Sunday, July 26, 2009

Do You Feel Lucky? Well, Do 'Ya, "Pug"?

(apologies to Clint Eastwood) ...and just about everyone else.
Including the late Howard "Pug" Piper, youngest son of Piper founder William T Piper, Sr.

"'W.T.' Piper who happened to produce five sons, one of whom, Howard (Pug), was to be responsible for moving a reluctant company into the modern age." (Well, back when "the modern age" was circa the early 1950's Aztec). Pug was also designer of the PA-24 Comanche, circa mid-1950's.

It's fair to say, Piper Aircraft wants to "move into the modern age" again, with a jet. (And it's got a 3000-pound-thrust-class Williams FJ-44 "Magnum" (-3AP) engine, the most power engine in the VLJ world- it'll knock your socks clean off!- oops, sorry again).

Especially if one considers the relative standings, then (mostly pre-biz jet 1968) to now (2008 anyway):

From 1968:
Cessna, $138M (6578 units)
Beech, $115M (1347 units)
Piper, $85M (4228 units)
Lear, $28M (41 units)
Mooney $24M (579 units)
AeroCommander $22M (435 units)
A History In the Making, by Donald M. Pattillo

General Aviation Manufacturer's Association 2008 delivery/billings:
Bombardier (including Lear) $6,228M (245 units)
Gulfstream (temp. AeroCommander) $5,512M (156 units)
Cessna $4,556M (1,300 units)
Hawker-Beech $2,468M (435 units)
Cirrus $287M (549 units)
Piper $214M (268 units)
Eclipse $207M (161 units)
Mooney $35M (65 units)

There is a temptation to lament the decline in general aviation, as a function of units and pilots produced per year, but from a dollar standpoint, things are going pretty well- using an inflation calculator, and adjusting the 1968 figures to 2008 dollars:
Cessna (1968): $853M (2008 dollars), so $4556M is a 530% increase
Hawker-Beech (1968): $711M (2008 dollars), so $2,468M is a 350% increase
Piper (1968): $525M (2008 dollars), so $214M is, well, a 60% decrease

Throw in Cirrus and Eclipse, and it was a pretty good year for GA, dollar wise. There might be some other items at play, but it seems to "stay in the game", Piper needs a jet. Cessna went into Citations big time, and Beech bought the Hawker and Mitsubishi line, as well as developed their own Premier and Horizon/4000 models.

So, what's the big deal? Seems like they've been shopping around for a place to build it (and maybe to relocate their entire operation). Supposedly, Oklahoma City OK (undisclosed amount), and Albuquerque ($70M "bid") were finalist, with Vero Beach squeezed to contribute $30-50M. Tallahassee offered $90M, and Columbus, S.C. (undisclosed amount) also made offers- but maybe there were some "sticklers" with those deals.

By the way, what did our friend Richard Aboulafia, V.P. of Analysis at the Teal Group have to say, when interviewed by the Albuquerque Tribune (2007):
"'There's a fine line between infrastructure and tax breaks and outright subsidies,' Aboulafia said. 'You have to watch that you're not giving away the store.' He called New Mexico's chances of outbidding its competitors, 'very good'. 'The New Mexican taxpayer is a remarkably generous creature,' he said."

Something to consider, Cirrus has billings (for new aircraft) 40% higher than Piper, and they are struggling financially. Eclipse had billings that were virtually equal to Piper- with only 8 months of production, and, ah, well- you know. So, can Piper pull it off? One thing which should help them is a sustaining revenue stream, from a bazillion (or so) airplanes already in service.

But still, the economy has resulted in challenges for 2009:

PalmBeachPost, February 13, 2009:
"Today, Piper is slashing staff. It laid off 450 workers during the past several months...After Tuesday's round of layoffs, which affected 300 workers, the company reported it had 650 employees...its shares (ACAS) plummet to $2.71, down from a 52-week high of about $37.86 a year ago."
(Ugh- a Friday the 13th. Note: the stock dropped to $0.58 in March)

TCPalm, June 10, 2009:
"Kevin J. Gould, Piper's Vice President of Operations, will become Piper's Chief Executive Officer, and John Becker, Piper's Vice President of Engineering, will become President of the Company."
(Outgoing CEO seemed to get good marks, new guys seem pretty capable too).

