What Went Wrong With Eclipse?


In late November Eclipse Aviation filed for bankruptcy, and investors, suppliers, Eclipse 500 owners and order holders lost well over $1 billion. There has never been a financial failure of this scale in the entire history of general aviation. Eclipse investors have lost hundreds of millions, but individuals are also big losers. Anybody who had a deposit for an airplane lost the money. And anybody who took delivery of the 260 or so airplanes to leave the factory has lost all warranties and the promises to modify the airplane to a final and usable status.

A disaster of this size has many causes, but the most fundamental was a fantasy about the economics of designing, building and supporting airplanes. The company also predicted impossibly low empty weights, which then led to unattainable performance and range predictions, and it expected to accomplish all of this in record setting time.

But Eclipse is, at its root, a financial failure first and foremost. It was costing the company more than twice as much to build an Eclipse 500 as it had sold the airplane for. And that was for an incomplete airplane lacking many basic functions and it would have cost many thousands more per airplane to eventually modify them to match the sales contract.

Eclipse founders and management are part of a long line of people who believed they could revolutionize aviation by changing the scale of airplane production. By building and selling the airplane in unprecedented volumes of thousands per year, the manufacturing cost, and thus the retail price, would be cut dramatically, they said. To get to the massive production levels the price had to be impossibly low so thousands would buy before production even began.

The flaw in this logic is that airplanes, even at rates of 2,000 or more per year that Eclipse planned, do not deliver large economies of scale. Airplanes, whether built by Cessna or Boeing, are hand built and costs per unit are only slightly lower as production rates go up. Airplanes are like houses. Whether you're building one or a thousand, they get riveted or glued together one at a time, just like houses are nailed together individually no matter how big the new subdivision.

When Eclipse unveiled the 500 nearly 10 years ago I wrote that the airplane at the initial weight, performance and price promises was simply not possible. Forgetting any aerodynamic or other technical issue, it just isn't possible to build a twin-engine turbojet for less than half the price of a turboprop single, and even less than that of the pressurized piston Piper Malibu Mirage, and be a viable business.

It didn't take any genius on my part to make the prediction. In 32 years at the magazine I can't begin to recount the number of "revolutionary" airplanes that have been introduced and never succeeded. And I can't think of another airplane project that had such an aggressive price as the Eclipse, not to mention impossibly short development cycle.

But it was the price -- around $800,000 initially -- that made the Eclipse such a sensation. Pilots desperately wanted to believe it was possible to do that if a new company started from scratch and ignored the hidebound methods of the existing aircraft industry. We had seen magical things from the electronics industry, and electronic pioneers were part of Eclipse, so maybe their Silicon Valley knowledge could do the impossible in aviation. It was so compelling everyone wanted to believe. And thousands did. There are more than 5,000 creditors in the Eclipse bankruptcy filing, so we nonbelievers were in a minority.

Eclipse founders were different from the established aviation industry in other ways, including an attitude that because they were right, the rest of us had to be wrong. Eclipse punished Flying magazine by refusing to buy advertising, even though they spent lavishly in all other media and at aviation events. My refusal to believe that a miracle from Eclipse, or anybody, is possible cost us money while the investors' millions flowed freely for several years.

But I was wrong about the Eclipse 500 chances for certification. The original design was never certifiable, but I didn't believe the evolved airplane was, either. Experience worked against me in that case because I didn't believe that the FAA would create a new certification category just for Eclipse, but it did. I expected the 500 to be held to the same standard as the several light jets already in production, but it wasn't.

Throughout history the FAA certification standards have treated turbojets differently. As you know, the big change in airplane certification standards comes at the 12,500-pound maximum takeoff weight where an airplane moves into the transport category. More recently there is a commuter category that allows airplanes to weigh more than 12,500 pounds for takeoff without meeting all transport standards, but special conditions are still imposed on jets that force them to meet the key transport performance requirements.

For example, the Cessna Citation CJ family of business jets is in the FAR Part 23 "small" airplane category, as is the Beech Premier I, and others. But because they are jets, every light jet in Part 23 had been required to meet the engine-out takeoff performance profile that demands minimum climb gradients after an engine failure during takeoff. Propeller airplanes, either piston or turboprop, that weigh less than 12,500 pounds for takeoff don't have to meet the takeoff flight requirements, but jets do. Jets are different. Rightly or wrongly -- entirely rightly in my opinion -- jets have been held to a higher standard.

At the initial program announcement the Eclipse was also going to meet the jet takeoff profile because its founders didn't believe they had an option. But as the program dragged on it became clear that the airplane just didn't have the performance to stop on the remaining runway if an engine quit before decision speed, or continue the takeoff and meet minimum climb gradients on the remaining engine, particularly on takeoff from high elevation runways, or on hot days. The performance is specified in climb gradient, not rate, because it is gradient -- the angle of climb -- not rate that gets you over obstructions.

But Eclipse proposed a new interpretation of the rules to the FAA. There is a weight break at 6,000 pounds in the FAR Part 23 certification standards and among the changes is that multiengine airplanes weighing less don't necessarily have to climb after an engine failure, while those heavier than 6,000 pounds must. Eclipse told the FAA it would keep its takeoff weight below 6,000 pounds so, just like piston twins of that weight, climb performance after an engine failure is not always required. I was surprised, but the FAA agreed. The historically unique demands of a jet by the FAA had been shuttled aside and the Eclipse would be treated like any other light airplane.

