Mysterious goings on at the Lazy B ranch !!
"Aug. 3 (Bloomberg) --Boeing Co. may not get the 787 Dreamliner flying for another six months following its fifth postponement, said Senior Plc, a British supplier of air ducts and other parts for the plane.
" 'We estimate another six-month delay,' Chief Executive Officer Mark Rollins, said today in a telephone interview. 'Their credibility is somewhat in question.' "
Well, now THERE's a quote for the blog to remember (no doubt, a view well established in the minds of both "advocates" and "critics" of a certain program in ABQ...)
Aviation critics (and enthusasts!!) have long been presented with challenge of finding a good metric for measuring progress of a new development program. First flight is an obvious one. One of my favorites is/was, second flight. And Type Certificate. First Delivery. Entry into Service.
Alas, Eclipse has taught us to re-evaluate the meaning of all those terms...and left me with the ill feeling that the only ones -really- quantifiable are: first flights. Still, I'll go out on a limb, and say TC, and first revenue flight are big milestones for the 787 program.
Along those lines, I'm "keeping score" for everyone wanting to offer a guess on:
a) 787 First Flight
b) Type Certificate Date
c) First Revenue Flight
Extra Credit Problem:
d) Number of aircraft having flown by the end of 2010
Super-Duper Extra Credit Problem:
e) Invent your own metric/milestone and share it with us!
Winner of the 787 First Flight will get a courtesy copy of Shane's forthcoming book.
(I'm pretty sure it will be finished before any of the above items are accomplished...)
415 comments:
«Oldest ‹Older 201 – 400 of 415 Newer› Newest»23 of the last 25 posts have been restrained, respectful and focused even though not necessarily in agreement - how cool is that?
How long can this go on? ;^)
Coldwet asked, "Have you seen anything that suggests just where the projected vs. actual disconnects were?"
Yeah, but it's not appropriate for this venue.
I suspect Vern and Peg might have opined that the aircraft could not be profitably sold at the old pricing. The dataroom certainly appears to bear that out.
I don't want to get into what the new company believes, however I can tell you what Friedman and Peter Reed concluded: "We have studied the actual costs of producing the aircraft and believe the costs can be reduced to profitably sell the aircraft at a $2.4 million price at a modest volume of 100 aircraft per year."
Ken
Ken,
"...$2.4 million price at a modest volume of 100 aircraft per year."
That's why I don't think any more will be produced. If Jet-A hit $10 gallon then you might make a case for a 'fuel sipping' little jet. Otherwise why not spend that dollar amount on any number of good used light jets that have better panels.
How about Hampson? Didn't they shutter the eppenage factory? Will Fuji build more wing sets? Will Newco be able to entice all the key suppliers back?
Great investment for Mann. Write a check for $20 million to buy Eclipse and the court sends him back a $20 million check for priority secured claims. That's a no-brainer in my book.
Fair enough explanation Ken, maybe another time.
Black Tulip said...why not spend that dollar amount on any number of good used light jets that have better panels.
----------------------
Same reasons as always.
1 - Smell of new, warranty, etc.
2 - In the case of the EA500 it is still faster than anything close to $2.4M (may change when SEJs come on line).
3 - In the case of the EA500 it is still more fuel efficient than any other GA plane that can go as fast.
I think this combination will probably support a small (50 or so per year) new market.
I still think G1000-equipped planes in the secondary market will be THE COMPETITION for new GA planes - from C172 to Phenom 300. As these planes become available on the secondary market, they will put pressure on new sales.
The SR22 Perspective and Phenom 100 Prodigy, have achieved a level of capability that will keep them desirable for decades.
Manufactures that fail to understand that will suffer mightily.
Thanks CW - yes, high scrappage rates are bad all around. They consume both material and labor.
Anyway...good discussion....but we need to see the transaction close, we need to see upgrade volumes and price, we need to see effective support, we need to see the DJ fleet flow through, we need to see parts vendors lined up, then we can see real new planes (meaning planes built from parts not yet manufactured) flow through. That is a long ways out.
"IMHO Eclipse Aerospace has reached the point where they would benefit from having a PR spokesperson to manage their message, keep it on track and avoid crossed-signals."
The need is for a competent, honest CEO with APPROPRIATE experience - he/she should be the spokesperson for the company. Dump this "manage the message" bullshit - its Vern-speak, and the kind of substanceless thinking that got EAC into trouble in the first place!
Alan K. is not the man IMHO. As Baron suggests, you need a "junk yard dog" type that can squeeze nickels and make the buffalo shxt.
If anyone can explain how this plane will cost LESS to produce 100 a year instead of 1,000... I'd be very interested.
Heck, even 100 versus 200 a year.
I'm sure the suppliers would like to know this, too.
And, the plane was not designed to be low cost at low rate - there's a big leap that this is possible.
Then only saving grace is the engine, which, I believe PW was smart enough to price around a normal production rate - if this is the cae, they might not double in cost... cannot say the same for the rest of the parts.
PS. if the "assembly" portion of this plane was supposed to be $75,000 and it jumps to $150,000 at low rate... this will be insignificant compared to all the other costs that will jump.
PPS. The new production planes will never be the same as the old ones - there are going to be major systems that will be changed.. this has potential implications for a lot of folks....
"Alan K. is not the man IMHO. As Baron suggests, you need a "junk yard dog" type that can squeeze nickels and make the buffalo shxt."
maybe Ken?
We have studied the actual costs of producing the aircraft and believe the costs can be reduced to profitably sell the aircraft at a $2.4 million price at a modest volume of 100 aircraft per year."
yes, the same guy who made the intial cost assumptions and said the same thing at less than $1M...
Ken... you are starting again....
"maybe Ken?"
With no disrespect to Ken intended, I also said APPROPRIATELY experienced. If Ken has previously led and turned around a small failed aiplane manufacting company, he may be worth considering. Note the word "small." IMO, this also disqualifies Schuster, who, IIRC, is a big company troubleshooter type, with HB the only airframe manuf. on his resume.
WT, Schuster was a troubleshooter period, and he ultimately positioned the Raytheon Aircraft Corporation unit to be sold for $3.3B, when nobody thought is was worth half that. RAC had been 'for sale' in the $4B range for years with no takers.
He would be a good guy for this I think not due to small plane experience (though he should have learned alot about that at RAC) but rather due to his ability to evaluate what is going on, to cut out what makes no sense, to commit to big change if needed, and the ability to attract the experienced technical airplane people to do the technical airplane stuff.
I have zero indication he is being considered or would be interested, I was only offering up a suggestion in answer to a question.
"He would be a good guy for this"
The reason I think NOT: over twenty years of investing in startup and emerging companies, I have seen many attempts to install big company guys (with no real small co. experience) as CEO, and they almost always fall on their face. They dont know how to hustle and clean toilets. They are used to being surrounded by plenty of people to whom they can delegate the real work. The right time for the high profile guys is usually after the company has become modestly succvessful (profitable) and is ready for a new stage of growth. Maybe Schuster could do it, but the odds are against it.
Schuster was at smaller Raytheon divisions prior to the aircraft unit, some of which were innovative, agile and 'start-up-ish' IMO which is why I think he'd be a good fit but I defer to your investment experience - besides, doubtful he is under consideration.
I would like to believe that M&M have a good solid plan and specific people either in mind or in place - remains to be seen.
CWMR,
Yes, that money is no longer owed, but the question is what happened and has the lesson been accurately identified and learned.
all acting players are gone!
accurately identified
Who dares to say "I did"?
learned
Who dares to say "I did"?
Is there anybody who did it and was successful?
Are M&M only investors (like Al Man) or are they going to become part of the exec team, too?
How much time is needed to get all the certs (or employees/consultants/feelancers with relevant certs) to do the job of a TC holder of the fpj, to do the maintenance in ABQ?
Lot of questions - M&M will soon present some answers ... or...
Julius
WhyTech is correct.
CEOs usually can't downsize effectively.
Getting a multibillion co CEO to operate in a firm capitalized to the tune of $20M or so is not a good recipe.
Get the guys running Aerostar or Mooney to run the upgrade/support mission. It is a $$$ and cents, thankless, no interviews, not press job. It is a backroom operation. No big name CEOs need apply.
There are no lessons to be learned from burning $1B or $2B or $3B. Waste of time.
It is about what you have on hand, what you can get your hands on, and what you can make of the two.
They have a TC, 3 dozen planes, a stack of parts, a factory, a few dozen available/trained workers, a service center, some IP, information on build times and parts costs, 230 potential upgrade customers and $20M give or take plus some amount of new ABQ incentives.
They can get xxx suppliers to play ball and produce parts and/or yyy suppliers to replace old ones in zzz months.
That is what you have to work with.
All else is noise.
What can EA make of this?
That is the question.
"What can EA make of this?
"
Very well stated!
I want to know what happened Baron, call it morbid curiousity.
How did such a promising concept end up in a nearly $3B crater?
Beyond the obvious management lessons about how not to run a railroad in terms of communication, decision making, etc., I really want to understand how $1-1.5B was effectively 'blown'.
Free pop and Fed Ex? International travel and big ass tents at OSH?
What were the major contributors or deviations from the plan? Sure, we know about Williams, and Avidyne, and BAe etc., but were they not risk-sharing partners?
How did so little come from so many with so much?
There are important lessons to be learned - some might even be of import to M&M, but all of it is interesting to me.
1. Shuster is an employee. EAC is a venture. The two do not mix.
2. Mann is out; he's simply working to get some cash back.
3. EAC V.2 is incoherent as far as production.
4. The 787 is dead.
Regards.
"I want to know what happened Baron, call it morbid curiousity."
Not Baron, but ...
No one was minding the store.
Freddy Oh - Down above 9,500. ...
WOW ... what a miracle !
BTW : do you know that each time the Dow get a point up = there is a THOUSAND persons to loose their job ?
as usual looking ONLY at what is interesting for you ...
Volume of transactions ?
what we are seeing here is only a de-stocking effect !
WHY do you think that even Angela Merkel called Obama to warn him of not pushing the cork too far ?
consumer's spending is sinking , as i said previously :
before one of the main problem was lack of savings ...
Now the biggest problem is going to be savings !
(for understanding : saving ratio in USA went from a negative value to over 7% in about 18 months ...)
let's see where are the problems :
Too much credits accumulated in past ...
Too much debts to be repaid ...
Wages being far from being enough ...
Tax (federal + state + locals) are soon going to skyrocket ...
(some state that the deficit will be ONLY about 1.5 Trillions at end 2009 ... )
those incentives of now are going to have to be repaid , probably sooner than later !
what are the solutions :
make peoples work a lot more (it is not possible ...or most can give their house ... they'll sleep directly on job premises !)
make them spend but with what ? job is hardly paying them enough to repay bills , credit is something they are going to be very skeptical about for XXX times
reduce vacations ? almost already none ... while in fact put peoples on vacations would be a big + , all the time peoples spend to work is time they don't use to spend ...!
lower $ value (by expanding even further the Monetary mass ) unfortunately the biggest chunk of is consumed in the US is imported (principal China ! the trick used by Stats peoples to lower Import volume = consider Hong-Kong and Macao as different countries from China ...)
OR
change the Economic bases !
this is where all the "Funds" (tarp + all others ) are quite weird ...
they only make a dying system to last a bit longer !
while it is DOOMED without the least doubt ...
I forgot to add :
I am NOT saying that to be nasty ...
ONLY to warn who want to be that it could be better to spend a bit more than 90 minutes per year reading essays and substantial stuff about what is going on in the WORLD (the whole lot , not limited to "stars & stripes banner")
than to spend 1546 Hours per year watching TV where they mainly tell ONE side of the story ...
as i believe that the one ready for the change coming will be the ones to make it well !
as for others ...
