Eclipse Aviation Corporation

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Eclipse Aviation Corporation

TECH BACKGROUND

FLYING IN THE FACE OF CONVENTION

FIRST FLIGHT IN 2002

CERTIFICATION IN 2006

PRINCIPAL COMPETITORS

FURTHER READING

2503 Clark Carr Loop SE
Albuquerque, New Mexico 87106
U.S.A.
Telephone: (505) 245-7555
Toll Free: (877) 375-7978
Fax: (505) 241-8800
Web site: http://www.eclipseaviation.com

Private Company
Incorporated:
1998
Employees: 1,000
Sales: $186 million (2004 est.)
NAIC: 336411 Aircraft Manufacturing; 336413 Other Aircraft Part and Auxiliary Equipment Manufacturing; 541710 Research and Development in the Physical, Engineering, and Life Sciences

Eclipse Aviation Corporation is a pioneer in the very light jet (VLJ) industry. Since the beginning the companys stated aim has been to revolutionize aviation the way the personal computer did the computer industry: making it more affordable, accessible, and efficient on the wings of the personal airplane. Eclipses founder and many of its early backers came from the tech industry. They brought new concepts to the design, manufacture, and customer service of the companys first plane, the Eclipse 500. The company is based at Albuquerques Sunport International Airport and has 190,000 square feet of facilities. It is also building a network of service centers across the country.

TECH BACKGROUND

Eclipse Aviation Corporation was formed in 1998 by Vern Raburn. Raburn had a degree in industrial engineering and more than two dozen years of experience in the information technology industry; he had led Microsoft Corporations first consumer products efforts, and later was CEO of the Symantec virus protection software company and the pen-based computing business Slate.

Raburn also knew flying; he had accumulated more than 5,000 hours in his pilots logbook, some of them while flying a business jet as head of the investment company of Microsoft cofounder Paul Allen. It was during this time that he conceived an idea for an economical business jet powered by a new class of small engines under development at Williams International.

Such a craft would be able to spare owners the frustration of traveling on major airlines through congested hubs. Instead, the personal jets could be piloted among thousands of secondary airports. If he could keep the costs down, he could reach a vast, untapped market of middle managers dissatisfied with commercial aviation but unwilling or unable to spend the $4 million or so to buy a traditional business jet.

Other savvy businesspeople agreed with the concept. One of the companys angel investors was Bill Gates, Raburns best man at his wedding to another early Microsoft employee, Dottie Hall (she also went to work at Eclipse). Other influential backers included company Chairman Harold A. Poling, former CEO of the Ford Motor Company.

Eclipse Aviation was incorporated in Delaware on December 2, 1998. It set up a temporary base in Scottsdale, Arizona, but after an extensive search settled on a new home at Albuquerques Double Eagle II Airport. New Mexico, a sparsely populated, rural state with few large companies, invested $15 million in the enterprise.

Within a couple of years, Eclipse had lined up 160 customers, each paying $155,000 deposits. This required a large leap of faith; the Eclipse was not only yet to achieve certification, but the engine was unproven. This turned out to be a classic risk/reward scenario: some of the original buyers were able to sell their deposits, and positions in the order book, for up to three times their original investment several years later, before the plane even entered production.

In 2000 the planned price was $837,500, or about one-quarter that of the most inexpensive existing business jets. Eclipse raised its asking price to $1.5 million by 2006. Deposits were not Eclipses only source of funds. It raised more than $600 million from private investors in its first several years.

A parallel industry was evolving alongside the new VLJs in development, even before they had taken to the air. This was air taxis; a number of operators were planning to use VLJs to shuttle corporate travelers point-to-point for a price comparable with full-fare airline flights. Some of these ventures were quite speculative. In September 2001 Floridas Nimbus Group Inc., once an Internet auction firm, ordered 1,000 of Eclipses planes for use in a massive air taxi service. However, this deal collapsed within months as Nimbuss share price fell.

The company originally aimed to deliver its first aircraft in 2004, but this date would be pushed back due to difficulties encountered in the daunting process of aircraft design. Since World War II, only a couple of new manufacturers (Lear and Robinson Helicopter) had successfully entered the U.S. market for factory-built aircraft (as opposed to experimental or kit planes).

FLYING IN THE FACE OF CONVENTION

By starting with the proverbial blank sheet, Eclipse was able to incorporate the latest technologies into its aircraft, such as just-in-time manufacturing and electronic instruments. Digital flight and engine controls reduced the complexity associated with flying jets. In addition, the Eclipse 500 would be much less expensive to operate than even its turboprop-driven rivals.

