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Press Release

Contact: Douglas Royce

Phone: (203) 426-0800

Fax: (203) 426-4262

Web site: www.forecast1.com

E-mail: Douglas.Royce@forecast1.com

Forecast International, Inc.

22 Commerce Rd. Newtown, CT 06470 USA

 

FOR IMMEDIATE RELEASE

 

Forecast International Projects End of Eclipse 500 Production

 

NEWTOWN, Conn. [October 28, 2008] — In a new report to be issued in December, Forecast International has projected that production of the Eclipse 500 will soon end.  The Connecticut-based market research firm believes that the aircraft’s manufacturer, Eclipse Aviation, will not attract new investment necessary to allow it to continue making the aircraft beyond the first quarter of 2009.

"Eclipse continues to produce aircraft at a low rate as it seeks to preserve cash," said Forecast International aircraft analyst Douglas Royce. "We have forecast production of 162 Eclipse 500s during 2008. We believe that the company will be able to push production out into early 2009 but will be forced to cease production within the first quarter of 2009." Forecast International predicts only about 12 Eclipse 500s will be produced in early 2009, and "even this forecast may prove too optimistic," said Royce. 

According to Forecast International, Eclipse Aviation’s business plan depended on delivering a twin-jet aircraft at an extremely low price relative to its competition.  This low price was dependent on use of a high-volume production strategy made possible by importing methods of production from the technology and automotive industries.  However, the anticipated production ramp-up never occurred and the company has been unable to realize the economies of scale it needs to meet its price target.  

 

Until May of 2008, the list price of the Eclipse 500 was $1.52 million. Thereafter, the aircraft’s price increased to $2.15 million, but Eclipse Aviation is required to deliver aircraft at the earlier, lower price to customers who executed an Aircraft Purchase Agreement and paid the required 60% total deposit.  Every aircraft delivered under the old price is delivered at a loss, Forecast International notes.  At the moment, the company does not have the financial resources to absorb these losses and survive.

 

To restructure its operations and reach profitability, Eclipse Aviation has said publicly that it needs $200-$300 million in new equity investment.  With credit markets in the midst of a major crisis, Eclipse Aviation is seeking funding at a time when bankers and investors are reluctant to pour hundreds of millions of dollars into a company facing an uncertain future. 

 

Eclipse is facing of host of new competitors in Very Light Jet (VLJ) market.  Florida-based DayJet, an air taxi service, accounted for about half of the initial Eclipse backlog when it folded in Sept. 2008. Raising prices any further to cover costs will also cause the company’s backlog to contract.  The business jet market overall is also entering a period in which demand is expected to contract sharply in the near term, cutting sales for every participant in the VLJ market. 

 

"Under the circumstances, Forecast International believes that securing new funding, while still possible, is unlikely," said Royce. "Forecast International has cut its forecast for the Eclipse 500 accordingly."

 

Forecast International, Inc. (www.forecastinternational.com) is a leading provider of Market Intelligence and Analysis in the areas of aerospace, defense, power systems and military electronics.  Based in Newtown, Conn., USA, Forecast International specializes in long-range industry forecasts and market assessments used by strategic planners, marketing professionals, military organizations, and governments worldwide.  To arrange an interview with Forecast International’s editors, please contact Ray Peterson, Vice President, Research & Editorial Services (203)-426-0800, ray.peterson@forecast1.com.

 



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