TCPalm, July 13, 2009:
"No formal public announcement has been made about Piper’s workforce but according to the company’s Web site, Piper is hiring 17 engineers. As for manufacturing, Piper’s Web site said it 'will not be seeking manufacturing candidates until further notice."

Maybe recent developments may improve the chances (do they feel lucky, well- do they? :) of continued development:

FlightGlobal, July 18, 2009:
"Imprimis, a Singapore investment firm that at the beginning of May (2009) acquired 100% of Piper from American Capital (ACAS). Imprimis has deep pockets funded by the government of Brunei, one of the world's richest countries, and sees its first aviation investment as a way to diversify its portfolio and tap into the industry's budding potential in Asia."

TCPalm, July 20, 2009:
"Piper Aircraft, Inc., will continue shutting down its local manufacturing facility for one week each month until the end of the year, according to a new report from a major aviation trade publication."

As unfortunate developments at Adam and Eclipse demonstrated, it's a tough market to crack, but those were start ups, and Cirrus -and Diamond- are by comparison, relatively new companies as well. Perhaps income from legacy product support, sales of the innovative PA-46; Matrix, Malibu, Meridian (which, ah, sure looks a lot like the PA-47 Piperjet), combined with robust financing from the new ownership will help Piper succeed- let's wish them well. The Piperjet might just "make my day" for a lot of owners!

(I hope we get some good feedback from those attending AirVenture this week).

Sunday, July 19, 2009

"That's one small step for man, one giant leap for mankind."

The Apollo 11 mission was the first manned mission to land on the Moon. It was the fifth human spaceflight of Project Apollo and the third human voyage to the Moon. Launched on July 16, 1969, it carried Mission Commander Neil Alden Armstrong, Command Module Pilot Michael Collins, and Lunar Module Pilot Edwin Eugene 'Buzz' Aldrin, Jr. On July 20, Armstrong and Aldrin became the first humans to walk on the Moon, while Collins orbited above. The mission fulfilled President John F. Kennedy's goal of reaching the moon by the end of the 1960s, which he expressed during a speech given before a joint session of Congress on May 25, 1961:

"Mr. Speaker, Mr. Vice President, my copartners in Government, gentlemen-and ladies:

"The Constitution imposes upon me the obligation to "from time to time give to the Congress information of the State of the Union." While this has traditionally been interpreted as an annual affair, this tradition has been broken in extraordinary times.

"These are extraordinary times. And we face an extraordinary challenge. Our strength as well as our convictions have imposed upon this nation the role of leader in freedom's cause.

"No role in history could be more difficult or more important. We stand for freedom.

"That is our conviction for ourselves--that is our only commitment to others. No friend, no neutral and no adversary should think otherwise. We are not against any man--or any nation--or any system--except as it is hostile to freedom. Nor am I here to present a new military doctrine, bearing any one name or aimed at any one area. I am here to promote the freedom doctrine".

Part One of Four
I. (Introduction)

Part Two of Four

Part Three of Four

Part Four of Four

"Finally, if we are to win the battle that is now going on around the world between freedom and tyranny, the dramatic achievements in space which occurred in recent weeks should have made clear to us all, as did the Sputnik in 1957, the impact of this adventure on the minds of men everywhere, who are attempting to make a determination of which road they should take. Since early in my term, our efforts in space have been under review. With the advice of the Vice President, who is Chairman of the National Space Council, we have examined where we are strong and where we are not, where we may succeed and where we may not. Now it is time to take longer strides--time for a great new American enterprise--time for this nation to take a clearly leading role in space achievement, which in many ways may hold the key to our future on earth.

"I believe we possess all the resources and talents necessary. But the facts of the matter are that we have never made the national decisions or marshalled the national resources required for such leadership. We have never specified long-range goals on an urgent time schedule, or managed our resources and our time so as to insure their fulfillment.

"Recognizing the head start obtained by the Soviets with their large rocket engines, which gives them many months of leadtime, and recognizing the likelihood that they will exploit this lead for some time to come in still more impressive successes, we nevertheless are required to make new efforts on our own. For while we cannot guarantee that we shall one day be first, we can guarantee that any failure to make this effort will make us last. We take an additional risk by making it in full view of the world, but as shown by the feat of astronaut Shepard, this very risk enhances our stature when we are successful. But this is not merely a race. Space is open to us now; and our eagerness to share its meaning is not governed by the efforts of others. We go into space because whatever mankind must undertake, free men must fully share.

