The story of a startup airplane maker is an arc. Here’s what ICON’s might mean.
The one name that everyone says when they talk about ICON Aircraft and its controversial A5 LSA amphibian program and that no one ever puts in print is this: “Eclipse.” Unless you’ve been lost in the Amazon for the past decade (and perhaps even if you have been), you know what I’m talking about. Eclipse Aviation was the startup company that invested a billion dollars in what remains the world’s only true very light jet and went down in a spectacular fashion after turning out a couple hundred airplanes. (Today’s Eclipse is under the ownership of One Aviation, unrelated to the original Eclipse Aviation.)
The years-long ordeal that was the demise of Eclipse involved a high-energy multi-million-dollar Hollywood marketing assault and a company run by a smart and charismatic leader, Vern Raburn, who insisted on tight control of the narrative and who was a lightning rod for criticism. Throw into the mix too-low initial sales prices, sky-high predictions for production rate and production efficiency, and an order of magnitude prediction for the demand for the product, and you had a recipe for delays, disappointment and disaster.
Sure enough, the bumps came and came hard: funds got tight, suppliers withheld parts, fingers got pointed and tempers flared. There were multiple rounds of funding, huge backlogs of orders and delays, seemingly endless rounds of problems in overcoming technical hurdles (the mid-program engine swap from Williams to Pratt was just one of dozens), and then, afterward, getting the airplane to hit its performance targets and getting the FAA to sign off on it, which didn’t save Eclipse, but only forestalled its demise.
Finally, when it was surely too late already to do anything about Rome but watch it burn came a global customer revolt that at one point generated the popular blog Eclipse Aviation Critic, with thousands of followers and hundreds of angry ones. In the end, customers were forcing their way into the hangar to try to get their airplane out the door before the marshals, by order of the court, padlocked the doors.
In the end, Eclipse declared bankruptcy, hundreds of once-optimistic customers saw their millions in deposits vanish, vendors lost hundreds of millions more, and few customers would ever get their jets. While the airplane, eventually resurrected by Eclipse Aircraft, would fly again, it was in much smaller numbers than the company had long promised.
The airplane itself, by the way, a 6,000-pound twinjet that can do 370 knots at 41,000 feet, was a tour de force. I’ve flown a few of them. I’d buy one tomorrow.
Now, if any of these things sound similar to the story of ICON Aircraft, a company with a charismatic and fiery leader in Kirk Hawkins leading a glitzy and sometimes hyperbolic sales campaign while taking thousands of orders for an airplane that would, the company said, democratize light GA, you’re not alone in that observation. Now we learn that the company has had to delay the program to chase down design and manufacturability concerns, so the already lengthy wait for the most expensive LSA ever is, well, at least a year longer now. Customers, once arguably ICON’s biggest asset, were angered by a purchase agreement that at a time when the company might have been working to hit its production targets was instead talking about short airframe life limits on an airplane it was years behind in delivering.
So, yes, the similarities are striking. Does this mean that ICON, like Eclipse before it, is headed down the road to bankruptcy? It might. Eclipse Aviation’s demise was clearly (even if only in hindsight for some) an inescapable conclusion to the Eclipse business model to bring to market an airplane that was nearly impossible to create and certify and remarkably expensive to build by a company that had never done any of those things before, yet seemed to believe it knew all about how to do those things without the experience.
Then, again, what ICON has going for it is that it’s got a lot less invested in its program than Eclipse ever did; while ICON isn’t sharing its investment in the A5 program, it’s reasonable to assume, given other known-cost airplane programs, that it’s invested $100 million in the LSA so far, which is far, far less than Eclipse ever did. Moreover, ICON is done with its certification, in that the A5 isn’t a Part 23 airplane, as the Eclipse jet is; it’s an LSA, so certification is essentially self-certification. Still, $100 million, give or take a bit, is a lot of dough to recoup on a $250,000 LSA. If you make 20 percent profit on each airplane, a charitable assumption, you’re looking at $50,000 profit each. You’d need to sell 2,000 airplanes to make that back. The problem, of course, is that buying the parts for those airplanes and building them costs even more money than you’ve already spent, a lot more, so you might need to double that figure, or more. It took Cirrus more than a decade to build that many airplanes, and its airplanes are used for transportation purposes and not as flying watercraft (admittedly, really cool flying watercraft). Maybe my numbers are way off. But even assuming that the investment is half what I’ve suggested and that the profit is twice what I say it could be (very unlikely assumptions, but just to be fair), what are the prospects of ICON selling its reportedly great flying LSAs in big enough numbers to make it?
I hope I’m wrong, but I’m skeptical about the prospects. My gut tells me the year’s delay in the program is the beginning of the end. It tells me that I’ve seen this film before and the good guys don’t win, that the design winds up being built by someone else under some similar-sounding name. I hope that’s not the case, because I really like the airplane and the spirit of innovation that has driven its creation, along with high hopes that it can do everything that the company says it can do both for its owners and for the industry. Then, again, I had those exact same feelings about another airplane once upon a time, too.
