Lancair Response to Direct-To (D2A) Customers

January 7, 2007

Lancair and Lancair Avionics Customers:

The D2A business failure is one which has touched all of us in one way or another. I see the postings and I am sickened by the finger pointing because I know that there must be more to this story than meets the eye. I have never agreed fully with Kirk's business decisions, however, for the well being of my customers, I continued purchasing, in good faith, because it was Chelton products that I believed I was purchasing, through D2A. I await, perhaps a bit more patiently than most, the full story. I just can't believe Kirk is 100 percent at fault here.

On several occasions I spoke with customers and explained that I was concerned about paying 100 percent up front for the Chelton package, especially when there was such great controversy over which, if any, AHARS/ADAHARS/GADAHARS would be appropriate for the IDU-1's. The truth is the customers had already made up their respective minds about Chelton having been so indoctrinated by so many D2A advertisements alluding to the fact that Chelton would give you "...so much blue for so little green." Our customers were cutthroat in trying to save every dollar and would on so many occasions attempt to go outside of Lancair Avionics, Inc. to buy direct from D2A. Last significant fact on this part of the subject, there wasn't then and isn't now a product which compares to the IDU-1's in price and performance, even if you now have to pay a small amount more to get all that you thought you would get.

So what do we now do? Well, Lancair Avionics, Inc. is reviewing its contracts with its customers who are still without an AHARS/ADAHARS/GADAHARS. For those customers whose contract calls for Crossbow 425's, they will get 425's. For those customers whose contract calls for Pinpoint, they will get Pinpoint, however, they will have to pay the difference between what the 425 costs and what the Pinpoint costs. Contractually Lancair Avionics, Inc. may be responsible to its customers fully, even if it was D2A that failed. I am in no way conceding that point at this time, however, for those of you who have never filed a lawsuit or have never been sued, let me tell you that it is a very expensive, time consuming, and wasteful event, especially when the singular loss to any one customer may be no more than $4,000.00. As to Lancair Avionics, Inc., the total amount may be as much as $145,000.00.

I am suggesting to my Lancair Avionics customers that we share in the loss as follows: 1) Chelton has obviously proposed providing product at or near its cost; 2) Lancair Avionics, Inc. would like to pay one-half of the amount required to acquire the items which D2A failed to provide; 3) Lancair Avionics, Inc. proposes that the customers pay the other one-half of the amount due necessary to acquire the items D2A failed to provide; and, 4) Those customers who participate as requested will receive a special discount on any item that they purchase through Lancair which will total at least that amount equal to their contribution to this effort. For instance, if a customer still has an engine to purchase, we will discount the engine by the one-half mentioned above. If the customer has already purchased items such as engine, prop, panel, etc., Lancair will offer a discount on any other airframe kit that we offer or will allow a special discount on parts and accessories until such time as the customer's contribution to the purchase of the back ordered D2A products is satisfied.

This offer, initially, is beneficial to Lancair and that is because we would rather not have to suffer this financial loss all at once. We hope that all or at least a majority of you will accept this offer.

Joseph C. Bartels, CEO

Lancair International, Inc.