Mooney Afloat On Red Ink
Previous Losses Offset Future, Says Chairman...
Perhaps, by current Wall Street standards, the situation at Mooney doesn't look so bad. But the New York moneymen behind the Mooney Aerospace Group (MAG) are finding rays of sunshine in places where others see only dark clouds. Sam Rothman, a Wall Street fund manager and chairman of MAG's board of directors, told AVweb the company -- which just closed its facility in Long Beach, Calif., and let go 20 more employees -- is in an enviable position. "We have a very strong foundation," said Rothman. "We're going to get Mooney profitable." It turns out the more than $90 million MAG's predecessor AASI spent on its aborted JetCruzer project is the bulwark on which Mooney will prosper, according to Rothman. With all those losses on the books, profits from the sale of Mooneys are essentially tax-free. "We will have tax-free profits for the next number of years," said Rothman. Couple that with the low debt load of the company (AASI picked up Mooney's Kerrville, Texas, plant lock, stock and 20 unfinished airplanes for $9 million last March) and it's a recipe for prosperity, Rothman contends. And if it isn't, well, there's always more money where the first $90 million came from. "The funds (read: investors) that are funding this operation have very deep pockets," he said.
...JetCruzer Investors "Knew Risks"...
And what about all those investors who thought they were buying into a bold new technological frontier in the JetCruzer and are now pumping out a pretty conventional, basically decades-old design? Well, MAG's most recent CEO -- the fourth since March -- Nelson Happy says they knew there were no guarantees. "I don't think it was a misleading thing," he said. "Anytime you're investing in a new technology, there's considerable risk." When it was conceived in the mid-1990s, Happy said the rear turboprop, canard design looked like it would revolutionize the light-business-aircraft sector. Development and certification problems doubled the original $900,000 cost and the advent of not-yet-in-production "microjets" like the Cessna Mustang and, possibly, the Eclipse 500, sealed its fate. Still, MAG hopes to find a buyer for the stacks of engineering data, a type certificate, a flying prototype and various parts and tools that are JetCruzer's living legacy. "It's sort of a Shake and Bake, do-it-yourself airplane manufacturing plant," he said. Ads will be appearing in aviation publications calling for bids on the whole package.
...Other Companies On Shopping List
And while the lucky winner of that competition is carting it away, Happy and Rothman say they'll be focusing their energies on the Kerrville plant, where Rothman says 151 employees are ... eager to get going. He said the focus will be on efficiency and productivity and he's sure that within a few months they'll be cutting into that tax cushion and Mooney will again be a symbol of quality and trust. Of the 20 unfinished planes the new owners inherited, 13 have been sold, said Happy. The goal is to clear the rest out by the end of the year and start building to order. Happy said the company can be profitable building 60 aircraft a year. Rothman said that while the whole focus is now on Mooney and the Kerrville plant, the company would eventually like to buy other aircraft manufacturers. Earlier this year, former CEO Roy Norris talked to Raytheon about buying the Beech Bonanza and Baron lines. Rothman declined to say whether those negotiations will be revived. "There are several companies that we are looking at," he said.