This ruling was essential for the Eclipse program to get as far as it did, and I was sorry to see a jet, even a small one, taken off of the pedestal. The Cessna Mustang weighs about 2,700 pounds more for takeoff than the Eclipse, but it meets all the normal engine-out jet performance rules. That's one of many reasons why the Eclipse is a VLJ and the Mustang is not. The Mustang, for lack of a better word, is a "real" jet in the traditional sense.

There are many other design and performance details of the Eclipse that have never before been approved in a jet, and I didn't expect that. But Eclipse made a case to the FAA, and the authorities agreed. These differences don't make the Eclipse an unsafe airplane, they just make it different than other jets, and I hated to see the jet brought down to the level of other airplanes.

Even though Eclipse got past certification hurdles I never thought it could, the whole process took far longer then company founders expected. Cash was flying out the hangar door by the hundreds of millions, but airplanes were not. And the news got even worse when deliveries actually began because early order holders had contracts for around $1 million, so the losses mounted with every airplane delivered. And each airplane went out the door with an IOU of tens of thousands for later modifications to bring the airplane up to the standard of performance and equipment promised in the contract.

We veteran aviation observers -- old farts, in other words -- marveled as each setback in schedule and performance was covered by hundreds of millions more in new investments. There seemed to be no end to the money people and governments would pour into the project even after it looked so hopeless. I was stunned that people handed over $100,000 deposits for the Eclipse 400 single-engine jet up to the bankruptcy filing even after it became clear the 500 was not meeting any of its goals. But they did.

I had a chance to fly one of the last Eclipse 500s built, and it is a conventional airplane in terms of flying qualities, but is very incomplete for a certified airplane. The only navigation available is raw data VOR and ILS. The autopilot, which flies the airplane just okay, can't track any en route or approach guidance, can only hold heading or altitude, and lacks all air data modes to hold airspeed or vertical speed. And the brakes are absurd. When you press the pedals they go to the floor, and you need to release them and pump again like you were in a 1952 Dodge that needed to have its brake shoes adjusted.

The Eclipse did deliver its promised top speed of 370 knots true, and climb performance isn't bad, though climb airspeeds are incredibly low at around 160 knots. The forces on the sidestick are surprisingly heavy for such a light and relatively slow airplane, and the trim runs very slowly so you do find yourself pushing and pulling a lot when maneuvering. The aileron forces are high, but part of that is that the human arm is not well designed to push and pull sideways as one must with a sidestick.

The day I flew the 500 the winds were gusting to near 40 knots but I, and another pilot who had never been in the airplane, had no challenge making decent landings after wildly turbulent approaches. The airplane has a stick pusher to prevent an actual aerodynamic stall, so if there is any bad behavior at the stall it remains behind the pusher. The stick pusher, as it must be, is aggressive yanking the stick forward for a 15 to 20 degree nose-down recovery.

The very strong winds on the day I flew the 500 reminded me of the excruciating choices the pilot of a slow jet faces. The wind was blowing 120 knots or so above 30,000 feet so our westbound groundspeed was knocked back to slow turboprop levels. But if we had descended into less wind, the fuel flow would have gone way up, so our range would have been about the same because more fuel was required for each mile. The Eclipse, like other light jets, burns a lot of fuel down low with nearly 1,000 pounds per hour at max continuous power at 10,000 feet. If ATC won't let you climb, or the winds aloft are on the nose, full tank range is not much over 500 nm.

But, as I said at the beginning, the failure of Eclipse is primarily a story of economics, and the money crunch that hit last year was too much for even true believers to overcome.

Eclipse is in Chapter 11 bankruptcy protection and hopes to continue in business some way with the court protection from its creditors. To resume production the new company would have to get parts from the dozens of suppliers who manufactured all the major components except the central fuselage. The Eclipse factory was essentially an assembly facility with components coming in from all over the world, and each of those suppliers is now owed from many thousands to many millions with almost no hope of collecting.

If a complete Eclipse with usable avionics and certified ice protection were to go back into production I estimate the price would need to be around $2.5 million for the company to be successful. At that price the airplane would not have an annual demand in the thousands, or even the hundreds, but that's what it would cost to have a sustainable company. And given the bleak forecasts for the next months, and even years, demand will be reduced at any price.

I feel sorry for everybody who lost in the debacle, but the biggest loser is general aviation. The Eclipse episode is the biggest disaster in memory for GA because it took more than a billion dollars that could have been used to create new and viable airplanes and wasted it. And the trauma will linger for years as investors, rightly terrified by the Eclipse disaster, refuse to put money into new airplane programs that can really work. The FAA has also created a traffic forecast and is trying to build a new ATC system partly based on the prediction of thousands of Eclipse-type VLJs blackening the sky. We could end up with an ATC system we don't want or need because outrageous production forecasts by Eclipse played right into the FAA's hands and gave it the ammunition to declare a coming ATC emergency.

Nobody knows what happens with Eclipse from here. I believe there is a viable market for light jets and there is absolutely no reason a couple of models can't succeed if they are priced to cover development and production costs, and the business plan is realistic with 100 or so a year being the top end of demand.

But the aviation industry has deluded itself about the size of demand many times in the past. In 1946 and '47 it is believed about 50,000 airplanes were built by the manufacturers who imagined a giant demand from returning military men. The market wasn't there and dozens of airplane manufacturers went out of business, and it took at least 15 years to build the next 50,000 airplanes. There was a spectacular boom in the late 1970s with total GA production reaching about 18,000 airplanes in both 1978 and '79. A few years later production rates dropped to one-tenth of that number, and at the low end not even 1,000 airplanes per year were built.

Eclipse has provided yet another cautionary tale, and I do believe its effects will linger in the general aviation business for the rest of my career.


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