Starting about Aug. 24, watch for the U.S. Bankruptcy Court for the District of Delaware to either select Eclipse Aerospace as the winning bidder or preside over an international bidding auction for the former Albuquerque-based Eclipse Aviation. Eclipse Aerospace was formed two months ago by one of two owner groups seeking control of the bankrupt personal jet manufacturer. Now it has the backing of the rival group, the Eclipse Owners Group (EOG).
Eclipse Aerospace submitted a $40 million bid for the assets of Eclipse Aviation, former manufacturer of the Eclipse 500, that has passed an inspection by the bankruptcy court. It consists of $20 million in cash and $20 million in new notes, and it has the money—all of it from U.S. investors. That’s important, given that its greatest rivals in any bidding war that occurs Aug. 24 will be from China, Russia, or Europe. However, the once-interested Daher-Socata has dropped its interest. The Eclipse Owners Group was once a bidder but has dropped out to support Eclipse Aerospace headed by Mason Holland and Mike Press. All known potential bidders have a foreign investment component.
To win approval of the court, any bid with a foreign component must pass a national security review by the Committee on Foreign Investment in the United States, a part of the U.S. Treasury.
If successful, Eclipse Aerospace has dozens of former Eclipse employees committed to returning to provide service and upgrades to the Eclipse 500 fleet of 259 aircraft (one crashed in a landing accident). The new company would make parts, service existing aircraft, and buy up used Eclipse 500 jets so they can be modified with all the systems originally promised to Eclipse owners, including the avionics suite. It will also operate an Eclipse service center in the Chicago area. It has already bought that center and has begun purchase of used Eclipse aircraft for upgrade and resale.
Of the 259 aircraft in the fleet, only two or three were ever fully completed with all promised systems. Some lack the promised avionics system while others lack modifications that will allow the aircraft to achieve promised speeds. Many of the aircraft are grounded and waiting for parts.
There are still some unknowns, aside from potential competing bids from China and other countries. One is the cost of the parts, the upgrades, and the maintenance. Owners are a captive audience for any new owner. Another is the return to production of the aircraft. The quick answer is, don’t expect manufacturing to begin anytime soon, if at all. One of the first tasks, if Eclipse Aerospace is successful, is to complete the aircraft design. Astounding as that may seem, Eclipse Aerospace officials are convinced that the Eclipse 500 was rushed to market before the engineering design was mature, and they want to finish it. After that, they plan to evaluate what it would cost in today’s market, and whether suppliers are willing and able to help return the aircraft to market.
The new owners are up to the task. Mike Press is now the owner of Single-Pilot Jet Management in St. Louis, a company meant to appeal to the emerging very light jet market. Earlier in his career, Press was a U.S. Air Force colonel managing major programs, and after his retirement he continued in program management for Northrop Grumman. Holland, a founder of the Cirrus Owners and Pilots Association, is owner of BenefitsFocus.com, an online benefits enrollment software firm that has 54 million customers. Mason wrote the safety alerts that Cirrus owners see every time they start their aircraft.