Vern Raburn: Never Saw It Coming?
The axe fell swiftly and hard on Monday as Eclipse's voluble CEO, Vern Raburn, was shown the door by the company's board of directors. Despite the fact that Eclipse's arc has been defined by one stumble and delay after another as the company burned through hundreds of millions in funding, Raburn seems to have been genuinely surprised by this sudden turn of events.
In a letter to Eclipse owners and position holders on Monday, Raburn said "As you can imagine, this development came as quite a surprise to me and it saddens me more than I can tell you to have to leave Eclipse." As of late Monday, it still wasn't clear to us how complete Raburn's divorce from Eclipse really is, since the company says he will retain duties in international marketing.
Whatever. Could he actually be that na´ve, not to have seen this coming? Or could the company's billowing and relentless promotion mask the fact that along with producing a sexy little light jet, it had also burned a giant hole in its own credibility. Evidently, as of this week, investors in the company--who have reportedly invested more than a billion dollars--had had enough. Raburn's departure was linked directly to the next round of funding. Evidently, it was either Vern or the money and we know what won.
So now what? Eclipse's financials are an unknown, but the picture is probably not very pretty. Following its announcement in May that it would raise the Eclipse 500's base price to $2.15 million, a significant number of position holders asked for their deposits back. When Eclipse failed to do this in a timely way, it raised the ire of a few. New acting CEO Roel Pieper promised those customers on Monday that this will get tended to as soon as possible.
Eclipse still has an uncertain future, in our view. The vast air taxi market that its economics were based on remains unrealized. It has been delivering what are essentially incomplete airplanes, without moving maps, without GPS, without FMS and without known icing. As all those approvals finally come together, Eclipse will have a long IOU list to tend to at a time when it will really need to ramp up production to generate revenue. And even when the much vaunted Avio system comes together with a kick start from Garmin 400s, it will be well behind the state of the art in small aircraft EFIS.
From the outside looking in, what we think Eclipse most needs is management that can drive down the center lane without being distracted by building grand promotional palaces at Oshkosh and other shows or by constructing certification and delivery schedules unattached to the realities of building airplanes.
And it will need leadership that knows how to devise practical specs for airplanes and avionics and freeze them early enough for its engineers to actually develop and build them. Some owners we've talked to say that Eclipse's biggest mistake was trying to build too much sophistication into an airplane that didn't really need it.
You can complain about vendors missing their due dates or not having the developmental savvy to pull off a modern integrated airplane, but in the end, it's really all the fault of the guy at the top.