Deep Blue :
2. Mann is out; he's simply working to get some cash back. ...
kinda agree ...
in fact what would be interesting to know :
DID he put some NEW and Fresh cash in it ?
or
DID he only accept the notes from M&M making him a associate ?
Yes , Julius ...
What has to be learned from any fiasco ?
A: some peoples (in charge) to acknowledge WE (not them or it) were wrong ...
What did we hear up to now ?
A: poor piss excuses ! and bloating of qualities ...
End of world is looking a bit iffy, huh? ...
i am amused that someone NOT reading all the Non-Sens i am writing is ACTUALLY following so well ... ;-)
once again , some contradictions ...
jumping at any second notice on the latest event is probably not the best way to learn what is "Long Term Planning" ...
or when reactivity becomes more a problem than a + !
All the talk about "restarting production" is focused on the wrong part of the problem, IMO. The appropriate focus is restarting sales. This is not a "build it and they will come" situation. Who is going to want to be first? Who is gong to want to place deposits in advance to (partly) fund restarting the line? IMO, 100 per year is a dream,for sure in the early going. Perhaps with credibility and trust restored, 50-100 per year is possible, but this is years away, and EA has to survive long enough to get there, and must do considerable refreshing of the design to be competitive in 2015, the earliest likely date at which they MIGHT be taken seriously by most buyers. (By then the original design will be 15 years old.) IIRC, BT was dead on in predicting production volumes for EAC, and he seems to be closer to reality for EA than others here.
Whytech :
Brilliant !
the dead-weight coming from history might be so heavy that altogether it may sink the boat !
"Production" was designed to deliver a high rate/low cost jet, and it failed on both counts. It took a long time (cycle) to get a plane out the door, and we all kow it cost way too much to make an EA50.
How will they make 50 a year affordably? Even IF its possible, it will not be with any of the manufacturing concepts utilized for high rate and low cost.
The fallacy here is, "We failed at high rate low cost" so we'll do "lower rate/low cost"...
So, Whytech: you pose a good question... where to begin?
1- get service running and profitable (cheap and profitable are not going to work for a small fleet)
2- figure out what to do with the design, so it CAN be produced in rational numbers and make money - this effort can cost $50M (I am being very generous, here - it will probably cost $100M)...
- if they try to take deposits again, any time soon, it will be death for them. Most people know they cannot deliver on a low cost / low rate plane. Especially not this one.
- any one know the parts count for an EA50? Including the parts they FWS together "before" assembly begins?
Ron:
What do you think they will sell the planes for?
I think you are right about one thing, and a related issue:
- they will discover if there is a market for 28 refurbed planes, today, at some price
- I think they will get a first taste of what it's like to be responsible for "producing and delivering" planes as an OEM... unless they farm out this work to a shop already doing some/all of this anyways. I suspect, they will do it this way, in which case the "learning" will be limited.
- if they try to do it themselves, I suspect it will take a lot longer than they expect
- if they try to farm it out, I suspect it will cost a lot more than they expect
Either way, learning is learning. There's a nice big fat expensive learning curve associated with what they are trying to do...
If anyone says... they'll hire the guys who knew from before - this is a whole differnet Eclipse... if its not, there are going to be big problems all over again.
Can't wait to see the differences show themselves...
"The refurbishment will cover paint, interior, ETT, AvioNG 1.5, and FIKI....I suspect they'll quickly find out if there is a market for these jets when they start selling the refurbed models."
This may be a somewhat useful market test, but remember that these are used acft, are substantially "finished," allowing a relatively quick turn around time, reducing risk in the event that a buyer must make an advance deposit, and reducing or eliminating the need for a substantial deposit. Avio NG 1.5 with dual Garmin 400's is already non-competitive in the marketplace. The credibility & trust issue can only be resolved by near flawless performance over extended time, so if these planes sell well at near the often mentioned price of $2.4mm, this will bode well for EA. Could happen, but I wouldnt bet on it.
Another side to this coin: if EA is busy refurbing these acft, this will slow performing mods for current owners. With around 250 acft to do, even if they could do an average of 50 per year (fewer in early years, more in later years), some owners will be waiting five years. Many potential buyers will be looking at how EA deals with current owners as a proxy for how EA will deal with them. Dangerous to treat existing owners with other than great care.
WT,
what do you think the finance community will think of those Dayjet birds... and what about EA in general?
I suspect, some fleet operator, like NA jet or Linear might want to buy these planes and use them for revenue? They had guys interested in financing them before... perhaps this is an approach
Whytech, excellent post on production and dates; it's quite sound. Let's hope any party that gets involved is as sober (not likely; too realistic for venture capital; you'd have to find quite smart and patient capital, a rarity).
"EA have stated that one of the first things they are going to do is to refurbish the Dayjet planes (and the other E500's they've purchased) and sell them. The refurbishment will cover paint, interior, ETT, AvioNG 1.5, and FIKI."
On what authority are they going to do this? They would need a certified repair station to do the work; they could not, as just the owner of the TC, perform such work.
Even if they had a Production Certificate it would not grant them authority to start modifying existing airplanes. If they can't find an existing repair station to work under they would have to go the Form 337 route and find some IA willing to sign the work off AND get it approved by the FAA. As far as working with the FAA, it may be payback time.
"what do you think the finance community will think of those Dayjet birds... and what about EA in general?"
Not quite sure what you mean by the "finance community" - covers many bases. I think it will be possible to finance part of the purchase price of the DayJet birds - but nowhere near the full purchase price if in the vicinity of $2mm, and on not so favorable terms. As far as EA goes, probably will need to find individual "hobbyist" investors like Mann. With the failure of EAC, Adam, etc. the professional private equity community will be very difficult to attract.
Naj is already certified. No problem there. What I'm interested in is how press handles 60 percenters and other depositors that he has claimed to care for so much and even said to feel responsible for! Unfortunately we know what will happen...these folks will come up with more cash to get the plane they have been waiting for for 7 years or whatever. I still think naj would have done just fine without ea. Would be nice to see Ross put the screws to m and m.
ASM says, "On what authority are they going to do this? They would need a certified repair station to do the work; they could not, as just the owner of the TC, perform such work."
Eclipse Aerospace has been doing the upgrades at their Chicago facility (North American Jet) for a couple of months. The 145 facility in Albuquerque will presumably require filing for an amended certificate. Anybody know how long that will take?
Ken
I understand that Avidyne is looking at the possibility of putting its Release 9 FMS into an Eclipse. The reviews of R9 (including article in Sept. 09 FLYING) have been positive. R9 seems to be basically what EAC promised from the beginning.
How practical is this idea? If implemented, it would leapfrog Eclipse jets over G1000 into an even better FMS.
"This may be a somewhat useful market test"
Sale of the DayJet acft will be a more significant test of the market if these acft are refurbed to new condition, with a meaningful new acft warranty, and with some form of "JetComplete" offered at a reasonable price.
To take a big step to restoring customer confidence, EA will bundle a meaningful warranty into the more comprehensive refurb options - not just on the mods themselves, but on the entire acft and/or offer a form of JetComplete at a significant discount vs a new retail customer price.
I dont expect them to do either, but IMO, such measures are needed to demonstrate good faith. Hopefully EA will take the long view and will have the resources to "invest" accordingly.
WT,
Those will be just "promises"... and dare I say, perceived to be "empty promises" unless there's something real to back it up.
So, its not the offering of a warantee or service plan, but something backing them, to make them real that is key.
In fact, "offering" them will look like a stunt... unless...
Whytech :
excellent again !
i fear the EA500 is going to be flying OR affordable ...
but only one of those conditions at any time !
Whytech says, "To take a big step to restoring customer confidence, EA will bundle a meaningful warranty into the more comprehensive refurb options - not just on the mods themselves...I dont expect them to do either"
They've already announced that they intend to do precisely as you have described.
Ken
ColdWetMackarelofReality said...
I want to know what happened Baron, call it morbid curiousity.
How did such a promising concept end up in a nearly $3B crater?
How did so little come from so many with so much?
-------------------
That is just it CW... by industry standards, I don't agree that they underperformed.
Lets look at Adam. They "consumed" $300M and generated 6 incomplete piston planes with no payload and substantially underperforming. That is $50M per incomplete and unusable piston plane.
Eclipse "consumed" $2.6B (using something close to your exagerated number) and delivered 260 jet planes, with the majority being NG/ETT planes that perform as promised, though are incomplete on avionics and FIKI functionality.
So that is $10M per plane. A plane that is probably 6 times more valuable than the A500.
So Eclipse performed 30 times better than Adam - whom many here held as a model individual and company.
And Eclipse performed infinitely better than all other start up VLJ companies - since none produced a single plane.
Yes, they underperformed Cessna and Embraer, mature companies that were up and running.
So what happened? They ran out of money. They tried to do too much.
Lets look at avionics. If I asked you to estimate for me, as a consultant, how much I should budget to develop and certify a flight deck from scratch with Autothrotlles, FADEC hosting, ECBs, etc for a twin jet, what would you say? $500M?
How much did L3 burn on their glass flight deck that has ZERO customers? $150M and 10 years? Well, Eclipse's flight deck with AT, ECBs, etc, if completed was going to be more capable. So that should consume about $500M.
But obviously the biggest cash burn as ALWAYS was people x elapse time.
When the EA500 project got delayed from 4 years to 11 years, it burned a lot of cash with no revenue.
$500M is what if should have cost for a COTS based twin jet program. Add $500M for ambitious avionics. Add $200M for engine swap. Add $700M for 7 year delay, add $300M to build the company and factory, add $750M to build 260 jets. That is your $3B.
Nothing mysterious about it. Now how does that help EA?
ATM ...
yes , promises ...
they cannot offer everything they should to regain confidence , attract new customers (which deadly needed) and make profit at the same time ...
unless they find potential buyers with a lot of passion for the thing ...
but at such a price they'll to competitors !
BricklinNG says, "I understand that Avidyne is looking at the possibility of putting its Release 9 FMS into an Eclipse...If implemented, it would leapfrog Eclipse jets over G1000 into an even better FMS."
I've heard that too. Just a guess, but I would think new production EA500's will have either R9 or the completed FMS NG package that EAC put on hold when they opted for the Garmins.
Ken
B95 said:
"How much did L3 burn on their glass flight deck that has ZERO customers? $150M and 10 years?"
B; are you referring to the Thales/L3 JV called ACSS or something else?
Ken, I think you mean...
"could"
or
"should"
;)
"unless there's something real to back it up."
Agree. To not back them up is suicide, and will become apparent early on.
"They've already announced that they intend to do precisely as you have described."
Cant comment until I have read the warranty language and understand the cost. The road to hell is paved with good intentions.
BricklinNG said...
I understand that Avidyne is looking at the possibility of putting its Release 9 FMS into an Eclipse.
--------------
They are trying to put Release 9 into anything. Like a teenage boy trying to score a chick.
Problem is no OEM wants them. Market has passed them by.
The Flying article is a ridiculous ball licking piece. Just like their articles on L3 on the Adam 500 and on Eclipse.
There is no critical writing on the trade press. They write article exclusively to score ad sales.
Does Release 9 have synthetic vision? NO. Do they have STCs to put it in basically any plane like Garmin has for the 500/600? NO.
Good or bad Garmin-1000 systems are the de-facto standard in new GA glass.
I would not want an Avidyne system on my plane. I don't think they will be around much longer to support it.
Deep Blue said...
B; are you referring to the Thales/L3 JV called ACSS or something else?
-----------
L3 Smartdeck - another dead end system (like R9) - looks like the only "revenue" they may get is if they win their law suit against Cirrus ;)
There is no way EA will be able to sell the refurbished DJ planes at $2.4M.
