Eclipse Aviation turns to the automotive industry for inspiration in mass producing jets

Nearly a year after winning FAA type certification, Eclipse Aviation CEO Vern Raburn casts blame in a lot of directions when asked why his company has been able to deliver barely 50 small jets -- far short of the hundreds he had forecast. His suppliers let him down, he says, calling the performance of a recently discarded avionics system "just really, really, really bad." Some of his managers fell down on the job, failing to grasp the complexities of mass producing airplanes. "They talked the talk, but they could not walk the walk. They had no concept of what it meant."

But then Raburn points the finger back at himself, acknowledging that he oversold the revolutionary idea that airplanes could be produced in big batches as efficiently as personal computers (he made his name in the software industry in the 1980s). "I didn't have an appreciation for the difficulty of ensuring that all this stuff was built in conformity," he says. "The biggest mistake I made was assuming the supply chain would function with the same efficiency and reliability as it does in the technology business."

Forget, for a moment, the long-running debates over whether there's a market for thousands of very light jets (VLJs) or how many of Eclipse's 2,600 orders will see fruition. The company's immediate challenge remains proving it can mass produce its two-engine, four-passenger jets with consistent quality.

The few dozen 500s that Eclipse has managed to deliver are falling short of their promised functionality, thanks in part to a last-minute switch in avionics suppliers. GPS isn't fully enabled, there's no approach mode in autopilot, and the avionics don't have a flight management system. Raburn says the integration of four systems components -- which he declines to name -- is still failing at "massively unacceptable rates." He estimates it will take another five months to iron out all of the problems.

"Half the challenge is designing an airplane, but the other half is building a line that can manufacture them at a consistent quality level," says Ed Iacobucci, president/CEO of DayJet, a Florida-based air taxi venture that is Eclipse's biggest customer. "Frankly, some of the first airplanes were half hand-built. They didn't have all the processes nailed down."

Time is of the essence for Eclipse. The Albuquerque, N.M., company has raised nearly $1 billion in equity and debt since 1998 -- backers include Microsoft Chairman Bill Gates—and investors are eager to see a profit. In June, the collapse of a $200-million investment deal with a hedge fund fueled rumors of a possible bankruptcy. Raburn insists the 1,550-employee company was months away from having to shut down and says it has now raised enough capital to reach profitability -- if it performs to plan. With a list price of $1.6 million, the VLJ industry's lowest, meeting that plan will require delivering 600 aircraft a year just to break even, meaning Eclipse's current production rate of about one aircraft per day must be doubled by year-end. Current plans call for a increasing yet again to three fully assembled aircraft per day by the end of 2008.

Meanwhile, the nascent VLJ market that Raburn pioneered when he began taking aircraft orders in 2000 is growing more crowded. Cessna's Citation Mustang entered service earlier this year, Embraer's Phenom 100 is expected to follow in mid-2008, and Honda Aircraft Co. is on track to receive FAA certification of its HondaJet in 2010.

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