The manufacturing was as revolutionary as the aircraft itself. According to Industrial Engineer, the company looked for inspiration to Lexus automobiles, Dell computers, even Carrier air conditioners rather than the staid, reactionary assembly lines of the OEM aircraft industry. In the process, the company introduced new techniques to aviation, such as friction stir welding, which replaced the rivets that had been holding metal planes together since before World War II.

Eclipse aimed to outdo the traditional manufacturers in customer service as well. In 2005 it announced a program called JetComplete, which offered aircraft access at a fixed rate per flight hour, including maintenance (fuel and insurance were extra). Other customer amenities included Iridium satellite communications as a standard feature and Avio flight planning software. The company had begun to establish service centers within an hours flight of nearly all its customers in the mainland United States. It signed up ETIRC Aviation Europe to handle sales and service in Turkey and the former Soviet Union.

FIRST FLIGHT IN 2002

Creating from scratch was a risky business, however, as illustrated in the companys experience with the 500s engine. The Eclipse 500 made its first test flight on August 26, 2002. However, problems soon emerged with the engine originally chosen for the design, leaving the company with what Raburn called a million-dollar glider. Eclipse found Williams Internationals lightweight EJ-22 jet to be inadequate in power and reliability.

COMPANY PERSPECTIVES

We knew it was a tall order. When we set out to create the Eclipse 500 jet aircraft, we werent taking advantage of an existing opportunity, but creating our own. But together with some of the best thinkers, doers, and design engineers in the jet aviation industry, and quite a few of the smartest people we know outside the industry, thats exactly what we did. Throughout the creation and refinement of the Eclipse 500, weve approached every goal with the determination to always take things to the next, higher level. Exactly where the worlds first very light jet should be.

This was a huge setback; in fact, the Williams engine was what had originally inspired the Eclipse concept. The planes design had relied on getting 770 pounds of thrust out of the 85-pound EJ-22, which had originally been developed for cruise missiles.

In early 2003, Pratt & Whitney Canada agreed to produce a replacement engine. Though based on its PW600 series, this required an investment of at least $10 million on Pratt & Whitneys part. Lining up such an established name as the venerable engine maker gave a huge boost of credibility to a company that had yet to certify a plane, Raburn told a local business journal. However, the change of plans delayed not just the planes entry into full scale production; the building of a $75 million manufacturing plant at Double Eagle II was put on hold at the same time.

CERTIFICATION IN 2006

The Federal Aviation Administration (FAA) issued type certification for the Eclipse 500 in September 2006. This was a major achievement, signifying the agency found it to be a safe aircraft. Certification of the companys production line, allowing Eclipse to manufacture and deliver planes without having each one individually inspected, was the next step.

A couple of minor mechanical issues were discovered in what Raburn called the most extensive testing process in the history of general aviation, but these were soon resolved. Eclipse officially delivered its first aircraft on January 4, 2007. The company had big plans, and by early 2007 had ramped up its employment to 1,000 workers. It was aiming to eventually have up to 2,000 employees producing 1,000 planes per year.

By early 2007, Eclipse had orders for 2,600 aircraft. It had started adding buildings to its Double Eagle II campus, with plans to start on a new assembly line after three years. Eclipses economic impact was not limited to New Mexico, however. In 2006 the company made an initial $10 million order with wiring harness manufacturer LaBarge Inc., which had plants in Arkansas and Missouri. Other vendors included Fuji Heavy Industries, which made the wings, and Mecaer Group, supplier of landing gear.

As Eclipses first jet cleared more of the obstacles leading to full-scale production, it became the focus of much economic activity. A small hub of aviation-related industries began to gather in New Mexico, prompting talk of a regional cluster to perhaps one day rival those in Kansas (Cessnas home base) and Florida.

A consulting firm hired by Eclipse predicted the total market for VLJs to be worth $6.5 billion a year by 2017. The FAA expected roughly 5,000 VLJs to be flying by 2016, most of them as air taxis.

Frederick C. Ingram

PRINCIPAL COMPETITORS

Adam Aircraft, Inc.; Cessna Aircraft Company; Piper Aircraft Inc.

KEY DATES

1998:
Vern Raburn forms company to produce a very light jet, the Eclipse 500.
2000:
Headquarters are established in Albuquerque, New Mexico; preliminary jet design is completed.
2002:
The Eclipse 500 begins test flights.
2003:
Pratt & Whitney agrees to develop customized engine for the Eclipse 500.
2006:
Eclipse 500 receives FAA type certification.
2007:
First aircraft is delivered to a customer.

