Capital Markets, DARPA Delay To Blame; Company Hopes To Sell
Off Sparrowhawk
Chalk up yet another aviation
company to feel the sting of slumping investment markets. Gyroplane
and rotor-wing developer Groen Brothers Aviation announced Friday
that following the delays in its Heliplane program for DARPA and
current conditions in capital markets, it is undertaking
cost-cutting measures -- including significant jobs cuts -- that it
hopes will allow it to continue to develop its technology on a
reduced scale.
"GBA has effected a reduction in force that reduces its employee
work force by two-thirds, and is reducing other expenditures as
well," the company said in a release to ANN. "In the mean time, the
company is negotiating with investors for additional funding that
if successful, will allow it to continue its technology development
while it negotiates new contracts for its technology. Even though
management remains optimistic, there is no guarantee that the
negotiations for essential new funding will be successful."
For the last two and a half years, GBA's business plan has been
primarily based on developing gyrodyne technology for military
applications under a multi-million dollar four-phase DARPA program
called 'Heliplane' awarded to GBA in November 2005. The Heliplane
program called for the company to design and develop a next
generation vertical take-off and landing (VTOL) demonstrator
rotorcraft capable of a speed of 400 mph and a range exceeding 1000
miles.
The GBA-led team includes Georgia Tech for analytical support,
Williams International as engine manufacturer, a highly-renowned
team of aerospace consultants and, initially, Adam Aircraft as
manufacturer of the fuselage.
The company says it is nearing the end of Phase I of the
Heliplane project. "Although technical progress in the project has
been most encouraging, the timetable for the program has proceeded
more slowly than anticipated, due in part to the funding challenges
that a small company faces in a fixed-price government contract,"
Groen Brothers said. "This has been exacerbated by the bankruptcy
of Adam Aircraft in January, requiring its replacement by another
airframe supplier, causing further delay and financial pressures on
the company. Continuation of the Heliplane program beyond the end
of Phase I is not yet known.
"GBA has also been actively seeking to find partners for the
certification and production of its advanced turbine-engine powered
Hawk 5 Gyroplane, principally with parties in Spain and Korea.
While good progress has been made with these entities, it is not
likely to provide sufficient positive cash flow to address the
company's short-term needs. The alternative course for the Hawk 5
Gyroplane entry into the marketplace through investors in Korea,
although at an earlier stage, has greater funding potential and is
therefore also being pursued aggressively. The Korean investors
have also expressed interest in the development of commercial
passenger GyroLiner aircraft, capable of vertical takeoff and
speeds significantly faster than a helicopter, as well as smaller
two-seat gyroplanes for personal transport."
Groen Brothers also announced it hopes to sell its Sparrowhawk
III kit-built gyroplane program to a third party buyer, saying the
civilian aircraft doesn't fit with its increasingly Defense
Deparment-minded business model.
"For this reason, having developed the SparrowHawk III Quick
Build and its associated manufacturing, quality, and marketing
requirements, GBA is seeking to sell the program to a third party
while still continuing to provide technical and other support for a
significant transition period, for the new owner," the company
said. "If this sale is accomplished, it could provide GBA with the
funding necessary to allow the company to resume its participation
in the DARPA Heliplane project if and when it restarts, and
continue to pursue its desired agreements with Korea and/or
Spain."