"I therefore ask the Congress, above and beyond the increases I have earlier requested for space activities, to provide the funds which are needed to meet the following national goals:

"First, I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth. No single space project in this period will be more impressive to mankind, or more important for the long-range exploration of space; and none will be so difficult or expensive to accomplish. We propose to accelerate the development of the appropriate lunar space craft. We propose to develop alternate liquid and solid fuel boosters, much larger than any now being developed, until certain which is superior. We propose additional funds for other engine development and for unmanned explorations--explorations which are particularly important for one purpose which this nation will never overlook: the survival of the man who first makes this daring flight. But in a very real sense, it will not be one man going to the moon--if we make this judgment affirmatively, it will be an entire nation. For all of us must work to put him there.

"Secondly, an additional 23 million dollars, together with 7 million dollars already available, will accelerate development of the Rover nuclear rocket. This gives promise of some day providing a means for even more exciting and ambitious exploration of space, perhaps beyond the moon, perhaps to the very end of the solar system itself.

"Third, an additional 50 million dollars will make the most of our present leadership, by accelerating the use of space satellites for world-wide communications.

"Fourth, an additional 75 million dollars--of which 53 million dollars is for the Weather Bureau--will help give us at the earliest possible time a satellite system for world-wide weather observation.

"Let it be clear--and this is a judgment which the Members of the Congress must finally make--let it be clear that I am asking the Congress and the country to accept a firm commitment to a new course of action, a course which will last for many years and carry very heavy costs: 531 million dollars in fiscal '62--an estimated seven to nine billion dollars additional over the next five years. If we are to go only half way, or reduce our sights in the face of difficulty, in my judgment it would be better not to go at all.

"Now this is a choice which this country must make, and I am confident that under the leadership of the Space Committees of the Congress, and the Appropriating Committees, that you will consider the matter carefully.

"It is a most important decision that we make as a nation. But all of you have lived through the last four years and have seen the significance of space and the adventures in space, and no one can predict with certainty what the ultimate meaning will be of mastery of space.

"I believe we should go to the moon. But I think every citizen of this country as well as the Members of the Congress should consider the matter carefully in making their judgment, to which we have given attention over many weeks and months, because it is a heavy burden, and there is no sense in agreeing or desiring that the United States take an affirmative position in outer space, unless we are prepared to do the work and bear the burdens to make it successful. If we are not, we should decide today and this year.

"This decision demands a major national commitment of scientific and technical manpower, materiel and facilities, and the possibility of their diversion from other important activities where they are already thinly spread. It means a degree of dedication, organization and discipline which have not always characterized our research and development efforts. It means we cannot afford undue work stoppages, inflated costs of material or talent, wasteful interagency rivalries, or a high turnover of key personnel.

"New objectives and new money cannot solve these problems. They could in fact, aggravate them further--unless every scientist, every engineer, every serviceman, every technician, contractor, and civil servant gives his personal pledge that this nation will move forward, with the full speed of freedom, in the exciting adventure of space."

President Kennedy was died on November 22, 1963.
Apollo 11 lifted off at 13:32 UTC (9:32 a.m. EDT) July 16, 1969.
(From the Kennedy Space Center).

Landed on the Surface of the Moon at 20:17 UTC (4:17 PM ETD) on July 20.
("Houston, Tranquility Base here. The Eagle has landed")

Neil Armstrong stepped on the lunar surface at 02:56 UTC on July 21 (10:56pm EDT, July 20), 1969
("That's one small step for man, one giant leap for mankind")

Six and a half hours after landing, Buzz Aldrin joined him, describing the view as "Magnificent desolation"

After about seven hours of rest, they were awakened by Houston to prepare for the return flight. Two and a half hours later, at 17:54 UTC (1:54 PM EDT), they lifted off the lunar surface. (Mission had more than 2.5 hours afoot on the lunar surface).

