Also Announces Reimbursement Plan If Company Misses Delivery Schedule

In its quest to keep customers up to speed on the latest developments, Eclipse Aviation announced this week the company has decided to retrofit earlier aircraft with improvements designed to improve speed and range.

Earlier this year, Eclipse announced the Eclipse 500 had fallen short of its guaranteed performance numbers. Eclipse offered refunds to customers who wished to opt out of their agreements -- only a small percentage did -- and Eclipse also committed to a plan to improve those performance numbers.

To achieve that plan while also getting planes into customer hands, Eclipse also said then there would be two different configurations of the E-500, based on the company's implementation plan for the performance improvements. The first 100 planes would be limited to a speed of 360 knots (TAS) and range of 1,055 nm; subsequent planes would meet the company's revised targets of 370 knots true, and 1,125 nm NBAA IFR range with 100 nm alternate.

Eclipse says the company has since achieved those targets, through a series of modifications (detailed below.) Furthermore, Eclipse has decided to retrofit ALL aircraft with these enhancements, ensuring there is a singular aircraft fleet.

Those retrofits will be performed after the modifications receive FAA approval sometime in Spring 2007 -- so the company's production schedule should remain unaffected.

Here is the latest from Eclipse:

Background:

The initially-certified Eclipse 500 has fallen short of its performance guarantees in speed and range. Eclipse embarked on a performance improvement program one year ago to improve this situation and committed to meeting the speed guarantee of 375 knots (TAS) +/- 2.5%, but would not meet the range guarantee of 1280 nm +/- 5%. This work resulted in a plan that would yield a speed of 370 knots (TAS) and a 1,125 nm range (NBAA IFR with 100 nm alternate).

Based on that fact that the Eclipse 500 would not meet the published range, Eclipse declared a refund event for our customers. During this event, Eclipse announced a performance improvement plan that included different modifications for the first 100 aircraft versus subsequent aircraft. The first 100 aircraft would only see a speed of 360 knots and a range of 1,055 nm. Additionally, Eclipse committed to its customers that the company would continue to explore the possibility of retrofitting additional improvements to these aircraft. We realized that the best and most expeditious solution is to have one fleet; therefore, we will be retrofitting all aircraft with the performance improvements that yield a speed of 370 knots (TAS) and 1,125 nm range (NBAA IFR with 100 nm alternate).

Corrective Action:

To date, two flight test aircraft have been fitted with the extended tip tanks (ETT). Additionally, one of these aircraft has also been fitted with additional prototype performance modifications. This aircraft has completed development flight testing and proven that these modifications will give the anticipated performance results. Once the wing bushing installation is completed (due to the previously communicated wing issue) on these two aircraft, we will start the certification program for these improvements. Procurement of the production parts and mod kits are well under way.

The changes to the airplane to achieve this performance include:

1. Extended tip tanks (ETT): ETT modifications are finalized and add 25 gallons of fuel.
2. Horizontal/vertical (bullet) fairing: A newly-designed tail bullet fairing has been incorporated to smooth out the flow between the interface to the horizontal and vertical stabilizers.
3. Flight controls: We have added covers over the hinges on the elevators, rudders, and ailerons. The elevator and rudders have been extended eliminating the gurney tabs that added significant drag. This change has also improved the control forces.
4. Engine pylon and nacelle: The pylon skin will be stiffened and the trailing edges modified. In addition, the lower nacelle panel has been modified to reduce the aerodynamic losses.
5. Landing gear and wheel assembly: Main landing gear fairings and more aerodynamic wheel covers have been added.
6. Engine thrust schedule adjustment: The Full Authority Digital Engine Control (FADEC) software will be changed to enable thrust preservation at cruise altitudes from 25,000 feet through the certified max altitude of 41,000 feet. This is NOT an increase in the 900-pound thrust rating of the engine, but results in more thrust at typical jet cruise altitudes.
7. Miscellaneous: Drain hole scupper and rig pin hole covers have been aerodynamically improved.

Note: Modifications to the wing de-ice system are no longer needed to achieve these performance numbers.

Aircraft Operational Impact:

The results of the performance improvement program have been phenomenally successful. With the drag reduction fixes in place, we now have data and flight testing that give high confidence that the speed and range specifications will meet the target of 370 knots (TAS) and 1,125nm (NBAA IFR range with 100 nm alternate). These improvements will be reflected in an updated Aircraft Flight Manual (AFM) and Aircraft Maintenance Manual (AMM).

Implementation of Modifications:

• All aircraft will be modified to meet the specification of 370 knots (TAS) and 1,125 nm (NBAA IFR range with 100 nm alternate)
• Aircraft modification will be conducted at an Eclipse Service Center.
• Eclipse will assume the cost of the modification (labor and parts only). The modification is estimated to take three weeks. We are working various approaches to reduce this time.
• At this time, we expect to have this configuration certified sometime between mid-March and mid-April 2007.
• We are refining a production incorporation plan that deliver aircraft with these full modifications immediately upon certification of the configuration.
• Aircraft delivered prior to certification of this configuration will be modified on an as-scheduled basis after aircraft delivery. This activity will be coordinated through Customer Care, which will be providing further information in the coming weeks to clarify specific serial number impact, and provide more detailed performance data and modification details.

Delivery Date Reimbursement Plan

In a separate notice mailed to Eclipse customers, the planemaker says it is sensitive to customer concerns the company won't meet its production schedule. It also acknowledges some have been reluctant to pay more money (to bring their cumulative deposits up to 60 percent of the price tag) in light of further possible delays -- so Eclipse has come up with a plan to reimburse customers a portion of their final payment for each month the plane may be delayed.

"To address your concerns Eclipse is announcing that for customers with a scheduled delivery date on or before September 30, 2007, we will reduce your final payment due at delivery by 0.5% per month (6% annual interest rate) of the additional payment we are asking you to pay now," the letter states.

Under the plan, should Eclipse not deliver a customer's plane on or before the end of the calendar month following the Scheduled Delivery Month -- and for each full calendar month after the end of the Scheduled Delivery Month that Eclipse is delayed in delivery of the plane -- Eclipse will deduct one-half of one percent (0.5% or six percent per annum simple interest) of the additional deposit amount from the final payment due at time of delivery.

As an example -- if the Scheduled Delivery Month is April 2007 and the actual date of delivery is June 3, 2007, the Buyer will be entitled to one month of a 0.5% offset of the additional deposit amount which will be deducted from the final payment amount.

Eclipse has sent an Aircraft Purchase Agreement Addendum for customers to submit to the company.

FMI: www.eclipseaviation.com