$1.8M yes. $2M maybe. Too much above that and they are encroaching into used Mustang prices.
And if Diamond manages to certify and start delivering their jets bellow $2M it will become harder still.
"Like a teenage boy trying to score a chick."
I can say with some certainty that this behavior is not limited to teenage boys.
Your comments on avionics demonstrate the importance of early design wins and getting it right the first time. Similar issue with Honeywell Apex in the PC-12 - too few design wins to reach a critical mass for ongoing support due to late arrival in the market. IIRC, the only other design win for Apex was the Grob jet - now vanished.
if these guys need to make any real changes to the design before production....its going to take time and money.
anyone want to guess at how much?
How in heavens name will you ever fabricate this plane, at lower rates and make money selling them for $2M?
If they get away with blowing $50M in pre-production engineering, that's $250,000 per plane in engineering for the first 200 planes. This number is a cheap estimate for the engineering... and 200 planes should take these guys 5 years or so, at best...
Any ideas?
Yes WhyTech, but at least PC-12NG owners don't need to worry about Honeywell going out of business.
Avidyne going out of business is a very distinct possibility.
Would you really want your $4M plane to have an avionics flight deck from a shaky company with a very poor reliability reputation like Avidyne?
I've been critical of the PC12NG flight deck as overly complicated, overly engineered. But at least it is fully functional and fully supported by a company with staying power.
The issue with the PC-12/Apex is 5 years from now, when you fly it into a small airport and have a problem. Will the local avionics shop have a spare on hand? They likely will have a couple of G1000 displays, GPS modules, etc ready for exchange. Will they even have the service manuals for Apex? Will you be stranded waiting for parts?
In all my flying, only once have I had to cancel a flight due to an airframe issue (wind from behind bent down the aileron actuators - I'm very proud of myself, as a 400 hr pilot back then, that I caught the problem on pre-flight).
But I've had plenty of issues with engines and avionics. So I want those two items to be as standard as possible for ease of field repair.
"Would you really want your $4M plane to have an avionics flight deck from a shaky company with a very poor reliability reputation like Avidyne?"
Some people chose to buy a $1.X million plane with Avidyne avionics from a shaky company...
Where do these lines cross?
"I've been critical of the PC12NG flight deck as overly complicated, overly engineered"
It fits the plane - it a Swiss-German thing. Why I love the airplane!
"But I've had plenty of issues with engines and avionics."
You needs to stop scrimping on maintenence! This is year 43 for me flying GA airplanes and helicopters. Never an engine problem, and only two minor avionics problems: both Honeywell-King KCS 55 boat anchor gyro failures - both discovered on the ground. Sure, I have had my share of SB's and AD's, etc, but these were handled as scheduled maintenance - no real inconvenience or safety of flight issues.
"only two minor avionics problems: both Honeywell-King KCS 55 boat anchor gyro failures - both discovered on the ground."
these occurred at home airport where there was a large "corporate" type avionics shop. Neither had a spare gyro available and neither did Honeywell - took a couple of weeks to get and install. This for a widely used, mature system. Good luck in finding G1000 spares in the field.
ATM asked: "if these guys need to make any real changes to the design before production....its going to take time and money.
anyone want to guess at how much?"
My put is 18-24 months, a minimum of $150M, and a very experienced leadership team.
Therefore, I actually expect more like 30 months, $200-220M, and probably done to the detriment of the support of the fielded aircraft (unintentionally).
This is to fix all known issues, regain the PC and EASA TC, and to redesign/retool the plane as required for profitable production at the volume and price that might work out ($2.2-2.4M, 50-80/yr).
This is also in addition to what I figure to be about $50M to support the plane effectively over the next 2 or so years and develop the IOU's.
Hundreds of million of dollars to build Eclipses... with questionable demand? Sooner or later you’ll be talkin’ real bucks. Brings to mind the quote variously attributed to Will Rogers,
"It's not so much the return on my money that concerns me as much as the return of my money."
($2.2-2.4M, 50-80/yr).
= $250-$400k per plane over ten year to recoup dev costs...
I think we've changed nothing so far...
Yes, we've decided to increase the priceof the plane and reduce production - I'd love to see how this results in profitability.
I think the numbers above begin to shed light on the sort of problem this plane is in for.
Whatever the cost of systems and parts, at Vern salesmanship/BS stories of volume, you can bet they will INCREASE substantially for lower rate.
Yes there's certainly no huge market for the $2M eclipse at profitable higher) rate, and there's not enough demand for 1,000 a year anyway... even IF it could be done for $1.X...
So, how can it be done for $2.2 -$2.4 for 50-80 per year?
(2012 pricing)
engines: $600,000 pr
avionics: $250,000
structure
systems
interior
gear
transparencies
labor
warrantee
- recoup dev costs...
???
anyone
"the only other design win for Apex was the Grob jet - now vanished."
Update: The Viking Twin Otter reincarnation and the Spectrum jets have announced selection of Apex for their acft. These are low/no volume manufacturers, and the net result remains insufficient critical mass for long term, easily available support.
Garmin has won this round, and there will not likely be an opportunity to grab significant market share until a new generation of technology convincingly obsoletes G1000 and derivatives.
AT asks, "So, how can it be done for $2.2 -$2.4 for 50-80 per year?
(2012 pricing)
engines: $600,000 pr"
You can stop right there. That's way more than what the engines cost under EAC.
Look, here's the deal. It's simple: The plane is fast, fun, reliable, safe, and cost-effective jet transportation. That's its niche. It is the most cost-effective jet there is, both in terms of projected upfront cost and per-mile DOCs.
I think we can all agree that Vern's hope of selling a thousand units a year was unrealistic. But last year Socata delivered 60 single-engine prop planes priced hundreds of thousands more than the projected price of the Eclipse. Piper delivered 52 much less capable planes near the pricepoint of the Eclipse. Cessna delivered 101 Mustangs that cost hundreds of thousands more but have less performance than the Eclipse.
Is there a market for the Eclipse in the low-to-mid $2 million pricepoint? Yep. You can be sure the new company looked pretty carefully into that question before plunking their dollars down. And I'll bet they're going to look even more carefully before restarting production.
Can the plane be produced at a pricepoint hundreds of thousands less than the Mustang and the TBM-850? The data I've seen say yes, it can.
Fast, fun, reliable, safe, cost-effective jet transportation is what the Eclipse 500 offers. Will enough people want it to sustain the new company? I think so. So do a lot of people whose opinion I trust.
Ken
"Will enough people want it to sustain the new company?"
Define "enough" in specific numbers. "Enough" depends not only on initial price but lifecycle economics and less tangible "ownership experience." Much, much work to do to make all this play out favorably. Impossible? No. Unlikely? Well ...
"Can the plane be produced at a pricepoint hundreds of thousands less than the Mustang and the TBM-850?"
Sadly the answer is no. The reasons are multi-variant but obvious to the informed observer.
BT says, Can the plane be produced at a pricepoint hundreds of thousands less than the Mustang and the TBM-850?"
Sadly the answer is no. The reasons are multi-variant but obvious to the informed observer"
Please tell us the objective data that led you to that conclusion.
I have seen objective data that says the Eclipse 500 can be produced at a pricepoint substantially below the Mustang and the TBM-850. I'm not talking about "feelings," "hairs on the back of the neck," or "sixth senses." I think maybe you are.
Ken
"I have seen objective data that says the Eclipse 500 can be produced at a pricepoint substantially below the Mustang and the TBM-850."
It going to need to be substantially below the Mustang to sell. Who wants to take on the risks of buying an Eclipse without a significant financial inducement (much lower price)? Immature airframe, obsolete avionics, questionable parts support, extremely geographically limited service support, etc. Fuel efficiency alone will not overcome these objections for the vast majority of potential buyers. The Mustang is the safe bet for a new jet owner, especially in light of the sordid history of Eclipse so far. Different buyers will be willing to pay different premiums for the "security" of a Mustang (plus larger cabin, Garmin 1000, lav, etc). For me personally, I'd be willing to pay about $2mm in "Mustang premium." (To be perfectly honest, I'd not be willing to purchase an Eclipse at any price in the near future (next 3 years) to use as my own personal acft.) So, the market will cap the price for an Eclipse. The question becomes can the acft be built profitably at this price at the likely resulting sales volume. Eclipse watchers here have been pretty good at judging similar Eclipse issues over the years, and the weight of opinion here seems to suggest that the answer is very likely "no."
Whytech says, "Immature airframe, obsolete avionics, questionable parts support, extremely geographically limited service support, etc. Fuel efficiency alone will not overcome these objections"
Hold the phone.
"Immature airframe"--the airframe is more mature than the Mustang's.
"Obsolete Avionics"--actually, that's not right either. The "native" avionics of the Eclipse--the ones that control the airplane, operate the CAS messages, etc etc--are actually much better than what the Mustang has. Your concern is that the FMS functions are lacking, but I'll wager you that any new production by EA will include full FMS functionality.
"questionable parts support"--that would be a big problem. It will be up to Eclipse Aerospace to dispel that belief.
"extremely geographically limited service support"--I think that one's already solved. Unlike the old company, who saw benefit in limited access to maintenance, the new company has no such compunction. I've already enjoyed better geographically-distributed support than I had under EAC. Heck, my nearest service center is now a short hop away from my home base whereas previously I had to fly to Albuquerque, Gainesville, or Albany.
"Fuel efficiency alone will not overcome these objections"--no argument from me. But better fuel efficiency combined with lower insurance rates, lower cost of capital, lower engine overhaul prices, lower this, that and the other thing will overcome objections for many.
Does Eclipse Aerospace have their work cut out for them? Sure. But it's within their grasp to provide a better, more cost-effective product than Cessna has. I think they can and will do it.
Ken
"There will NEVER be a meeting of CEO/Corporate behaviors"
So help us out a bit: was EAC a skunk works or corporate bureaucracy?
"the airframe is more mature than the Mustang's."
By what measure? My guess is that Mustnag fleet hours now exceed Eclipse fleet hours. And, the Mustang airframe is built by a company with decades of light jet manufacturing experience.
"The "native" avionics of the Eclipse--the ones that control the airplane, operate the CAS messages, etc etc--are actually much better than what the Mustang has"
You mean like the flight control system that many report has serious issues? I'll give you credit for FMS, synthetic vison, etc when they are delivering. No credit for good intentions.
"Heck, my nearest service center is now a short hop away from my home base "
Better, but only partial credit. I'll give you full credit for this when your local service center is approved for warranty service by EA.
Ken, you are falling back in to the trap of not distinguishing what could be from what is. EA is going to have to learn very quickly to make a sharp distinction. What could be wont cut it in the real world.
"The flight control system in the Eclipse is manual and has no issues. What are you talking about?"
Autopilot and related systems
Ken Meyer wrote: Cessna delivered 101 Mustangs that cost hundreds of thousands more but have less performance than the Eclipse.
Not so fast Ken.
If the Eclipse cost less than the Mustang and had better performance, I would have bought it. It doesn't. The Mustang has better performance than the Eclipse hands down.
Let's review:
1.) The Mustang is a fully certified aircraft with numerous features that the Eclipse lacks and will likely never have.
2.) The Mustang is backed by Cessna - a solvent multi-billion dollar organization which is part of a larger multi-billlion dollar organization, Textron -which in turn has diverse revenue streams. Textron has been consistently profitable for at least the 30 quarters - including 2009 YTD. Eclipse has only lost money.
3.) The Mustang is a more versatile aircraft than the Eclipse.
4.) The Mustang has better construction than the Eclipse.
5.) The Mustang has better avionics than the Eclipse.
