Industrial Investors, the Russian firm that bought the assets of bankrupt Adam Aircraft, has cut its monthly support from $ 6 million to $ 1 million because of the impact of the near-collapse of Russian capital markets that resulted in substantial margin calls, according to a highly placed source at AAI Acquisition. Rather than risk total collapse of AAI Acquisitions, Jack Braly, president and CEO, announced a "strategic realignment" on Oct. 28 to keep the VLJ maker solvent.
"You know that cash infusions are our life blood," Braly told AWIN today. "So we´re responsibly powering down to a level of effort that our investors can support."
Braly declined to comment on the new level of funding for AAI, but he did say that all but 30 employees, composed mostly of an engineering team led by Tom Bisges, needed to continue development of the Adam 700 VLJ, will be laid off effective Nov. 2, 2008. The severe cutbacks are certain to delay Adam 700 certification, which had been slated for 2010.
One former AAI Acquisition senior executive said, "I don´t think it´s going to happen at all." Braly, though, disputes that assertion, but he declined to predict when the Adam 700 might be certified.
Industrial Investors´ economic woes will have repercussions far beyond AAI Acquisition and Adam 700 development. The Russian firm also planned to buy Piper Aircraft, providing a much needed cash infusion into the PiperJet development program. That investment now has been put on hold, according to AAI Acquisitions insiders. Without a large scale cash infusion from outside investors, it´s unlikely that Piper will be able to sustain its jet development program.