Cutting Purchases For Rest Of Year, First Half Of '09
A possible picture of future events for
Albuquerque, NM-based Eclipse Aviation may be starting to come
together. On Tuesday, composites supplier Albany International
Corp. said its sales growth for the remainder of the year will take
a significant hit, due to cutbacks in planned production rates at
Eclipse.
Albany said Eclipse plans to cut production through the first
half of 2009, and has slashed its parts purchases from subsidiary
Albany Engineered Composites accordingly, reports Reuters. The
company adds Eclipse told AEC to expect orders to sharply rebound
after that.
Shares in the New York-based company tumbled on the news,
falling some $7 before rebounding somewhat to around the $30
mark.
Despite the gloomy announcement, Albany expects its overall 2008
revenue to exceed the previous year's $1.09 billion aggregate total
by at least 35 percent, though the company adds its composites
division will fall below the break-even point.
"Break-even" is a mark Eclipse aspires to... and Albany's
announcement gives a sign of the planemaker's plan to accomplish
that, albeit a perplexing one.
Founded in 1998 by recently-ousted CEO Vern Raburn, Eclipse
promised its customers and suppliers alike that profitability would
come from high production rates -- as many as four finished planes
per day. In the nearly two years the Eclipse 500 has been in serial
production, the planemaker has come close to attaining
one per day... an impressive figure, though still far from the
levels Eclipse needs to survive on its own, without outside
funding.
Acting CEO Roel Pieper -- head of ETIRC, a major foreign
investor in Eclipse -- appears willing to consider all options in
making Eclipse profitable, many of them painful. Since AirVenture,
Eclipse has laid off approximately 190 temporary workers on its
production line, and there's evidence manufacturing has slowed
significantly as the company considers its next move.
The planemaker also told customers that plans to upgrade older
Eclipse 500s to Avio NG avionics have been delayed indefinitely,
pending receipt of the latest round of funding. Refunds to
depositors who opted to cancel their orders, in response to a May
price increase, are also on hold... leaving some position holders
to consider legal options.
As ANN reported, Eclipse said last week it
would not speak to the press until it was ready to announce its
plans for the future, which representatives said should come by the
end of this month. That statement was followed by a separate
announcement from Raburn, saying he had decided not to accept a
role with ETIRC, despite earlier statements that he would become
vice chairman of ETIRC Aviation.
In the interim, the industry is left to ponder how a
volume-based company plans to make more money... by building fewer
aircraft.
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