6.) The Mustang has better situational awareness than the Eclipse, including but not limited to Synthetic Vision and Safe-Taxi.
7.) The Mustang has better payload than the Eclipse.
8.) The Mustang has better range than the Eclipse. The block times are comparable between the two until the Eclipse needs to land for fuel where the Mustang can keep going.
9.) The Mustang has vast external baggage which dwarfs the baggage available to the Eclipse owner.
10.) The Mustang has a comfortable 4 pax club seating arrangement. The Mustang 4 club is in fact larger than the 4 club on the Citation II, the Citation Bravo, the Citation SII, the Citation V, Citation V Ultra, and the Citation Encore. The Eclipse passenger seating is wholly inadequate when compared to the Citation Mustang. Ken as you know, the 4 pax Eclipse is an absolute joke. Years ago Eclipse told me that even if I travelled to New Mexico, they didn't have 4 pax configuration to show me and they really didn't recommend it. The standard 3 pax Eclipse has people packed like sardines with baggage jammed behind their heads! (the most comfortable Eclipse configuration I've been told of had one of the three rear seats removed - so only two rear pax.)
11.) The Mustang has a better lavatory than the Eclipse 500. As you know, most Eclipse aircraft don't even have a lavatory, it takes up too much space and reduces the Eclipse's tiny payload even further.
12.) The Mustang had testing in design verification before production that Eclipse NEVER did before it sold aircraft to its customers. Based upon information and belief, the Eclipse 500 has never been tested to the same standards as the Mustang even through today.
13.) The Mustang has real support engineers, spare parts around the globe and a strong vendor base supporting the Citation Mustang fleet. The Eclipse 500 has never been able to match Cessna's support network for the Citation Mustang and likely never will. IMHO, this is a significant safety issue in and of itself which is largely ignored by Eclipse advocates on this blog.
To get all this for only hundreds of thousands of dollars more (in purchase price) seems like a bargain to me.
Yes, the Eclipse uses a little less fuel but in the overall scheme of things, the fuel savings of the Eclipse compared to the Mustang is mice nuts.
What I enjoy is how much less the Citation Mustang costs to operate than other Citations from Cessna or jets from other traditional OEMs. Those savings, when combined with all the points above, leads me to the conclusion that the Mustang has better performance.
Kevin
Kevin of real plane ...
HOW dare you to nay-saying that the eclipse is less attractive than a Mustang ? ;-)
have you never seen the PowerPoint made to show that EA500 will darken the skies ?
only change a few parameters in this PowerPoint = Data shows without any doubts that EA500 is superior to anything flying man-made since Wright brothers and Clement Ader ...!
very nice summary !!
i think that Whytech , Coldwet and black-tulip said it all :
the plane need to be corrected to be sold ...
but to be corrected it need to be sold ...
where do we start ?
Tell ya what...and I certainly don't want to see it happen...but let's hope these guys aren't looking for big downs for a MX plan that seems too good to be true.By the hour or whatever owners beware. Ken chime in please. If they can straighten out MX docs and have good accepted revs it will be a super start.
"I have seen objective data that says the Eclipse 500 can be produced at a pricepoint substantially below the Mustang and the TBM-850"
OK, I'll bit... how do you know what it costs to produce the Mustang or TBM?
Ken,
I would advise some caution, here. Cessna had the advantage of seeing and understand exactly what EAC was doing, when they decided to produce the Mustang.
KNOWING a lot more than you, they decided the value package called "Mustang" priced at $2.4++ was the right way to go.
Did they think "everyone" would choose the Mustang? No.
But, the knew MOST people would.
HOLD THE PHONE:
"You can stop right there. That's way more than what the engines cost under EAC."
Really?
"way more"
I provide for $300,000 per engine in 2012... compared to around $200,000 in 2007... accouting for 50 jets(lower rate)... how much am I off, Ken?
That's 4 years later, and perhaps 1/5th to 1/10th the projected volume... for which, today, there's no prayer.
"To get all this for only hundreds of thousands of dollars more (in purchase price) seems like a bargain to me."
A real customer making my point far more effectively than I could. Thanks.
CW,
what a pair of PW610's cost at low rate?
AT asks, "Really?
'way more'"
Yep. The engine pricing was never announced (to my knowledge anyway), but came out via the Chapter 11.
Ken
Kevin writes, "If the Eclipse cost less than the Mustang and had better performance, I would have bought it."
I like the Mustang; let's put that upfront. But the facts are the facts, Kevin. It is a fair amount more expensive upfront, and it costs more every mile than the Eclipse.
I said it has less performance--it is slower--and it is. At ISA and midweight, here are the numbers:
40,000: 317 knots on 468 pph (Mustang) vs 351 knots on 345 pph (Mustang is 35 knots slower and burns 50% more fuel per mile)
35,000: 340 knots on 609 pph (Mustang) vs 369 knots on 459 pph (Mustang is 29 knots slower and burns 44% more per mile)
30,000: 342 knots on 713 pph (Mustang) vs 371 knots on 553 pph (Mustang is 31 knots slower and burns 40% more per mile)
You mentioned block times. OK. Business and Commercial Aviation says the Eclipse beats the Mustang on each of it's typical flight profiles of 1000 nm, 600 nm, and 300 nm.
You mentioned range, suggesting that there is a large range difference between the Eclipse and the Mustang. Actually, there is not. The NBAA IFR range of the Mustang is 1150 nm; the Eclipse is 1125 nm.
You mentioned payload capability. Full fuel payload for the Mustang is 800 lbs vs 720 lbs for the Eclipse.
To be clear, Mustang is a nice plane, and you should be happy to own one. My point is just that there is a niche for the Eclipse for those owner/pilots and cost-conscious charter operations who want the faster, more cost-effective choice.
Ken
"My point is just that there is a niche for the Eclipse."
No argument about this. What the debate is about is how large a niche and how much of a discount to the Mustang price is needed to create this niche. And, Ken, get real on the fuel burn and speed differences - these wont change anyone's life. The speed "advantage" of the Eclipse will be a few minutes in the most favorable case, and the fuel cost savings will be swamped by other costs over a several year ownership period.
Ken, can any EA-500 legally operate at FL400 today? We both know the answer so why include it?
Let's keep to what is, not what might be, someday. This discussion has been remarkably civil and filled with good information but if you slip back into a mode that refuses to publicly acknowledge the known and significant shortcomings of the EA-500 and the tremendous challenges ahead for M&M and instead glosses over that for playing up the acknowledged areas where the EA-500 can potentially be competitive I think it will sour the discussion.
Besides, if picking nits, it is absolutely true that Mustang has more range and more payload, according to the info you provided. Real Planes said it did, and you agree. And you ommitted to discuss the other 10 or so areas that Real Planes provided comparisons for.
I note that Mustang 510-012 is listed on Controller with 750TT. Is there an Eclipse actively flying with this much time (or another 510 with even more time)?
"you ommitted to discuss the other 10 or so areas that Real Planes provided comparisons for."
Kevin was discussing why he doesn't agree with me that the Eclipse has better performance than the Mustang. I addressed that issue. He threw in a bunch of extraneous things that do not go to the performance question at hand.
He's right about the company--the new company will have to demonstrate it's ability to support the aircraft.
But in my view he's wrong about some of the other things. Cabin layout, for instance. That's a personal matter, but I think the club layout of the Mustang is probably its weakest element. You can't help but knock knees with the guy opposite you. The seats either don't recline or don't recline much. And you cannot easily remove extra seats like you can in the Eclipse.
I think if you really need to fill 4 rear seats, you should buy the Mustang. But if not, the Eclipse actually presents are more practical arrangement that can easily be adjusted according to needs. IMHO, the 4 seat configuration is certainly more comfortable than the Mustang's 6 seat configuration:
Comfortable rear seating
Large man and girlfriend stretch out
Baggage? Well, when Kevin's wife starts complaining about her cosmetic liquids and goo's oozing out because he had to put them outside the pressurized hull, he may start longing for a plane that can put a lot of "stuff" inside where it is warm, pressurized, and accessible:
Interior luggage load for a recent trip
As you might imagine, there are pros and cons to both; strengths and weaknesses to both.
Ken
That may have been one of your best posts yet Ken, seriously.
ColdWet said... Let's keep to what is, not what might be
First, they are legitimate data points, but let's go your route of thinking. No more posting of what you think might be, what you think was, or what you think they will do today. If you do that, ATM won't have anything to say that fits those constraints.
Erratum:
The numbers I posted as being at 40,000 feet were actually at 41,000 feet. And there was a math error--the Mustang is 34 knots slower at 41,000 feet, not 35 knots.
Coldwet--thank you. I included 41,000 despite the current limitation to FL 370 because I believe the AD will be resolved shortly.
Ken
"Not so fast Ken. "
Another plus for the Mustang not mentioned in Kevin's previous post: ABS - an important safety feature and tire saver.
“My point is just that there is a niche for the Eclipse…”
I explored the various definitions for niche and now I understand -
Niche - (neesh) - noun
An alcove or enclosure in a wall for holding a funerary urn or religious object.
(Islamic - mihrab) a recess in the wall of a mosque that indicates the direction of Mecca (or Albuquerque).
Ken,
you stated that the fpj is a niche product (fast, but too small, no external baggage storage etc.).
Space for luggage - did your wife ever try to get to her pieces when the large man was lying like on your picture? What happens if the tarmac is wet or covered with snow?
The fpj was designed to fly above FL370 - now it's range is restricted to approx. 1000 nm at long range speed.
Until further notice there is little or no chance that AVIO (NG) will be upgraded to allow flying above FL 370.
We had some discussions about the AVIO versions. Is the FAA going to asking EAC about it's AVIO (NG) capabilities?
For the "next few months" M.H. is boss of EA(C) and looking for a new CEO - good luck!
In 90 day profitable?
Julius
Julius asked, "did your wife ever try to get to her pieces when the large man was lying like on your picture?"
Yes. He moved to the side a little.
We found it a lot easier than landing the plane to get to the external baggage hold :)
[No kidding; been there done that. I remember the time I was setting up for an approach in Minnesota in my 340 when I discovered the appropriate NACO book was in the wing locker; it's just not easy to get stuff out of external storage when you're flying, trust me]
Seriously...it's an often-overlooked downside of the Mustang that the plane has little to no capability of internal baggage storage. I do like the external baggage hold, but not at the expense of eliminating internal storage.
Ken
PT is 100 percent correct:
"If you do that, ATM won't have anything to say that fits those constraints"
If you limit the discussion to what we know, why bother even engaging?
USe what we know to develop theories about the future... this interests me. Also, I have learned a heck of a lot from this blog... stuff I did not know, and now do.
MAny things claimed as fact, are just opinion... and in fact, I'd say misunderstanding THIS has likely been the biggest mistake the depositors made.
Good luck with that, you'll not get too far, in life, in my opinion.
Ken... good story.. do you are saying there isn't enough room inside the Mustang to hold your NACO book? Or are you just saying it was a good thing you didn't leave it at home...
"cosmetic liquids and goo's" required for some women.... in mass quantities such that they do not fit in the mustang?
Sounds like someone's been hauling around drag queens....
The speed "advantage" of the Eclipse will be a few minutes in the most favorable case, and the fuel cost savings will be swamped by other costs over a several year ownership period.
man, how true is this...
"It is a fair amount more expensive upfront"
I think we need to admit, we have no clue as to how much the Eclipse plane will cost, IF , it eve gets produced again. Plus the subsidized price paid by the 260, was unrealistic.
Somone might say, "I bought the EA50, becasue I only had to pay $1.XM, plus upgrades, plus warantee work, plus lost deposits" = my cost
So, Ken... what did they pay for the PW610s?
Re Mustang vs EA500.
