Small jet manufacturer Eclipse Aviation files for bankruptcy

26 November 2008

Unable to cope with the year-long downturn in financial markets which has had a direct effect on aviation, small jet manufacturer Eclipse Aviation filed for bankruptcy protection yesterday.
 
The Albuquerque, New Mexico-based company, which had revolutionised the market for very light jets (VLJs) was founded in 1998 by former Microsoft Corp employee Vern Raburn. However, it was forced to cut back production of its Eclipse 500 jet earlier this year as costs outstripped sales.

The twin turbofan jet, seating up to six and able to fly at 425 mph, was designed to open the lower end of the business jet market to a new class of buyers. The mass market for small jets never reached Eclipse's ambitions and one of its largest customers, the air taxi service DayJet, folded earlier this year. After a five-year boom, the economic slowdown and financial crisis has stopped the business jet market in its tracks.

Manufacturers such as Canada's Bombardier Inc, Textron Inc's Cessna unit and France's Dassault Aviation SA all reported a sequential dip in the value of jets delivered in the latest quarter.

Eclipse Aviation Corp has filed for Chapter 11 protection in the US Bankruptcy Court in Delaware, where it is incorporated. It is seeking court approval for debtor-in-possession (DIP) financing and procedures for the sale of substantially all of its assets under Section 363 of the US Bankruptcy Code.

"In the face of unprecedented economic challenges, it is clear that the sale of the Eclipse business through the Chapter 11 process was the right course of action to maximise the value of the business, secure its future and protect the best interests of Eclipse's stake holders, including customers, suppliers, employees and creditors," acting CEO Roel Pieper said in a statement.

''The successful sale will position the business for aggressive global expansion, allowing the company to fulfil its promise and solidify its position as the world's leading manufacturer of VLJs,'' he concluded.