A possible picture of future events for Albuquerque, NM-based Eclipse Aviation may be starting to come together. On Tuesday, composites supplier Albany International Corp. said its sales growth for the remainder of the year will take a significant hit, due to cutbacks in planned production rates at Eclipse.
Albany said Eclipse plans to cut production through the first half of 2009, and has slashed its parts purchases from subsidiary Albany Engineered Composites accordingly, reports Reuters. The company adds Eclipse told AEC to expect orders to sharply rebound after that.
Shares in the New York-based company tumbled on the news, falling some $ 7 before rebounding somewhat to around the $ 30 mark.
Despite the gloomy announcement, Albany expects its overall 2008 revenue to exceed the previous year´s $ 1.09 billion aggregate total by at least 35 percent, though the company adds its composites division will fall below the break-even point.
"Break-even" is a mark Eclipse aspires to... and Albany´s announcement gives a sign of the planemaker´s plan to accomplish that, albeit a perplexing one.
Founded in 1998 by recently-ousted CEO Vern Raburn, Eclipse promised its customers and suppliers alike that profitability would come from high production rates -- as many as four finished planes per day. In the nearly two years the Eclipse 500 has been in serial production, the planemaker has come close to attaining one per day... an impressive figure, though still far from the levels Eclipse needs to survive on its own, without outside funding.
Acting CEO Roel Pieper -- head of ETIRC, a major foreign investor in Eclipse -- appears willing to consider all options in making Eclipse profitable, many of them painful. Since AirVenture, Eclipse has laid off approximately 190 temporary workers on its production line, and there´s evidence manufacturing has slowed significantly as the company considers its next move.
The planemaker also told customers that plans to upgrade older Eclipse 500s to Avio NG avionics have been delayed indefinitely, pending receipt of the latest round of funding. Refunds to depositors who opted to cancel their orders, in response to a May price increase, are also on hold... leaving some position holders to consider legal options.
As ANN reported, Eclipse said last week it would not speak to the press until it was ready to announce its plans for the future, which representatives said should come by the end of this month. That statement was followed by a separate announcement from Raburn, saying he had decided not to accept a role with ETIRC, despite earlier statements that he would become vice chairman of ETIRC Aviation.