Business model that gave the Eclipse a new dawn

“I’m supposed to be a genius not a model,” laughed Turkish entrepreneur Ekim Alptekin as his sat on the steps of an Eclipse 500 very light jet (VLJ) for our photographic session.

Yet he had looked every bit a model as he glided effortlessly through the cabin doorway of the VLJ – undergoing modification in a hangar on Istanbul’s Ataturk airport – with ease and confidence.

There were many who questioned whether that natural confidence was misplaced two years ago when Alptekin, who had led a group of investors to buy 120 of the VLJs, met fellow creditor American Mason Holland on the steps of an Albuquerque bankruptcy court and agreed to join forces to take over the assets.

It was a sorry story. The concept of the six-seater jet had split the business aviation world. It was tipped to do to aviation what Henry Ford had done for the automotive industry with a business plan to produce up to a record-breaking six aircraft a day.

Its main customer was a US air taxi service, with its own ambitious plan to operate aircraft all over southeast USA.

When this failed, debt-ridden Eclipse failed with it. Certification from EASA was suspended and a period in Chapter 11 failed to allow survival for the Eclipse team. The factory closed and bankruptcy began.

So, step in Alptekin and Holland with other creditors to create Eclipse Aerospace.

“We had made the investment already. We were the biggest creditors but we had also believed what was possible,” said Alptekin. “I have a huge amount of admiration for Vern Rayburn [founder of Eclipse] he had a great vision. What he didn’t have was good financial management. 

“We had experience of start-ups and this was effectively what we needed – a feasible business plan in place and a will to make it work.”

Two years on and Eclipse Aerospace is on track.

“We now have a strong balance sheet with zero debt, and we have been delivering what we promised to customers,” Alptekin said. “This has meant a lot of modifications in areas like the avionics and flight into known icing conditions. We are now able to supply parts and the newly FAA-certified integrated flight management system (IFMS) is the final piece in the jigsaw. We are close to reinstating the EASA certification without restrictions and then we will build from there.”

Alptekin is executive vice president of the company and chairman of EA Aerospace, which has the distribution rights to the Eclipse 500.

The aircraft’s performance statistics are impressive. It can fly at 41,000 feet above the traffic and the weather with a range of 1,125nm, with direct operating costs lower than leading turboprops and a fraction of other jets.

And, at just over $2million for a factory-modified Total Eclipse aircraft, it is almost half the price of a King Air.

But that is now. There is no production of new aircraft and the light end of the business aviation market is still in the doldrums. These facts presented to Alptekin produce nothing other than a slightly raised eyebrow.

“The Eclipse is a personalised aircraft. It is what the cell phone is to communications; what the laptop is to computers and what TV is to entertainment. It wasn’t that many years ago that the idea of ordinary people having mobile phones was considered madness or that there would ever be a demand of anything more than six mainframe computers in the world. 

“Eclipse is revolutionary and the direct operating costs will mean private point-to-point aviation from airfields with runways of not much more than 700 metres becomes practical. Personal travel and fast effective business travel is not the preserve of the super rich.

“I am confident there will be greater demand for aircraft than we are able to produce.”

So does Alptekin see the six-a-day delivery promise from the Rayburn plan returning?

“That was never practical,” he said. “But look, there were 260 aircraft produced in around 18 months. Cessna, which had certified their Mustang before us, which didn’t have to deal with the issues we had or a bankruptcy, has barely produced 300 aircraft now. If it could have done it would. Eclipse 260 aircraft in one-and-a-half years has never been done before.

“There will be a decision made on beginning production again and I would expect an announcement to be made by the end of the year. There are 30 aircraft in various stages of production that would allow the line to speed up. I think we would be aiming at two a day rather than six.”

Albuquerque would be the obvious place as tooling is already there but Alptekin sees no reason why there would not be a second production facility outside of the Americas.

“We have been looking,” Alptekin admitted. “We would want to diversify the risk and increase capacity. The US could produce 100 aircraft a year, so a second site will be needed. We are looking for a country that has an aerospace industry, has good logistics, a skilled workforce and a beneficial tax infrastructure.”

MENA countries are on the list. “We are also looking at Turkey, too,” he said with a smile.

A key element of Eclipse getting back into production rests with the supply chain. The new owners have met with previous vendors and the latest major investor is also helping.

Sikorsky – part of United Technologies – bought a stake in Eclipse Aerospace in October last year. The helicopter-maker’s president, Jeff Pino, had his own Eclipse before the bankruptcy and was a great fan of the aircraft’s capabilities.

“People like Sikorsky don’t get involved unless they are confident that the company is in good shape,” Alptekin said. “Having them on board is a great asset. They have great experience with supply chain management. It puts us in a better position in discussions with vendors and particularly now when the market is down.”

Alptekin is confident that sales will outstrip supply and sees it important that initially Eclipse will be selecting customers – rather than the other way round – and hopes these customers will prove the business model.

Getting the infrastructure in place is also vital. “If not it would be like selling a fax machine to people without a telecoms service,” Alptekin said. “We are working with SimCom for training and will open a training centre here in Istanbul where we already have a platinum-factory-level service centre. Remember within three hours flying we are in reach of one-and-a-half billion people. That’s a lot of people who could fly and who could make use of secondary airfields.

“For example in the US there are 500 airfields that can take a Gulfstream – there are 10,000 that can take Eclipse. Markets and public opinion will change as it becomes possible and legislation follows market demand.