, service customer aircraft and continue manufacturing operations throughout the sale period.

New York-based Greenhill & Co., Inc., a leading independent investment bank with proven expertise in mergers, acquisitions and restructurings, has been retained as financial advisor to Eclipse Aviation. Inquiries into the Eclipse Aviation sale process can be directed to Brad Robins, Greenhill & Co., Inc. at 212-389-1567 or brobins@greenhill.com.

About Eclipse Aviation
Eclipse Aviation is the world’s leading very light jet (VLJ) manufacturer, producing innovative, affordable jets that are revolutionizing air transportation. The company created the VLJ category with the design, certification and delivery of the Eclipse 500 — the industry’s first VLJ. Eclipse applies advanced technologies, manufacturing processes and business practices to create high-performance aircraft that cost a fraction of other jets, and provide the lowest cost of jet ownership ever achieved. By changing the value proposition for private jet travel, Eclipse is allowing more pilots to enter the world of jet-powered aviation and enabling a new generation of entrepreneurs to help business travelers move between cities on a quick, affordable and convenient basis. Contact Eclipse at www.eclipseaviation.com.

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Eclipse Aviation Corporation, Eclipse and Eclipse 500 are trademarks of Eclipse Aviation Corporation.

Tags: Air Taxi jet, Eclipse 500, Very Light Jets, VLJs

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