FURTHER READING

Averett, Steven, Eclipsing the Past: Eclipse Aviation Wants to Change the Way You Fly, Industrial Engineer, September 2004, pp. 3442.

Cohn, Meredith, New Tiny Jets Aim to Revolutionize Air Travel, Baltimore Sun, August 13, 2006.

Domrzalski, Dennis, ABQ Aviation Cluster Plans Build Momentum, New Mexico Business Weekly, February 2, 2004, http://albuquerque.bizjournals.com/albuquerque/stories/2004/02/02/story4.html.

, Eclipse Early-Purchasers Pocket Large-Dollar Position Premiums, New Mexico Business Weekly, August 12, 2005, http://albuquerque.bizjournals.com/albuquerque/stories/2005/08/15/story4.html.

, New Mexico Cities to Fight for Aviation Companies, New Mexico Business Weekly, October 11, 2002, http://albuquerque.bizjournals.com/albuquerque/stories/2002/10/14/story1.html.

, Raburn: Eclipse 500 or Die Trying, New Mexico Business Weekly, March 10, 2003, http://albuquerque.bizjournals.com/albuquerque/stories/2003/03/10/focus1.html.

, Startup Eclipse Already an Economic Force, New Mexico Business Weekly, October 18, 2004, http://albuquerque.bizjournals.com/albuquerque/stories/2004/10/18/story6.html.

Eclipse Nears FAA Certification, New Mexico Business Weekly, May 2, 2006, http://albuquerque.bizjournals.com/albuquerque/stories/2006/05/01/daily9.html.

FAA Certification Leads to New Financing, Partnerships for Eclipse, New Mexico Business Weekly, July 28, 2006, http://albuquerque.bizjournals.com/albuquerque/stories/2006/07/24/daily27.html.

First Eclipse Handover, Flight International, January 9, 2007.

Isen, Cheryl, The Skys the Limit for this Jet-Plane Entrepreneur, Puget Sound Business Journal, January 20, 2006, http://seattle.bizjournals.com/seattle/stories/2006/01/23/smallb3.html.

Karlgaard, Rich, Flying Eclipses Pocket Jet, Forbes, August 15, 2005, p. 27.

Kestin, Hesh, The Plane Truth, Inc., June 1, 2002.

LaBarge Inks $10M Eclipse Order Deal, St. Louis Business Journal, April 19, 2006, http://stlouis.bizjournals.com/stlouis/stories/2006/04/17/daily21.html.

Norris, Guy, Eclipse Begins Work on New Facility, Flight International, February 27, 2007.

Raburn, Vern, Why Eclipse Landed in Albuquerque, New Mexico Business Journal, February/March 2001, pp. 3741.

Robinson-Avila, Kevin, Design Tweaks Bring Eclipse 500 Up to Speed and Distance, New Mexico Business Weekly, February 12, 2007, http://albuquerque.bizjournals.com/albuquerque/stories/2007/02/12/story5.html.

, Eclipse Breaks New Ground for Attention to Customer Service, New Mexico Business Weekly, January 29, 2007, http://albuquerque.bizjournals.com/albuquerque/stories/2007/01/29/story2.html.

, Eclipse Glides Through Turbulence, New Mexico Business Weekly, December 25, 2006, http://albuquerque.bizjournals.com/albuquerque/stories/2006/12/25/story1.html.

Schonfeld, Erick, The Little (Jet) Engine That Could: With a Revolutionary 85-Pound Engine and $60 Million in Backing, Vern Raburn Wants to Turn the World of Private Air Travel Upside Down, Fortune, July 24, 2000, pp. 132+.

Siebenmark, Jerry, Flying Low: Eclipse Aviations Business Jet Cheaper Than Ones Made in Wichita, Wichita Business Journal, February 25, 2002, http://wichita.bizjournals.com/wichita/stories/2002/02/25/story1.html.

, Wichita Officials Keeping an Eye on Eclipse Aviations Slow Progress, Wichita Business Journal, March 24, 2003, http://wichita.bizjournals.com/wichita/stories/2003/03/24/story4.html.

Siebenmark, Jerry, and Dennis Domrzalski, A Call to Arms? Officials Keeping an Eye on N.M. Aviation Cluster, Wichita Business Journal, October 21, 2002, http://wichita.bizjournals.com/wichita/stories/2002/10/21/story3.html.

Wastnage, Justin, Cancellation: Eclipse 500 Order Termination Signals End to Nimbus Taxi Plans; Deal Flounders When Manufacturer Returns Former Internet Auctioneers Stock Deposit After Low Value Hinders Sale, Flight International, July 16, 2002, p. 39.

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