Editor in Chief Tom Haines has been reporting on the general aviation industry for more than 15 years.
A major sea change is under way in the general aviation industry. Whether it's toward calmer or more violent seas remains to be seen. Never before have so many of the "founding father" companies faced such uncertain times while also being battered by a string of newcomers promising to revolutionize the way we fly. If you really thrive on uncertainty, add into the equation the current economic qualms and the security and regulatory threats facing GA. It's a squall line out there.
Cessna, Mooney, and Raytheon face extraordinary internal issues under new leadership while newcomers such as Cirrus, Lancair, Adam, and Eclipse make remarkable progress on new products that give prospective airplane buyers choices never before available.
Cessna is the latest to face new leadership challenges. Gary Hay, a Cessna employee for nearly 40 years, resigned in June from his position as chairman and chief executive officer. He was a handpicked successor to longtime Cessna leader Russ Meyer. Hay is one of the nicest guys you'll ever meet — a true gentleman. For years, Cessna's parent company, Textron, kept an arm's-length approach to managing the big Wichita airframer. Recently, however, Textron has decided that Cessna needs to be "Textronized." Hay didn't agree with some of the proposed changes and decided to leave rather than implement policies he couldn't support. This change in top management comes at a time when Cessna's single-engine program continues to struggle and when the number of new business jet orders is way down from previous years — issues facing all of the airframe manufacturers.
Meanwhile, across town at Beech Field, new management at Raytheon Aircraft Company is attempting to set back on track an airframer that began derailing 15 years ago with the development of the Beech Starship. The revolutionary twin pusher turboprop was meant to be a replacement for the aging King Air line. However, the Starship's radical look — it had a canard, enormous winglets that also acted as rudders, and no tail — and its less-than-predicted performance doomed the project that ran hundreds of millions of dollars over budget. Only 53 Starships were built and many of them are still owned by Raytheon. The project cost anywhere from $750 million to $1 billion, depending on whom you talk to.
At about the time the Starship project was sinking, Raytheon maintenance should have installed a revolving door in the executive suite. I've lost track of the number of CEOs, chairmen, and presidents the company has had in the past 15 years. It's no wonder that no one was paying attention to the bottom line or to the customers. Beech, once the hallmark of customer service, slipped to the basement. Customers taking delivery of new airplanes complained loudly about defects. Prices rose and quality fell.
Finally, a year ago, James Schuster was appointed CEO. Schuster is a veteran of Raytheon's E-Systems subsidiary. He quickly brought in General Electric management whiz Robert Horowitz as chief operating officer. Schuster's first task was to stop the financial bleeding. Negative cash flow haunted Raytheon Aircraft for three straight years, consuming a half a billion dollars in cash and losing $15 million — this despite a decent backlog of orders for everything from the piston-powered Bonanza and Baron lines to the King Air turboprops and the Hawker jets.
Schuster — in shirtsleeves with a straight-talking manner — is a breath of fresh air to the usually stodgy Raytheon image. To stem the losses, he immediately instituted layoffs and ordered a complete review of all manufacturing processes. Instead of relying completely on outsiders for the review, he also consulted with production line workers and union reps. The workers have responded with a plethora of new ideas on how to effectively manage the company and its inventory. The results have saved jobs in Wichita and set the company sailing in the right direction.
Deliveries of the Premier I business jet are finally ramping up. Serial number 54 started down the production line a few months ago. For longtime employees who remember the failed Starship program, the significance of number 54 was not lost. With Schuster's encouragement, the employees have once again begun referring to themselves as "Beechcrafters" — an honored tradition that goes back to the days when you earned the right to call yourself that after carefully mastering your production job. Schuster is also resurrecting the Beechcraft and Hawker product names — names that Raytheon for two decades had attempted to quash.
Despite these encouraging signs, it's clear that Raytheon isn't all that interested in manufacturing piston-powered airplanes. Mooney Aerospace Group officials met with Raytheon executives early this year to discuss the possible acquisition of the piston products. It's been rumored for years that Raytheon would sell the piston line cheap.
So far, there hasn't been a lot of progress toward any deal to sell the Bonanza or Baron lines because Schuster has been focused on fixing problems throughout the company — a process that seems well under way.
Meanwhile, Roy Norris, president of Raytheon Aircraft in the mid-1990s, was recently named president and CEO of Mooney Aerospace Group Ltd., the company that emerged with the assets of the bankrupt Mooney Aircraft Company. Norris has held senior executive positions at Gulfstream Aerospace and Cessna. He's the one interested in acquiring the Beech piston products to add to the Mooney line. His objective is to do a "roll-up" of the "best of breed" models from various airframe manufacturers to create a complete product line of airplanes from four-place Mooney hot rods to a six-place single and twin (such as the Bonanza and Baron) to a single-engine turboprop to a light jet. In mid-June he said he was slated to close on the purchase of the Century Aerospace Century Jet by late June. The Century Jet, still under development, is a light business jet powered by a pair of Williams fanjets.
To jump-start the Mooney business, Norris rolled back prices by 20 percent — an unprecedented move in the piston market. The reduction knocks a cool hundred thousand dollars off the price of the top-end Bravo. With the change, the Mooney products suddenly become price competitive with new entrants Cirrus and Lancair. The Mooneys have always been performance competitive with the new lines.
While Norris is busy trying to rebuild a company around the Mooney products, a new entrant is making tremendous progress on an all-new piston twin. In Denver, Adam Aircraft was expecting to fly its first CarbonAero A500 six-seat push-pull pressurized airplane in early July. Engine start and taxi tests of the first conforming airplane occurred in mid-June. This is a company that seemingly came out of nowhere. No one had heard of it until April 2000 when the proof-of-concept airplane was unveiled. Since then, progress on the all-carbon-fiber airplane has continued at a breakneck pace. Certification of the A500 is set for January with deliveries to follow immediately thereafter.
It's an aggressive schedule to be sure. Deliveries less than three years after a program is announced — for an all-new airplane — that's an unparalleled feat, at least in modern times. Plenty of challenges remain that could cause the timeline to slip, but so far Adam has done a good job of keeping the project properly funded and progressing. And with a price tag of less than $800,000 and a projected max cruise speed of 250 kt, the A500 also sets new standards in value.
In the dollar-per-knot category, another new company, Eclipse Aviation, plans to give the old-line companies a run for their money. The Eclipse 500 small jet promises a 355-knot cruise for $837,500 — a miserly sum compared to other jets that start at prices higher than $3.5 million. Eclipse, too, is making tremendous progress. The first airplane — a mostly conforming prototype — was to be unveiled July 13 at the Eclipse headquarters in Albuquerque, New Mexico. First flight is set for late July or early August. Certification is scheduled for 2004.
So while the old-line companies struggle to stay on track, they face stiff competition from a host of new entrants. Expect the next three years to be the most interesting in a long time for the general aviation market.
E-mail the author at [email protected].
