Cessna, Eclipse Supplier In Cash Crunch?
Avcorp's Bank Demands Loan Repayment...
The financial difficulties of an obscure Canadian aerospace company could have far-reaching effects in the business and commercial jet sector. Avcorp, of Vancouver, B.C., makes airframe components for the new Cessna Sovereign and CJ3 jets, the Eclipse 500, Bombardier regional jets and Boeing airliners and has been ordered to repay the full amount of a $12.5 million loan owed to an unnamed bank -- the deadline for that repayment passed Tuesday. Avcorp officials refused to discuss the situation with AVweb in two phone conversations and an e-mail request, but said a press release would soon be issued. According to press releases currently on the Web site, Avcorp has received three extensions on the credit agreement it has with its bank. The latest one expired on Jan. 30 and the company was given two business weeks to repay the balance of the loan. In a Jan. 24 press release, the company said it was in breach of some ratio covenants with the bank. Avcorp has also been to the market at least three times to raise capital and received a $3.2 million research grant from the government of Canada in October. Like many aerospace companies, Avcorp traces its troubles to 9/11, at which time it employed 750 people in a 300,000-square-foot facility in the Vancouver suburb of Delta. As of the end of 2002 it had 379 employees.
...Company Officials Keeping Quiet
The effects of Avcorp's troubles are hard to gauge because two of the companies most prominently associated with the firm are also offering no comment. Avcorp is building the wing spar for Cessna's new Sovereign (currently in flight tests) and the wing box and tail assembly for the CJ3. Cessna spokeswoman Jessica Myers was happy to talk about both airplanes in general, but not in relation to Avcorp. "It's inappropriate to comment at this time," she said. Avcorp is building the ailerons, elevators, rudder, nose assembly and speed brake on the Eclipse. Spokeswoman Dottie Hall said parts have been supplied for the second airframe currently under construction but beyond that she declined detailed comment. "Basically, we're sorry about their business situation but I have been assured we will be able to find other suppliers if necessary," she said. Because of well-publicized problems with its engines, Eclipse's production timeline has been pushed back two years to 2006, so an interruption in supply from Avcorp is less critical. But Cessna's affected airplanes are at pivotal points in their development. The first three Sovereigns are undergoing flight tests and the first production model is on the assembly line. There are 160 orders with first deliveries slated for early next year. The prototype CJ3 is nearing completion with a first flight planned for sometime in the second quarter of this year. Myers declined to say whether parts from Avcorp are on hand for both projects but she did say both aircraft are on schedule.