First let me say that if I were in the market for a $2.xM plane, I'd buy a used Mustang.
I do NOT think the EA500 can be produced/supported for by EA for less than the Mustang. Cessna's purchasing power (for things like fasteners, aluminum, G1000s, paint) and ability to spread support overhead across a HUGE fleet can not be beat. Period. When Cessna opens a service center (owned or franchised) in Texas or Brazil, it is spreading that cost over a huge fleet of jets costing up to 10 times what a Mustang costs. When EA tries to open a service center, it can only spread the cost over 250 planes.
-------------------
With that out of the way, Cessna MISSED THE MARK on the Mustang's aerodynamic design. They left the door open. There is no polite way of putting it. Compared to the EA500 and the Phenom, even adjusting for cabin size, and fuel burn, the Mustang cruises substantially slower.
The Mustang also needed a number of "after thought" aero mods to be certifiable. It grew wing boot vortex generators, tail strakes and vertical stabilizer rubber boots - all as band-aids to meet FIKI certification.
If it were not for leaving this performance gap door wide open, I'd say the case FOR the Mustang would be open and shut.
Because of this performance gap, I say there is a tiny chance that operators that favor speed and lower fuel burn AND live reasonably close a future EA support center, to choose the EA500.
It is a very small niche - but because Cessna left the performance door open, it is probably not zero.
I think the parallel is MU2 vs BE90. We know Beech won out. We also know that the BE90 was the slowest of the entry twin TPs. The Conquests and MUs and Cheyennes outperformed the comparable King Airs. These planes only lived because Beech left the performance door wide open. But in the end, fleet size, DETERMINISTIC (if not lowest cost) support cabin room, after market mods availability, etc won the day for Beech.
I predict the same for the EA500. I think it will live for a while as a small niche fleet because Cessna left the performance door open.
The question is - how did Cessna miss so much on the aero design of the Mustang when they did all else so right? Did they rush it as a response to the EA500? Did they skimp on the wind tunnel time?
Ken,
the fpj's accessibility of the luggage is paid by the third seat (starting from a grand total of 5 seats)... and the Mustang...
Cockpit space - one is better off with a working paperless cockpit - but I don't know the procedures.
(fpj has very limited cockpit space for maps, books etc.)
But I think "space" might just be a point after M&M will have found a person for the CEO-job at EAC....
Julius
airtaximan said...
The speed "advantage" of the Eclipse will be a few minutes in the most favorable case,
-------------------
That is INCORRECT. Let me illustrate...
Mission: Westbound flight 700nm, weather below, 70kts headwind component flown at 35,000
Mustang Ground Speed= 340 - 70 = 240 kts on 609 pph = 3 miles/gallon efficiency.
EA500 Ground Speed = 370-70 = 300 kts @ 459 pph = 5 miles/gallon efficiency.
So, for this mission, in cruise, the EA500 is a full 25% faster, and 67% more fuel efficient.
The block time difference will be *HUGE*. The Mustang won't make it without a fuel stop. Even if it did, the block time would be almost a full hour longer.
And this is not even the "most favorable case" as you claim.
Do NOT dismiss speed advantages. ANY time you are flying against head winds, even a few knots make a meaningful difference.
meant 1/2 hour.
Sorry Baron, Cessna did not design/release the Mustang as a response to the Eclipse, no matter how many times certain people say it. Mustang was on the drawing board before Eclipse was announced (design studies in GA predate the program announcement by anywhere from 12 to 24 months).
Also, the PW600 engine family was on the drawing board the same time as the EJ-22.
Eclipse and many supporters certainly acted as if they were the market leader, and that the Mustang, Phenom etc., were all responses but it is simply not true.
If anything, it should be obvious by now that design targets move consistently, that is, a number of twin turboprops were introduced when the PT6 and 331 were introduced - same with the CJ-610 and JT-15 - the airframes are enabled by the engines, the vaionics, etc., but the market almost always moves nearly in unison.
This is in fact where the constant criticism of GA and aviation in general comes from, there is no revolution. That is because we see evolution, and we see it generally across the board. Some companies play to their strengths no doubt, but the market moves together more often than not.
The real lesson you point out is the important one, it is not the pure speed or range performance winner that wins in this market, MU-2 was faster than King-Air, Conquest was bigger (originally) than King-Air, and yet only one is still in production. The King-Air wins because it is the total package, it does many things well and is very well supported - same as the Citation.
Big Picture airplanes that offer a balanced mix of performance, economy, utility, and support are winners.
Peace offering to Shane combined with the un-anticipated consequences of using new technology ...
An old Irish man was in a pub last week having a pint when he suddenly realized he desperately needed to pass gas.
Luckily, the music was really, really loud, so he timed his fa#ts with the beat.
After a couple of songs, He was already feeling much better.
He finished his pint and noticed that everybody was staring at him.
Then he suddenly remembered that he had actually been listening to his iPod.
ColdWetMackarelofReality said...
Sorry Baron, Cessna did not design/release the Mustang as a response to the Eclipse, no matter how many times certain people say it.
--------------
That is imaterial to the discussion that the Mustang aero design is substantially deficient vis-a-vis the competition (EA500/Phenom 100).
Why do you think that is?
--------------------
CW also said... Big Picture airplanes that offer a balanced mix of performance, economy, utility, and support are winners.
-----------------
Exactly, but why is the BE90 so much slower than the competition on the same engines even adjusted for cabin size?
You can be the total package and still have the best aero design, right?
Why are King Airs and Mustangs so slow vis-a-vis the competition?
"We know Beech won out."
This is because there is so much more to acft ownership/utilization than raw performance. Look at Citations ("Slowtations")overall. They excel in very few areas, especially speed and other performance measures, yet they are the most produced and purchased light jets in the world. Safe, pilot friendly, excellent support, etc etc. Speed (performance) comes way down the list.
"So, for this mission"
This mission is contrived to require a fuel stop for the Mustang, and not for the Eclipse. Most favorable possible case for Eclipse. Even so, the block time difference is not life changing.
Well Baron I'll go out on a limb here and suggest the slightly lower performance level of the King-Air or Mustang are actually part of their market success - if not a reason then more a symptom.
By not having a design optimized to the Nth degree, you have an aircraft which can be economically and repeatedly produced at a price point that drives adequate volume for, let's call it success.
The niche products with more optimized or specific point-driven designs, like the PC-XII or the Piaggoi Avanti or TBM remain in the market, but at nowhere near competitive volumes with the more mundane, vanilla offerings from the two companies that dominate.
Understand though, I am an engineer not a CEO/COO - that is just my view.
"Why are King Airs and Mustangs so slow vis-a-vis the competition?"
More relevant question: Why are they so successful vis-avis the competition?
"Is there an Eclipse actively flying with this much time (or another 510 with even more time)?"
I had expected a response to this question by now. Ken, can I take the lack of a response from you stating a higher hour figure for an Eclipse to mean that none have reached the 750 hour mark yet? I recall hearing about one used to fly medical lab samples around (or something)- perhaps this one is close?
The lab plane has more than 1,000 hrs I think, and there are a few others probably at 750-1000 hrs each, but I would estimate at this point that fleet hours are pretty similar for EA-50 vs Mustang.
"I would estimate at this point that fleet hours are pretty similar for EA-50 vs Mustang."
This is pretty much what I was thinking. There are slightly fewer Mustangs in service, but it seems a high percentage of the Eclipse fleet flies relatively little, except for Ken and some working airplanes.
WhyTech said...
"Why are King Airs and Mustangs so slow vis-a-vis the competition?"
More relevant question: Why are they so successful vis-avis the competition?
----------------------
Adjusted for cabin size/price/burn...
Why is it more relevant? They are different questions.
Why is a Mustang so much slower than a Phenom 100?
Why was/is a BE90 the slowest turboprop on the market by a substantial margin?
---------------------
Luckily for Cessna, Eclipse tanked and the exchange rate between the US$ and the Brazilian Real has swung in Cessna's favor by 50% since the Phenom was launched.
Else, I think, with all the advantages, the Mustang would be substantially exposed due to performance deficit.
"Else, I think, with all the advantages, the Mustang would be substantially exposed due to performance deficit."
Citations have pretty much always had a performance deficit - and they have been a great commercial success. A possible issue for the Phenom 100 in the short term: how many of the 9 planned US service centers are up and running? No doubt that they will eventually be there, but how far will one have to travel for service in the meantime? One compelling reason I purchased a PC-12: the largest US service center was 8 miles from home base. The techs would drive over to my hangar to work on my plane for any routine minor needs. There werent many of these, but it sure was convenient. No Phenom 100 service centers on the East coast according to Phenom website - closest shown in Battle Creek, MI, - perhaps 700 miles. There is one closer in Canada if you want to go to Canada.
These issues are most influential to those of us who dont want to spend our time flying 1400 miles rountrip for service. Within reason, convenience trumps performance any day.
And, Phenom 100 is significantly more expensive than Mustang - one would expect some performance benefit. Perhaps BT can debunk these assertions which are based on published info, not firsthand experience.
airtaximan said...
The speed "advantage" of the Eclipse will be a few minutes in the most favorable case,
ftr, I never said this, but I do think this... the amount of time spent worrying, trying to save, and trying to better your condition regarding the ea50, is not worth the speed advantages (or fuel for that matter) for most folks.
Some others "like" trying to save their plane and keep it flying somehow... most other worry about this kind of BS waste of time.
Honeywell puts out some interesting reports every year, and those privy to them see that speed has a factor of 7 in value in jets compared to all other elements of value... while in props it does not have this powerful driver.
Honeywell does not consider the market for ea50 to be in the "jet" market.... they have doen tons of surveys and research and have determined that the value of speed is not there for most folks looking for a jet smaller than a Light.
Bottom line, your calc of 1/2 and how valuable it might be to you... is really of little value in real world operating situations, for those who chose a jet smaller than a light jet.
Some care... most, by far do not.
This begs the question about props... there are some value drivers that will certainly make for a competitive situation for prop compared to the ea50.
PS... there's a pretty good reason Cessna decisded not to go as small and light as possible with the Mustang. Ac ouple of reasons... but one is, if they ever decide to produce a single engine jet, at least there will be a price/volume equation that makes sense and does not destroy the market for the Mustang. I think, they knew what they were doing and they were VERY smart about it.
So, Ken... what did they pay for the PW610s?
ATM said... most other worry about this kind of BS waste of time.
That's why it's discussed here.
ATM, I think it came out during the early part of the BK that they were maybe $190K each but am going from memory. I would have figured more like $500-600K minimum for the pair but seems like it was a surprisingly low number all things considered IIRC.
Of course, Ken is making out that he knows what the number was, maybe he'll answer the question or you can go back and check the thread's from Stan's, I am sure it was discussed there.
My aircraft timed out at 784 hrs after my flight yesterday.
yes...
how to save your plane, how to keep it flying and how to save the company that build your plane, seems to be a fascination of the owners...
A big waste of time for someone making decisions regarding which plane to buy based on a 35kts or 1/2 hour (max) on some flights.
Coldwet says, "maybe he'll answer the question [about the price of the PW610]"
Can't; sorry. It came out of the data room and therefore is subject to NDA.
Ken
so, if we believe $190k in 2007/08 and the promise of higher rates, whats the price in 2013/14 for 50-80 shipsets per year?
$243,000 plus "an amount" per engine for lower rate...
I guess I was way off... according to Ken... who accepted his preemie jet with no warantee and a lot of free-stuff he'll be paying for... but LOVES his plane and decision... they were off by how much?
How much was the jet OFF from the initial promises? AND he LOVES his decision and his jet?
and I was way off, by maybe 10%-15%..Maybe...