On July 24 July 24, 1969 at 16:50:35 UTC (12:50:33 PM EDT) Apollo 11 splashed down in the Pacific Ocean 2,660 km (1,440 nm) east of Wake Island, or 380 km (210 nm) south of Johnston Atoll, and 24 km (15 mi) from the recovery ship, USS Hornet.

Wikipedia: Apollo 11
John F. Kennedy
JFK Presidential Library

Tuesday, July 14, 2009

A Special Guest Lecturer For This Week's Class !

I am most pleased to have obtained Mr. Richard Aboulafia's permission to post his July 2009 newsletter, the topic of which is Boeing's ah, "progress" with the 787 program.
Mr. Aboulafia is Vice President of Analysis for the Teal Group, and his was one the earliest (and most accurate and credible) assessments of the challenges faced by our friends in Albuquerque during their arduous march to certification and production- and, well, bankruptcy. That drama is still being played out, as the bankruptcy, proceed- and will continue to be a central theme of the blog. But it is interesting to note that even the "big guys" can have their share of challenges too.
Without further ado, and with utmost appreciation; here's Richard's July 2009 Newsletter (inclusive article starts/stops with red text, and is shown without quotation marks for the reader's convenience):

Dear Fellow DayDreamliner Believers,

The battle of Jutland didn’t start well for the Royal Navy. As the British and German fleets fired their opening rounds, three RN capital ships took direct hits. Two were battlecruisers that blew up and sank, taking thousands of sailors with them. In the midst of the carnage, Admiral Sir David Beatty turned to his flag captain and said “There seems to be something wrong with our bloody ships today.”

I’m reminded of this droll understatement because, for Boeing, there seems to be something wrong with their bloody plane today. The week after Le Bourget, the industry was hit with the latest 787 news – first flight was delayed again, this time due to problems with the wing-to-body join structure. This development cast an unpleasant retroactive shadow over Le Bourget. Boeing said it was looking at possible fixes and tried to sound upbeat, or as upbeat as possible given the circumstances. They haven’t provided a new schedule, but that’s just as well because nobody would take a sixth schedule particularly seriously. Days after that announcement, Boeing moved to buy Vought’s share of the 787 program, which unintentionally signaled that the company had not yet fully straightened out the situation with at least one of its major partners.

This is all seriously bad. As we digested the news, I paused to reflect on just what a tremendous drug-like rush the 787 program once was, and just what a ghastly let down it has become. A few years ago I said it was the aviation equivalent of the i-Pod – a revolutionary product that would be a category killer and would change the way we perceive of aircraft production. The sales figures were extraordinary. It was clearly the key to Boeing’s reinvention, and to helping the company maintain its status as an export powerhouse. We knew a market downturn was coming, but the 787 looked set to keep its supply chain companies –much of the aerospace industry – healthy due to overwhelming demand. The 787 also looked set to prove that advanced market economies could compete in manufacturing, and that global industrial supply chains were a brilliant concept. No wonder the 787’s structure has stress problems – that’s a lot of weight for a mere airplane to bear.

The 787 had additional meaning because of what it wasn’t. It came with a coherent business case, without delusions and wishful thinking. The 787 was created as a truly global product, rather than as a foolish display of national pride. The 787 introduced new technology. Most of all, the 787 is what the market wants – an efficient, long-ranged mid-market plane, perfect for new point-to-point routes that would bring the world closer together. In short, the 787 was in all ways the exact opposite of the A380. Unfortunately for Boeing, the A380, while still commercially irrelevant, is flying in revenue service. We have no idea when the 787 will achieve that status.

This final delay has also obliterated much of Boeing’s credibility. BCA executives have reasonable explanation for their optimistic posturing at Le Bourget. They were apparently not informed about the extent of the problems at that point. But those of us at the rollout two years ago (on 7-8-07) are stuck with some baffling memories, and few explanations with much plausibility. Executives there were every bit as optimistic as they were at Le Bourget, firmly convinced that the plane would fly two months later. Either you had very high ranking executives willing to lie, or you had an organization that was completely unable to tell those high ranking executives that the plane that had just been rolled in had more in common with a Revell model kit than with anything that actually might get airborne.

