Believes Company Will Not Be Able To Secure New Investment
In a new report to be issued in December, Forecast
International has projected that production of the Eclipse 500 will
soon end. The Connecticut-based market research firm believes the
aircraft's manufacturer, Eclipse Aviation, will not attract new
investment necessary to allow it to continue making the aircraft
beyond the first quarter of 2009.
"Eclipse continues to produce aircraft at a low rate as it seeks
to preserve cash," said Forecast International aircraft analyst
Douglas Royce. "We have forecast production of 162 Eclipse 500s
during 2008. We believe that the company will be able to push
production out into early 2009 but will be forced to cease
production within the first quarter of 2009."
Forecast International predicts only about 12 Eclipse 500s will
be produced in early 2009, and "even this forecast may prove too
optimistic," said Royce.
According to Forecast International, Eclipse Aviation's business
plan depended on delivering a twin-jet aircraft at an extremely low
price relative to its competition. This low price was dependent on
use of a high-volume production strategy made possible by importing
methods of production from the technology and automotive
industries. However, the anticipated production ramp-up never
occurred and the company has been unable to realize the economies
of scale it needs to meet its price target.
Until May 2008, the list price of the Eclipse 500 was $1.52
million. Thereafter, the aircraft's price increased to $2.15
million... but Eclipse Aviation is required to deliver aircraft at
the earlier, lower price to customers who executed an Aircraft
Purchase Agreement and paid the required 60% total deposit.
Every aircraft delivered under the old price is delivered at a
loss, Forecast International notes. "At the moment, the company
does not have the financial resources to absorb these losses and
survive," FI states.
To restructure its operations and reach profitability, Eclipse
has said publicly that it needs $200-$300 million in new equity
investment. With credit markets in the midst of a major crisis,
Eclipse Aviation is seeking funding at a time when bankers and
investors are reluctant to pour hundreds of millions of dollars
into a company facing an uncertain future.
Forecast International adds that in addition to the credit
crisis, Eclipse is also battling a shrinking market... as well as
the failure of the largest single customer for its aircraft.
As ANN reported, Florida-based DayJet -- which
at one time was reported to hold close to half of the roughly 2,400
orders Eclipse claimed for the 500 -- shut its doors on September
"Under the circumstances, Forecast International believes that
securing new funding, while still possible, is unlikely," said
Royce. "Forecast International has cut its forecast for the Eclipse
Eclipse had no comment on the report when contacted by