The Teething Pains Continue
ANN has just finished a
pretty frank discussion with Eclipse Boss Vern Raburn, who answered
ANN's questions about the current lack of long-awaited E-500
deliveries with candor and a great deal of detail. In addition to
this, Raburn has released to ANN the update letter (that discusses
that very topic) that will be released shortly to Eclipse customers
and investors without restriction or condition. It is reproduced
(below) in its entirety and without any editing, changes or
omissions.
Full Text Of Raburn Letter To Eclipse Customers
For the past several weeks, many of you have been waiting for
the news that Eclipse Aviation has delivered the first production
aircraft (AC1) after being awarded a Certificate of Airworthiness
(C of A). That important milestone event has not yet taken place
and in turn, this may be impacting your confidence that Eclipse can
perform, and more importantly meet the schedules we have projected
for delivering your aircraft. Some of you have specifically asked
whether it will still be appropriate for us to invoice for the
upcoming 60% progress payment due for aircraft scheduled to be
delivered through June 30, 2007. The following letter addresses
this question and other issues surrounding our transformation from
a development company to a production company.
AC1 Delivery Delays
The following are the
facts and circumstances which have caused the delay in the C of A
for AC1 and subsequent customer delivery.
Prior to entering the process for conformity to the FAA Type
Design, AC1 was flown by Flight Operations, checked by Flight Test,
and was submitted for the inspection process discrepancy free.
Additionally Flight Test, Production and Quality Assurance found
AC1 to be safe, met all of our quality standards, and ensured that
the aircraft was ready to submit to the FAA. There is no issue with
the airplane. However, through the process of working with the FAA,
we did find that there is an issue with our internal conformity
process.
The process required for awarding of a C of A and eventually our
Production Certificate (PC) is both an inspection and testing
process. Most importantly, it is an administrative review by the
FAA of Eclipse's compliance to our processes and procedures used to
build and test the aircraft. This process and review is designed to
show that the accuracy and repeatability of the production process
demonstrates that the type design that the FAA certified is indeed
the airplane that is being built. This administrative review
process is very well defined, detailed and unforgiving. It is what
will give the FAA and every customer confidence that all Eclipse
500s are safe and meet the same TC conformity as any aircraft on
the line.
In high-tech product development and aircraft manufacturing, the
Quality organization is the guardian and the mentor for excellence
in manufacturing. The reason that the delivery of AC1 is late is
due to the fact that the Quality process designed for achieving
aircraft C of A was not sufficiently designed and tested resulting
in administrative quality escapes. The quality escapes we have
experienced are characterized in two content areas including
conformity to the aircraft build instructions and the clarity of
the functional test procedures. With the problems identified, we
elected to completely stop the process, evaluate the circumstances,
develop a corrective action plan, and only then, restart the FAA
inspection. We did not want to restart the process with the FAA
until we were confident that the result will be an awarding of C of
A for AC1. After meeting with the FAA in Fort Worth last week, the
action plan has been written and coordinated with them. The Eclipse
internal resources are in place and we are focused on completing
the conformity process. We will work our way through this
issue.
This learning experience has given us the following immediate
actions to refocus and strengthen the quality oversight and process
routine.
- Manufacturing will re-conduct the conformity checks on AC1
before we invite the FAA back. All activity the week of November
27th will be focused on process correction and preparation to
restart the C of A process. This correction process is being
conducted in cooperation with the FAA. The FAA team will return to
Eclipse during the week of December 4th to begin the formal
certification process.
- Conforming audits and inspections will be increased on the
production line prior to starting the formal C of A
inspections.
Please note that none of these internal delays are related to the
recent communication of wing attach issues on the test fleet or
window issues we disclosed to you.
Aircraft Delivery Schedule
Eclipse fully intends to meet its obligation for the delivery
schedule. We are positioned with an achievable plan to deliver
approximately 10 aircraft in 2006 and 515 aircraft in 2007. It is
important to note that the delay caused by AC1 is not a day
for day delay. We have parts and components coming in from
suppliers and are hiring manufacturing personnel consistent with
this production and delivery schedule. We have over 30 aircraft in
various stages of assembly (pictures below) per our schedule and
are actually ahead of schedule in primary assembly. Aircraft 3 and
4 have been through their engine runs and are scheduled to fly in
the coming week. Additionally, there have been positive results in
production rate attainment and significant reductions in instances
of non-conformance throughout the production line.
The receipt of the six month progress payments is connected to
the continued flow of parts to build your aircraft. This payment
schedule is tied directly to the production schedule, and is an
integral part of the acquisition process for your Eclipse 500. Our
Customer Care organization is the primary point of contact to help
you complete any optional equipment selections, the aircraft
purchase agreement, and submit the required progress payment. If
you have questions or issues regarding this process, please let us
know how we can to make the experience and our delivery processes
as thorough and efficient as possible.
We are asking that all of our customers work with us and support
us during this transition from a development company to a
production company. Now is the time for shared communication and
mutual support. We will continue to give you the information you
need to prepare for your Eclipse 500 delivery. As our production
process moves up the learning curve, we will project more specific
aircraft delivery dates. Eclipse is focused and committed to
complete this production certification process and deliver your
aircraft.