He should be so lucky
Can't; sorry. It came out of the data room and therefore is subject to NDA.
really, you said it was listed in the BK docs and public now...
what gives?
I think for a flight school dispatcher, my damn guess was pretty close.
Closer than Eclipse...
anyhow, KEn, you said the number was public now... c'mon....
AT--how many students did you kill today?
After all you did say you've been "dispatching" them. If you wish to play language games, that's okay with me.
I said the PW610 pricing information came out during the Chapter 11. That's not the same as saying it is public.
Besides, even if I told you the price of the engines under EAC, you wouldn't know what kind of sweet deal PWC is giving the new company in order to keep selling them, now would you? :)
All you really need to know is that there is a pricepoint at which the Eclipse can be sold that is sufficiently lower than the its competition that people will buy it (recognizing the things it does better than other aircraft) and yet provides sufficient profit for Eclipse Aerospace to be happy selling it at that price.
That's the bottom line, isn't it?
Ken
"Perhaps BT can debunk these assertions which are based on published info, not firsthand experience."
No firsthand experience yet but the first private and Embraer sponsored user group meetings are being held in California next month. There should be a great deal of data changing hands then.
I visited the Embraer service center at Bradley Windsor Locks last fall. It was a brand-new impressive but, of course, empty installation starting to stock tools, parts and people. I later heard it was shuttered awaiting aircraft deliveries but haven't confirmed.
Hear that the Phenom 100 is having the usual infant teething problems and training is a bottleneck with no sims up and running. But people like the ship I believe it's been on five or six magazine covers. Haven't flown one yet.
Baron95 said Mission: Westbound flight 700nm, weather below, 70kts headwind component flown at 35,000
Mustang Ground Speed= 340 - 70 = 240 kts on 609 pph = 3 miles/gallon efficiency.
EA500 Ground Speed = 370-70 = 300 kts @ 459 pph = 5 miles/gallon efficiency.
So, for this mission, in cruise, the EA500 is a full 25% faster, and 67% more fuel efficient.
The block time difference will be *HUGE*. The Mustang won't make it without a fuel stop. Even if it did, the block time would be almost a full hour longer.
First, the Mustang would fly this 700 nm mission at FL350 with 600 lb reserves without a problem or a fuel stop. In the real world, I would point out that the Citation Mustang would likely fly higher than FL350 which would give the Mustang even longer legs.
Baron, you have made a math error here. Mustang airspeed 340 kts - 70 kts headwind equals 270 knots ground speed. Full fuel is 2,580 lbs on the Mustang.
Ken - I will also point out that BCA discloses the Eclipse won't make the 1000 nm mission with 4 pax, BCA reduced the Eclipse payload to 3 pax to allow it to complete the 1000 nm mission whereas the Mustang will make the 1000 nm mission with 4 pax.
Also, another somewhat open secret for the readers of this blog. The Citation Mustang generally performs a little better than its book numbers. Not by a lot but just a little. It flies a few knots faster than book on a little less fuel. If I had to give a general number, I would say 2% to 3% better overall as a rough generalization.
Finally, as to the block time differences, it is doubtful they would be *HUGE* as Baron95 wrote. As you know, the Mustang climbs faster than the Eclipse which helps close the apparent speed gap. In the real world I suspect the times would be pretty damn close as BCA reports.
Kevin
I was in Colorado this weekend and stopped in to see the Sport-Jet. They were trial fitting the spar to the wing assembly jig. Good looking plane.
Asked Bob about the lawsuit... he said the gov. is not going to get away with their standard diatribe of always blaming the pilot (which is relatively easy when the pilots are most often dead). Here the pilot is alive and knows exactly what happened and what didn't and can prove it.
The Europeans should be interested in this one! Rumor has it that the premier wake vortex research facility in the world (located in Europe) is providing expert support/testimony on the case (for Excel-Jet).
Sorry for the math error. Point being that when flying against headwinds, the slower plane suffers very disproportionally.
As for book, the info I have is that the Mustang performs a bit better than book, cruising up to 10kts faster. Phenom performs a bit worse than book cruising up to 10 kts slower and is disproportionally affected by hi temps with very slow climbs past FL350. And the Eclipse (the ETT ones) perform very close to book.
I disagree that Citation always had a speed disadvantage. Cessna has ALWAYS pitched the 500/501/CJ1 against the King Airs. All their adds were 150MPH faster and 2 miles higher.
The 500 and CJ11+ has always been the fastest plane at anywhere near its price point.
It was only when the EA500 then the Phenom came on the scene that the Mustang/CJ1+ became exposed from a speed point of view. Cessna has never faced this deficit before on the Citation line.
They are safe for now. Eclipse cratered and the BRL shot up forcing Embraer to price the Phenom much higher than they anticipated.
When the Phenom was launched it was 3 BRL to 1 US$ now it is 1.7 to 1.
Just imagine what a Phenom 100 selling at a 40% discount would do to the Mustang.
Ken,
Without breaking any NDAs, what factors could possibly cause the EA500 to be cheaper for EA to produce than say for Cessna to produce the Mustang.
Yes the PWC610 is less expensive than the 615. Lets say that is a $150K less per ship. Eclipse uses less material, that is $50K less. Eclipse may have better tooling on the factory given their investment in high rate. So lets give them a $100K per ship advantage.
On the other hand, EA has nowhere the purchasing power for parts and materials as Cessna. They can't spread the administrative overhead across a broad line/fleet. Independence is emancipated labor, so not much of a labor advantage there. The G1000 at Cessna volume prices must be cheaper than the Avio NG hodge podge.
So, at best it should be very close on price.
I don't see a single clear competitive advantage that Eclipse has on manufacturing price.
What do you see as a compelling advantage? What would cause the EA500 built by EA to be say $500K cheaper than the Mustang built by Cessna?
Oh, WhyTech, I'm told (no, not via in-box, but by phone) that Pilatus is substantially reducing PC12 production rate. They have had "tons" of cancellations on PC-12 orders and little in the way of training a/c orders.
So much for running all out and the "huge" backlog, huh?
Watch out for another distressed sale or insolvency filing if things don't turn around soon.
Forbes just reported that Al Mann invested $566M into Mannkind. The current market value of MannKind is about $780M. Al Mann own (according to MSNBC) slightly less than 42% of the company. So his holding are worth about $326M for a loss todate of $240M.
Question is, did he lose more money on MNKD or Eclipse?
From their website: "The management of Pilatus Aircraft Ltd has decided that for part of the workforce in Stans on 1 September 2009 short-time working is introduced. Especially affected are the productive areas of manufacturing and aircraft assembly. Over the entire company is expected to reduce the working time of about 15 percent. This affects up to approximately 350 employees. There will be no dismissal.
This measure is related to the accelerated canceling the PC-12 NG, and the lack of orders from the trainer aircraft."
This is a looooong way from the bloodbaths at Beech, Cessna, Piper and others.
"All you really need to know is that there is a pricepoint at which the Eclipse can be sold that is sufficiently lower than the its competition that people will buy it (recognizing the things it does better than other aircraft) and yet provides sufficient profit for Eclipse Aerospace to be happy selling it at that price.
That's the bottom line, isn't it?"
Sure...
how do you KNOW this?
You believed it all before, I guess you still want to believe... but what do you KNOW?
It seems not a lot regarding this sort of thing.
funny...
"Yep. The engine pricing was never announced (to my knowledge anyway), but came out via the Chapter 11."
then
"I said the PW610 pricing information came out during the Chapter 11. That's not the same as saying it is public."
always the same BS...
"So much for running all out and the "huge" backlog, huh?"
They had it - now its gone. A sign of the time perhaps. Any other acft manufs experiencing order cancellations? Gee, let me check.
"I visited the Embraer service center at Bradley Windsor Locks last fall."
As in CT? WHen I checked the Embraer website, this one did not show up.
Whytech :
i can indirectly answer your question :
Dassault (Producer of Falcon series) last year had a net earning per share of nearly 37 euros ...
this year (2009) the analysts from the firm itself expects that the net earning per share is going to be at the most 11 euros ...
when it is known that the biggest market for Falcon is USA and that it represent 82% of aircrafts buildings activities ...
conclusion is quite obvious !
on a side note , dassault has decided that they will not publish activities results (as deliveries and orders numbers) from the first semester ...
officially for safety and concurrence reasons ...
which sounds a bit weird as they did it in previous years !
Atm :
always the same BS... ...
yes , for me it sounds "funny" the debts and all obligations vanished with the BK ...
but NDA are still operative ?
sounds "Funny" !!
Whytech,
It is an expansive greenfield facility described here:
EMBRAER EXECUTIVE JET SERVICES
The NDA to access the Data Room was made with the trustee, I believe, to examine the assets and IP. As with any corporate IP that would be considered assets, that does get passed on to the buyers and remains confidential. How difficult is that to understand? Otherwise, once the bankruptcy was concluded, anyone would be able to publish all of the IP. Now give Ken a break.
Plain truth :
my comments was aimed at a general situation ...
seems (from far away) so easy to have BK for "Good" effects while keeping what is "Less Good" is "thrown under a bus" ...
nonetheless WHY ken would know such details ?
as a customer , it's a bit weird ...
as a party , it makes sens ... as well as defending so well the bird !
you see when i like something , the world population can call me wrong = why should i care since i like !
Baron asks, "Without breaking any NDAs, what factors could possibly cause the EA500 to be cheaper for EA to produce than say for Cessna to produce the Mustang?"
Beats me, sorry. I don't know anything at all about what it costs Cessna to produce the Mustang. Maybe they spend a lot on the G1000 contract, the antilock brakes or their SG&A. Maybe they're supporting their single-engine line or Textron is siphoning off a bunch of money from them.
Honestly, I haven't a clue. But it doesn't matter. My conclusion that the Eclipse can be sold less than the Mustang works backward from the current pricing of the Mustang and forward from the known cost to produce the EA500, modified by some reasonable assumptions as to what can be done to lower the BOM and labor hours.
The principals of the new company have made it crystal-clear that their analysis shows the same thing, but that they will not restart production unless their pre-purchase analysis turns out to be correct as they move forward.
Ken
Ken, why be so 'coy' about the engine pricing?
Is it because the lowball price Vern had from P&W would make a mockery of the 'E500 will be profitable' argument you're trying to promote?
Again.
OK, since you won't tell the blog what the engine price WAS prior to Chapter 11, I will.
"ENGINE ASSY PRATT & WHITNEY PW610F, Pratt & Whitney Canada Corp Longueuil, QC, Canada, $212,000.00"
There are 'associated' bits supplied by P&W, including the 'Tail Cone Assembly' which add up to another $15k odd.
Let's agree, for the sake of brevity (difficult, I know...) that a complete engine, in 2008 dollars, cost EAC $227,000.
So, base cost, each E500 has $454,000 worth of engines.
Add what Hampsons were awarded (for the empennage) and Fuji (for wings) and you're at another third of a million.
I'm trying to be more than fair here, btw, but if you disagree (and remember, Ken, I do have all the relevant documents) please feel free to contradict.
I think it's safe to report that the various hardware vendors for AvioNG came somewhere close to $80k, per set. Add the wind screens, windows, seats, wiring harnesses and the myriad of other bits and you find yourself into serious money.
After adding up (using a spreadsheet, no less) all of the items, I've come to a number, just for actual hardware:-
$1,350,000 +/- $100,000
For each 'copy' of the E500.
I'll freely admit that this is a guesstimate, as the number of suppliers makes simple analysis very hard. Some items in the lists were clearly duplicated, for instance, so I've tried to adjust as appropriate.
