Eclipse Aviation Furloughs 800 Employees

Feb. 19, 2009
Eclipse sent 800 workers home on Wednesday, says they will return upon pending company sale.

ALBUQUERQUE, NM -- Eclipse Aviation Corp. officials sent about 800 workers home Wednesday on an unpaid furlough but expressed confidence the employees will return when the company's pending sale goes through.

Eclipse president and general manager Michael McConnell, during a hastily arranged conference call with Albuquerque reporters, called it "a bit of a good news and some bad to terrible news."

McConnell said the good news was that Eclipse is "very close" to closing a $188 million sale to European-based EclipseJet Aviation International Inc., an affiliate of ETIRC Aviation.

"Even in this crazy, crazy market, we believe it's possible to sell our airplane in the global market this year. We believe we have the best product" among very light jets, McConnell said.

He said the bad news was that furloughs were necessary while Eclipse waits for the sale to be completed. While the global economic crisis has created delays, McConnell insisted it won't force the sale to be abandoned.

"The fact it's taking longer just speaks to the complexity of putting together global deals in today's economy," he said. "No one has backed out. No one has changed their mind. It's just taking longer than we thought."

Last month, a federal judge in Delaware approved the sale to allow Eclipse's reorganization under bankruptcy protection.

McConnell characterized the furloughs as indefinite and said about 50 workers remain to maintain aircraft and flight simulators. Eclipse's service center and flight training centers have been temporarily closed.

McConnell said benefits will continue during the furlough and all workers will receive this week's paychecks.

But he declined to elaborate when pressed about when the employees can expect to return.

"I'm not going to handicap when that's going to be," he said. "I've handicapped for about a month now and learned I'm not going to play the lottery. Our desire, our belief, is that it's very short term."

The furloughed figure of 800 workers came as a mild surprise because recent news releases have said Eclipse employed 956. McConnell said the company currently is "in the range of 850 or 860 employees."

"We've had attrition, as you might expect, in a company going through uncertainty," McConnell said.

McConnell was asked whether the employees, when they return, will be working for the new European-controlled company.

"I think that's a fair assessment," he replied.

It has been a turbulent year for the Albuquerque aircraft builder.

The bankruptcy filing came after layoffs of more than a third of Eclipse's work force, the exit of its founder and former chief executive, Vern Raburn, and safety questions from the Federal Aviation Administration.

Eclipse also sustained a setback with the bankruptcy of its largest customer, air taxi operator DayJet Corp. of Boca Raton, FL.

However, McConnell said Eclipse has delivered 259 planes since handing over the first in January 2007. He said more than 1,000 orders are backlogged, in part because of DayJet's problems.

"Of course, it has had an effect, but at the end of the day we never built our business around DayJet being successful or not successful," he said.