Analysts Doubtful That Can Happen
As ANN reported, a Tuesday memo from Eclipse
Aviation execs to remaining employees informing them that the
company's bankruptcy was moving from Chapter 11 reorganization to
Chapter 7 liquidation, noted that the move had the approval of the
company's directors. A later press release confirmed the company
would not fight the change.
Albuquerque business bankruptcy attorney Bill Davis tells the
Houston Chronicle that makes approval of the move to liquidation a
near certainty. "When there's a motion to convert and the company
is not contesting, it's 99 percent certain the case will be
Reaction to the news of Eclipse's demise has been mixed.
Economic development officials in New Mexico and general aviation
industry groups are understandably disappointed. But Teal Group
analyst Richard Aboulafia, a consistent critic of the Eclipse
business plan, was blunt.
"There are a lot of people who choose to believe in Santa Claus
at a surprisingly advanced age," he said. "There's a great chance
that people will learn from this and there will never be such an
awful program again. That's the only up side."
Despite Aboulafia's comments -- or perhaps because of them --
there appears to be at least one entity willing to attempt to bring
Eclipse back from the ashes of its own demise. On Thursday,
aerospace executive Phil Friedman announced his plans to bid for
the assets of the defunct company, under the auspices of his
company New Eclipse Acquisition LLC.
"I have been studying the Eclipse situation for over a year,"
said Friedman, currently CEO of Harlow Aerostructures LLC in
Wichita, KS. "It is sad that the company has ended up in
bankruptcy, but I believe there is an excellent business
opportunity going forward if managed correctly."
If awarded Eclipse's assets, Friedman says he plans to spend the
first two years updating the existing active fleet of 259 Eclipse
500s to current type-certification levels, in order to optimize
service and support and to "restore the brand." Friedman also
hinted at plans to upgrade the Avio NG avionics suite, and reducing
"We will be charging customers to bring their aircraft up to the
latest certification level," he continued. "Our business plan
assumes some of the customers will not be able to afford the
upgrade. Our sales representatives will work with these customers
at no charge to find new buyers who will have the means to pay for
the upgrades. In providing this service, and with a business plan
that translates into the New Eclipse becoming a company with a
profitable long term future, we will be supporting the investment
that the existing owners have made in their aircraft."
Friedman says it is his objective to bring the aftermarket price
of the Eclipse up to the $2 million range. New Eclipse also plans
to finish and sell seven new aircraft on the production line that
are about 95% complete, though he did not elaborate on how 21 other
planes now sitting on the assembly line -- in various states of
completion, and with deposit money already collected from
customers -- would be distributed.
Peter Reed, a former Chief Financial Officer at Eclipse for
seven years, is part of Friedman's team and has actively
participated in developing the New Eclipse business plan over the
past several months.
One thing seems certain: Friedman -- and anyone else who may
attempt to rescue Eclipse -- has an uphill fight ahead of them.
Doug Royce is an analyst for Forecast International
Incorporated, who last year predicted Eclipse's collapse and even
the timing with considerable precision. He observes, "There are too
many better investment options than investing in business aircraft
when there's a major downturn in the business climate."