Like the band that kept playing while the Titanic took on water, Eclipse Aviation´s new management last week urged nervous customers to remain calm - a rescue boat (carrying large amounts of cash) would soon come over the horizon. The question is whether that lifeboat is real or imagined.
The most recent cash infusion came in late July in exchange for the ousting of Eclipse´s visionary founder, Vern Raburn. Chairman Roel Pieper took the helm and started making the kinds of changes that industry observers had long called for - balancing the profitability equation by raising the price and cutting back on ambitious production goals of more than two a day. Pieper also cut the head count, to 1,100, but summer came and went with no positive cash flow.
The Eclipse ship hit an iceberg on 19 September, when the company´s largest customer - DayJet - said it would park its 28 Eclipse 500s, the first of its 700 firm orders and 700 options. A terse statement from DayJet blamed "inability to arrange critical financing in the midst of the current global financial crisis". Eclipse downplayed the impact, but its orderbooks had evaporated from 2,300 down to "hundreds", which Eclipse equates to "enough for at least a year´s worth of production". As of mid-September, Eclipse had delivered 252 jets, including 153 this year.
Pieper appeared to have slowed the leak somewhat last week when Russia´s Vnesheconombank approved $ 205 million to build an Eclipse 500 plant in Ulyanovsk, reportedly capable of producing 800 aircraft a year, with start-up in 2010.
Eclipse hopes the announcement will help its hired financing experts, UBS, find more capital. But the Russian money is ultimately dependant on economic events, in Russia and worldwide.
An expected approval of the Eclipse 500 by the European Aviation Safety Agency in October could be a boon to sales as well. But the question remains whether efforts, heroic as they may be, will be enough to buoy the boat until help, if any, arrives.