To understand how this happened, you need to look back in time. A grossly oversimplified recent history of Boeing: Twelve years ago McDonnell Douglas effectively used Boeing’s money to buy Boeing. This resulted in a struggle between a faction that wanted to invest in Boeing’s future (basically the legacy Boeing crowd) and a faction that wanted to invest in Boeing’s shareholders (basically the McDonnell Douglas leadership).You can find a slightly less simplified chronicle of these events in my May 2003 and December 2003 letters, archived at

The future investment faction won, but at a price: the McDonnell Douglas zombie bit them before it died. To sell the new plane to the board and to investors, they needed to get as much cost and risk as possible off Boeing’s books. This resulted in a short-sighted decision to trust enormous parts of the 787’s development and integration work to partners, without due diligence to ensure that these partners were up to the job. (Disclosure: I was a big fan of this approach at the time, and I still think production work outsourcing is a good idea.) Like a lot of the US economy in the last decade, the program relied way too much on leverage to make something big happen with an inadequate financial base. The desire to create the plane at minimal cost also resulted in an impossibly aggressive schedule that just made things worse. Work was performed out-of-sequence or with temporary components just to meet arbitrary cost-driven milestones, without any production processes put in place. Billions in cost overruns, late fees, and other expenses are the result. The Vought 787work acquisition adds another $1 billion to the bill ($580million in cash, $422 million in payments forgiveness). The savings from putting design and development work in the hands of partners has been dwarfed by the cost of remedying the damage wrought by that strategy.

Finally, the new Boeing also disempowered the company’s engineers, turning its back on a decades-old management culture that didn’t always produce profits but did always produce great planes. Instead, it embraced McDonnell Douglas’s culture of leadership by money people. This disconnect between engineers and finance executives would explain why bad news wasn’t communicated upstairs, either at Le Bourget 2009 or at the 7-8-07 rollout. Countries that survive civil wars and internal strife, such as South Africa, create a Truth and Reconciliation Commission. Boeing badly needs something like that, to establish what lines of communication broke down and what went horribly wrong.

What happens next? Nobody can say. There’s a strong chance that Boeing is being factual, and that the plane will arrive in 2010, and that it will perform as advertised. It’s also possible that there will be seventh, eighth, and ninth delays, with an EIS in 2011. There’s also an unlikely but not impossible worst case scenario: a 787 that’s simply a mediocre aircraft. The proven Boeing track record (“We’re ten for ten!”) has been replaced by the unpleasant memory of McDonnell Douglas’s checkered past. The nickel and dimed MD-11 mediocrity, the useless MD JSF competitor, the out-of-control cost overruns of the C-17, and worst of all, the scandalous MD/GD A-12 carrier stealth attack plane. The likely (or at least hopeful) scenario is that the 787 winds up like the C-17, a nightmare development program followed by an impressive technical achievement and a profitable production phase. But we can’t rule anything out. The A-12 is the most haunting extreme outlier: a mere Potemkin Village plane. Those of us at the 7-8-07 rollout wouldn’t have dreamt of that comparison at the time. But who knows what to believe anymore?

In short, the 787 has become less of an adrenaline rush of optimism, and more of a wait-and-see story. Returning to the Jutland analogy, as Churchill said of Admiral Jellicoe, commander of the British fleet in World War One, he is the only man who can lose the war in an afternoon. The men in charge of the 787 today must know exactly how that feels.

This month, we’ve updated the Commercial Jetliner market overview, as well as the 747, 767, CSeries, Dash 8, ERJ 170/190, C-27J/G.222, Hawker 800/4000, UH-1, UH-60, SH/MH-60, EC 145/UH-72,MD500, and the Nimrod. Have a good month.

Yours, “Til The RealityLiner Arrives,
Richard Aboulafia

As was posted on the previous thread- Woo- Hoo !! Long time Eclipse watchers no doubt enjoyed the irony in Mr. Aboulafia's description of events at "the lazy B ranch", and the similarity to those in "the land of enchanment". I would have to say, given Richard's familiarity with aviation history, and current events- he's both an aviation critic, and enthusiast!! Please accept our sincere thanks for your excellent analysis, and your graciousness in sharing it with us.

(Now, least I be accused of being un-critic-al, or overly enthusiast-ic; I am pleased to present "Another View", which provides solid confirmation of Mr. Aboulafia's insightful analysis ! :)