Labor costs per unit are much easier to estimate. The 'rate' of production never exceeded 22 in any month, but was often much lower. The best ACTUAL labour cost number I've been able to dig out was $2.5 million, per week. This was the wage bill that Al Mann 'covered' when the bank(s) bounced the payroll cheques last November, which was AFTER the headcount was reduced by Roel.
So, if you take 22 aircraft (best ever month, May 2008) and divide it by the payroll (November 2008) you get direct costs of:-
$450,000, per E500. That seems a tad on the low side, at just over 30% of 'materials', but it's the best we have, so I'll run with it.
So, RAW numbers, unit cost is now approaching $1.8 million. No money for insurance, tax, waste (that was a huge bill...) funding, R&D, software updates, etc, etc, etc.
That means EA are treading on very, very shaky ground. The cost of the 'bits' is not going to be lower than what Vern had negotiated based on his '500' per annum, is it? I could be well wrong, on the low side. Can EA restart production at 'factor of x lower' labour costs? Will the market pay $2.25+ million for an E500?
These are amongst a number of 'unknown unknowns' any one of which could still kill this program, stone dead.
But hey, that's just my opinion. Maybe, just maybe, Mike, Mason (and Al) will convince a sufficient number of the 700 odd depositors to pony up, again, by offering some sort of 'coupon'.
My discussion with this group is best summed up by what one said to me:-
"Shane, I'll only put more money into this if I can see my jet in the delivery bay"
His one was going to end up costing just over $1.7 million, by the way.
So, there you have it. We all now know how much a P&W 610 for an E500 actually cost, in 2008 dollars.
I've given you my 'best shot' at the remaining costs, including labour, all extracted from either the EAC supplied Court documents or other, public, sources.
Care to respond?
I'd be genuinely interested in what you 'know' as opposed to what you 'think'. I'm also a little fascinated as to why you'd avoided answering such a simple question, as in 'how much is a P&W 610'?
Especially since you're so keen to share plenty of other 'answers' with us.....
Shane
Baron,
An Irishman would never be seen dead in a proper pub, listening to an iPod.
The other lads would think he was gay...
Shane
"Let's agree, for the sake of brevity (difficult, I know...) that a complete engine, in 2008 dollars, cost EAC $227,000."
thanks Shane... so, the idiot airtaximan, flight school jockey guestimated the PW610F to cost around $200,000 - $250,000 each, guestimating EA (newco) would pay around $500,000-$600,000 a pair - I called it $600,000 becasue of lower rate projections, and a few years of normal price increases will pass...
Ken said I was WAY off.
Remember this when he defends his purchase decision, and tells you he loves his plane - becasue if I was way off, he should be steaming mad at how "Way Off" they were...
Anyhow, we all know what this is about - the dream lives in some, and in order for this to be true, it must remain, a "dream"... relaity bites, so to speak... and I am still waiting on a rational idea/theory about how this plane will ever remain price competitive, when produced at lower rate, and require a profit?
PS. I come accross EA50's listed for charter flights from time to time, and at $2600 per hour, which is how some are coming in... this ain't no bargain, I can tell you that. There are perfectly good normal size jets being offered at $1800/hour for the same trips.
... I wonder why?
And another thing....
'Reliable sources' tell me that the P&W 610 went out the factor door costing Pratt & Whitney Canada '$50,000' in labour and materials.
The invoice to EAC therefore reflected something never achieved in ABQ.
A profit margin.
Shane
"Shane, I'll only put more money into this if I can see my jet in the delivery bay"
My bet is that this will be the norm until EA has established an impeccable record for good behavior. Will make collecting deposits in advance, unless protected by a bulletproof escrow, near impossible.
Shane, your numbers seem about right to me. Some perhaps a little high, some perhap a little low, but in total, about right.
'Reliable sources' tell me that the P&W 610 went out the factor door costing Pratt & Whitney Canada '$50,000' in labour and materials.
This does not strike me as a credible statement, Shane.
"modified by some reasonable assumptions as to what can be done to lower the BOM and labor hours."
aren't you a dentist or something?
Let me get this straight... an insurance guy, a dentist and a Colonel got together and decided the best thinking at EAC, after burning a ton of cash and spending 12 years, with some pretty smart aerospace engineers and execs, was wrong, and could be improved with some "reasonable asumptions"...
Its like the beginning fo a bad joke... you know, an insurance guy, a dentist and a Colonel were in a row boat... one turns to the other and says....
I guess EAC was WAY OFF on their ideas about low cost.
Ken wrote-
Beats me, sorry. I don't know anything at all about what it costs Cessna to produce the Mustang. Maybe they spend a lot on the G1000 contract, the antilock brakes or their SG&A.
I don't know about the G1000 or SG&A. But Cessna did the Mustang antilock (actually, antiskid, which is an upgrade) brakes as a "build to cost" (do what you can for $xx)" The number was well under 20k.
And to anticipate a question-no, the system the Mustang uses would not work and/or be at that price point on an Eclipse.
ATman,
"This does not strike me as a credible statement, Shane."
Don't shoot messenger, especially one with Canadian spies...
As it happens, it kinda makes sense for me, in the 'high technology' end of things.
Apple pay buttons for iPods/iPhones and charge you and I far too much money.
As well as screwing AT&T and a host of other teleco's worldwide for the connected them.
Microsoft bill us for, well, a string of numbers and expect us to do their field testing for them.
Hell, Boeing even invoice customers for aircraft they can't deliver....
Lets say my source is completely wrong. Are you saying P&W were selling to EAC, at a loss?
Didn't think so....
Shane
Shane,
I just do not think $50k is credible for this engine.
I know it was designed to be assembled in one shift...
I know there was supposed to be enough margin such that rejection/rebuild on acceptance test was low...
Your point on the tech side makes sense, but this is not tech, really... although the machines are pretty cool, if you ask me.
I would consider a total cost to PW without recoup of development, in the range of $125,000 per engine.
This would be a very rich margin compared to other programs...
It just strikes me as so silly, that somoen would make comparisons to CEssna, and assume Cessna overpaid for anything compared to EAC.
Even the idea that the Mustang is heavier than the EA50, is by design. It costs a lot of money to build aerostructure very thin and light.
Its a fallacy to tink that lighter is lower cost, in this industry. Chem milling, FSW of little support parts here and there, lots of spars and a lot of machined parts, all add up.
They also do not add up to "better"... just lighter, and generally more costly to make, repair, and assemble, especially at low rate.
Shane asks, "I'm also a little fascinated as to why you'd avoided answering such a simple question, as in 'how much is a P&W 610'?"
Shane, the number you posted was from Schedule B30, Personal Property and Inventory. That number is public. Everybody has it. But it's not the actual contract price, which was volume dependent.
AT says, "Ken said I was WAY off."
That's only 'cause you were. At least where I come from, we think when you're off by more than 50%, you're "way off." When I fly a jet, if I'm off by 50%, I die. I guess when you fly your desk, you can afford to be off by more than 50%.
Ken
Shane says, "The cost of the 'bits' is not going to be lower than what Vern had negotiated based on his '500' per annum, is it?"
I think you're assuming that the contracts did not escalate with volume, but rather suppliers blindly accepted the volume predictions of EAC and used fixed pricing rather than sliding scale.
Does that seem reasonable to you?
Let us say I produce widgets for use in the EA500. Vern says he's going to produce airplanes at the rate of 1000 or more per year and wants my best price. I'm scratching my head and thinking, "I don't think he can do that."
So, I say, "OK, Vern, I'll give you my widget for 49 bucks a piece when your volume is 1000 planes per year. But I want $75 for 500-1000 units annually, and $200 each until you hit your first 300 units."
Vern is thinking, "Well, I'm going to hit 1000 units annually in no time 'cause my plan is so good, so I'll take that deal in order to get the better high volume prices."
Meanwhile, I'm thinking, "I got a good deal 'cause that guy is never going to produce the kind of unit count he's talking about."
So, along comes Shane Price after the whole thing implodes and says, "a new company is never going to be able to negotiate better pricing than Vern did."
Uh-huh. I don't think so.
Ken
Ken,
But it's not the actual contract price, which was volume dependent.
So what?
It's the one on EAC's own Court listing. It's also the price for the 'recovery' P&W did of 24 units that were 'on their way' at Chapter 11 time.
In other words, while ACTUALLY building at a 'high' rate, this was the ACTUAL price EAC were paying.
You're not telling me that EA are predicting higher volumes than EAC, are you?
Shane
"It's the one on EAC's own Court listing."
So was the "Prepaid Jet Complete" listing that you kept incorrectly hawking as being something I paid.
You don't get it, do you? You can take a few numbers off a court filing and proclaim yourself to be Moses come down from the mountain, but it doesn't necessarily make it so.
Ken
By the same token Ken, you can take some numbers of a PowerPoint presented by the guys who want to buy the OEM and also present yourself as being 'in the know', that sword cuts both ways.
If it is OK for you to say you 'know' what it will cost to produce a new EA-500 and then refuse to share anything concrete to back it up, then it ought to also be acceptable for Shane to actually cite where the data came from and the value.
Of course, you could also explain what the ~$35K amount was for since you have yet to state the number itself was not paid by you, only that it was not for JetInComplete.
Was there a single expenditure, or multiple expenditures by you, Shari and/or your various entities, to EAC, totalling approximately that amount?
If yes, what was it/they for? Coffee mugs? Logo apparel? Spare Parts and Tires? A night in the Lincoln Bedroom?
Simple question really.
Shan is correct, the pricing was at HIGHER VOLUME than anyhting a new company would ever dream of attaining if their projections come from anywhere near planet earth, that is.
So, at 50-80 units a year... the pricing will be MUCH higher than anything Vern arranged to pay.
He hd the promise of higher rate, and a revolutionary model. This imploded... anyone who tooled up and got ready for this, got shafted.
Lower rate will have a higher price.
It looks as if Ken thinks this is not so.... also looks as if he thinks somehow Newco will be able to negotiate for better pricing than Vern. The promise now is... a new company is going to produce and sell 50 planes a year, maybe?
Lord, if Ken is right, Vern was a complete fool. Imagine IF this is true. All that work, developing a plane to be produced at high rate and low cost, when in fact it could have been CHEAPER at 50-80 units a year!!!
If it was Koolaide before, its now some fantastic pharmaceutical cocktail cocaine and morphine or heroin
OH brother.. maybe the industry has it wrong, and we should be revamping our procurement function to buy less and pay less.
Heck, I guess less market share is good, too... how about less service centers...
Ken, I mean Moses...
What is being written here regarding cost, is not WAY off, as you have said. Its probably low compared to what this company will eventually experience if they are ever crazy enough to try to restart producing this plane.
If you think somehow you have a better grasp of these issues than the rest of us, I think you need to re-examine the past, and your decisions and opinions as they relate to what you thought, and what actually occured.
Everything you thought was fed to you by someone who wnated something from you, and you intern fed it to folks you tried to get something from... it does not make any of it right. In fact, you were WAY off, to coin a phrase.
Learning requires examining the past, and using your brains to change your mind regardng where you went wrong, and where you were WAY OFF.
You should try it.
I love it... "we're going to negotiate better pricing than Vern did"... based on low volume...
Not a good plan.
PS. Vern did not negotiate the supplier contracts the way you describe, and as Shane points out, the PW pricing was at rates "you'll" never again see for this plane. Demand was fron-loaded by spending Millions on marketing to ferret out the "die-hards"... this IS the niche.
Ken,
So was the "Prepaid Jet Complete" listing that you kept incorrectly hawking as being something I paid.
I never claimed you paid it, EAC put it into the Court record. I simply provided that information for our friends here on the blog.
So, if I understand you, EAC numbers are 'unreliable'. One part of me is glad you finally joined the real world, the other is saddened that you're previous company had such sloppy administration.
When you always insisted they could 'do no wrong'....
It was my opinion, repeated many times over more than two years, that EAC was headed to Bankruptcy because I didn't like the 'smell' coming out of ABQ
You didn't agree.
Turns out, I was right and you were wrong.
Now, with EAC bankrupt, I'm doubtful that EA can make their effort work, simply because I can't make the numbers work.
I've put these together based on EAC paperwork, as well as multiple sources from within the supplier network. They can't all be all wrong.
You don't agree, preferring to follow the EA 'party line', and insist that everything will work out this time.
Besides the cost of the engines, I've a few other concerns. Will EA manage to reduce the labour cost? Can they buy wings and tail feather for less than $300,000? What will IS&S (and the rest) want for the glass cockpit? The rest of the aircraft was largely made of sub-assemblies, all of which will be 're-priced' to EA. I can't imagine they will for less than they invoiced to EAC. In 2008.
That's one side of the equation.
The other is the selling price, coupled to the size of the market. Vern showed how inflated order numbers caused more trouble than they were worth. He also showed that too low a list price caused problems when the inevitable increase triggered a 'refund event'.
I think EA will need to price the jet (if they ever last that long) somewhere north of $2.5 million. I'm not alone is thinking that's too much for what the E500 is.
I'm also very skeptical that, with many other GA company cutting back on forecasts, EA will manage to sell any sort of volume, before they run out of cash.
In other words, I 'smell' trouble, whereas you smell 'roses'.
One of us has been right on this subject, so far.
Modesty forbids me from stating who that is....
Shane
I think I follow what Ken is trying to say about Vern and the pricing in-play at the time of the BK.
If Vern and Co expected super high production rates, and the Vendor called BS, Vern and Co would agree to a stepped pricing structure at varying volumes from say 50/yr to 1000/yr.
IF and I stress IF the pricing seen in the BK filing was the correct price for mid-rate production (100-200/yr), I would expect that this ought to be roughly representative of what P&WC would look to recapture their investment in tooling and training for the 615.
Simply put though, I can see no legitimate business reason they would accept 'significantly' (my word) less for a set of engines, to NewCo, when it should be perhaps 3 years before said engines would be needed (except for the 30 or 'in-work' planes collecting dust in ABQ.
Even at $200K/each that is a smoking deal, the 'big-block' PT-6's in low volume are ~$500K.
To suggest that more than 5% can be taken out of the pricing from existing vendors would seem to be pure fantasy, and the numbers Shane shared work out to approximately what I would expect, ~$1.3M in parts and assemblies, $500-600K in labor, so a pure build-cost of say $1.8-1.9M under the old regime.
In other words, while I understand what Ken was trying to say, I think it is hubris and folly to suggest there are oppotunities for 'huge' (my word) cost savings - I know of some of the purchase contracts Eclipse created, and even at low volumes the pricing was aggressive - certainly not worse than industry norm pricing.
In order to gain any meaningful reduction in labor costs will require redesign of tooling at the minimum, and might drive redesign of major parts and assemblies at the maximum. This is a big unknown but one which several parties from Vern and Peg, to RiP, to Reed and Friedman, to M&M have all felt, for some reason, was achievable.
Once the sale closes (Mann buys EAC from himself with his own money), the hard work begins. Now the vendors who discussed the program with M&M and their cohorts will have a real, live mark, I mean customer - and contract negotiations will begin. I say begin because I know pricing and other things were certainly discussed in advance but that was before M&M were pot committed - I expect to see prices for parts and such to escalate from what was promised before.
And this is only one of the dozen or so major challenges I see, along with the freshness date issue, the resources issue related to supporting fielded aircraft AD bringing the plane back into production, the need for strong, experienced leadership, etc.
This will be a very difficult road, no matter whether it lasts for a few months or a few years, that is for sure.
ColdWet,
This will be a very difficult road, no matter whether it lasts for a few months or a few years, that is for sure.
'Understatement of the Day' Award
With Oak Leaves, Laurels, and Crosses.
Shane
Let's not forget that when EA said they were negotiating or talking with vendors it was BS. They hadn't even spoke with Curtis Wright or Tamegawa at that point. There are still a number of majors that they haven't had word 1 with yet. Forget about production. Let's just see if they can produce accepted doc revs to start with!
One sceanario that might result in "low" prices from vendors, at least short-term: in these troubled economic times, vendors may offer unusually low prices just to keep the shop running at some level. As long as the variable cost of production is recovered, the vendor is ahead of the game. And, if they are sitting on inventory of any kind that is unique to the EA50, it is better to price this stuff to move it, as it has likley been written down or written off already. If so, sale at a lowball price might actually help the bottom line. And, sale at any price might help cash flow.
If this is what is happening, it cant last. Once the shops get back to near capacity the prices will go up. Ken, if he follows his usual style, will brag about the low prices, but will not disclose the gottcha's.
The psychology is really amazing...
Something looks like a positive event... defend the plane and company at all costs, so whoever is taking a position on this thing, does not back out... then...
Try like heck to paint a picture such that the very real risks are maked, and someone takes a vacant chair until the music stops, once again...
Until then, hope/pray/weasel what you need out of the situation.
- I only tate this, this way, becasue there is so much simple evidence and history regarding these issues, that I fail to see how anyone can actually believe the stuff about pricing and production that's being written here.
I am not surprised that the 610 direct manufacturing cost was said to be about $50,000 with a small volume sell price of $225,000 or so.
in the environment P&W is in with the very high liability costs, warrante costs and with a huge up front investment in design, certification, and manufacturing plant a mark up of 4X is not unusual. especially when they are a sole supplier.
there is a reason that P&W is still in business and that is it charges enough to make money when considering all the costs both direct and indirect.
I know for a fact that 3M electrical tape has a mark up of 20X over direct manufacturing costs.
Most middle volume manufacturers (250 to 1000 per year) of highly technical products like lasers etc. have a mark up of a minimum of 3X before they make money.
For the items that Eclipse asked vendors to develop for them (e.g. Avio, PWC610, etc), there are are two main methods in common use.
Method A: Eclipse would pay development costs as development milestones/completion is reached. Then from that point on they'd pay an agreed upon price.
Method B: Eclipse would agree to buy a minimum number of sets at a given price to cover production + development costs, then pay a lower price per set after that.
With both methods volumes discounts could apply.
It is POSSIBLE that the PWC contract had a price of say $225K for the first 500 engines, then a price of $200K for each engine is bought at a rate of 50/month and $175K if bough at a rate of 100/month, etc.
I don't know the contract, so I can't tell. However I can tell that if PWC has already covered the PWC610's development costs in the first 530 engines already delivered (which they prob have), there is more margin for lower price contracts.
Remember that PWC has an interest to make new engines even if all they have is a small margin above the production costs, regardless of what happened before.
Baron, any comments on my answer to your question about the performance of the Mustang, King Air or Citation when compared to their less numerous but performance superior competitors?
As for court filings, what people list as the value of an asset or claim is usually not what was paid or invoiced and rarely is related to forward pricing for undelivered items.
I think $300K to $400K per ship set for the engines is as low as it can go. In the big scheme of things that is 20% of selling price for engines, which is in line (if a bit low) with other planes.
I think the engines are the only part of the EA500 that should not elicit much discussion. It is readily available, readily manufacturable, and readily supported.
So why waste time on the only part of the plane that is "secured"?
What about empenage? What about wings? What about fuselage construction? What about avionics? What about transparencies for FIKI?
That is where the risk and variability will come from - not from Pratt.
I wish we'd move away from discussions on re-starting production for now.
It is such a remote (in time and probability) event as to not be worthy of discussion.
The immediate questions are:
1 - When will the transaction close and EA take possession of the assets?
2 - How long before they prepare and price the various upgrade packages?
3 - What locations and upgrade volumes will they be able to process.
4 - What are the critical parts list?
5 - What other SBs (e.g. tire upgrade) will they work on and the schedule for availability.
6 - Will they offer a support package - PAID BY THE MONTH - that will be equivalent to warranty for these planes?
If I were an owner that is what I'd want to know.
Forget what a PWC610 would cost 3 years from now whey production may be resumed.
"2 - How long before they prepare and price the various upgrade packages?"
2a. When will upgrades begin?
2b. How will the order of upgrades be determined? (IE, in SN sequence, or whoever yells loudest, or whoever pays the most, or?)
time questions.
does anyone have any reliable rumors of when the deal will be done and when they will actually be able to start supplying parts, upgrading and repairing airplanes etc?
BD, M&M&M (Mike, Mason and Mann) owe us absolutely nothing in terms of announcements or other communication, and they probabyl have their hands full this week getting all the i's crossed and t's dotted.
That said, M&M were the most communicative of the 'players' in the public sphere, with kudo's to Peter Reed's participation here on the blog - so I would say every day or two that goes by without significant announcement indicates one of two things, either A - the plan was not that well developed no matter how flashy the PowerPoints were, or B - they quickly realize just how complicated this thing really is and maybe even that some things they thought they knew will turn out to be wrong, in some case significantly wrong.
I would look for a nice forward looking press release when the purchase closes, probably later this week (thanks to Al Mann) - and then another one within a week announcing the initial plan and team, maybe even with a strong leader (not holding my breath here).
Pricing has probably already gone out to the owner community, with no guarantees, and will go up 5-10% by the end of September or early October, and agin by the end of the year (escalation will be a minimum of 20% from original suggested prices). I say this having seen no pricing data BTW, just an educated guess based on the representations made here and elsewhere.
IMO, the longer the silence goes on, the worse the news is.
WhyTech said...
2b. How will the order of upgrades be determined? (IE, in SN sequence, or whoever yells loudest, or whoever pays the most, or?)
------------------
Isn't that what we have eBay for?
"Isn't that what we have eBay for?"
Sure. But even so, it would seem that there will be many unhappy campers resulting from the upgrade process. If, as has been suggested previously, the average is 50 per year beginning now (more likely months from now) it will be five years before all acft can be upgraded, or seven or more years of operating the acft without the upgrades. (and who knows if EA will last long enough to do even half the upgrades?) Who is going to sit still for this? You'd really have to put a huge value on fuel sipping to put up with this. My guess is that many owners will flip their airplanes out of desperation and frudtration long before their upgrade slot comes up, assuming that they can find a buyer.
For the items that Eclipse asked vendors to develop for them (e.g. Avio, PWC610, etc), there are are two main methods in common use.
Method A: Eclipse would pay development costs as development milestones/completion is reached. Then from that point on they'd pay an agreed upon price.
Method B: Eclipse would agree to buy a minimum number of sets at a given price to cover production + development costs, then pay a lower price per set after that.
With both methods volumes discounts could apply.
It is POSSIBLE that the PWC contract had a price of say $225K for the first 500 engines, then a price of $200K for each engine is bought at a rate of 50/month and $175K if bough at a rate of 100/month, etc.
I don't know the contract, so I can't tell. However I can tell that if PWC has already covered the PWC610's development costs in the first 530 engines already delivered (which they prob have), there is more margin for lower price contracts.
Remember that PWC has an interest to make new engines even if all they have is a small margin above the production costs, regardless of what happened before.
insanity:
"However I can tell that if PWC has already covered the PWC610's development costs in the first 530 engines already delivered (which they prob have).."
This is really the kind of stuff Vern would say.
Max, they "made" $100,000 per engine, gross... that's $53M.
= I doubt they could ever find a way to book keep more than half of this as recouped dev costs...
I also do not believe they "made" $100,000 per engine. Probably closer to $60,000, gross...
- the whole theory on this is crazy
You lost me there ATM.
What do you think the delta development costs of the PWC610 from the PWC615 were?
My guestimate would be in the $30-$60M.
What is yours?
$53M is right in there.
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