The Case: Eclipse Aviation was trying to build the first twin-turbofan private jet with a price tag under $1 million. But when reliability questions surfaced around the engines being designed for Eclipse, the company had to decide whether to stick with its original supplier or find a new one – and thus push off the plane’s debut for two years. Any delay would tax the patience of the prospective buyers on the Eclipse’s waiting list – and run the risk of exhausting the company’s cash reserves.
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When the wheels of Eclipse 500 jet lifted off the runway of the Albuquerque International Sunport on the morning of August 26, 2002, Ken Harness thought that the last of his problems were about to vanish like a high-altitude vapor trail.
As the New Mexico company’s director of propulsion systems, Harness had worked feverishly to get the plane ready for this inaugural flight, focusing especially on a newly designed engine that weighed just 85 pounds, but was intended to churn out an impressive 770 pounds of thrust. But after a successful first flight that day, things unraveled. As the Eclipse 500 was taxiing out for a second take-off, one of its engines quit. That failure would lead to big decision about Eclipse’s relationship with its engine supplier, Williams International.
Eclipse was founded in 1998 by Vern Raburn, a pilot and aviation enthusiast, whose personal fleet includes a 1940s era Lockheed Constellation that was actually used in the Berlin Airlift. Raburn had soaked up business experience as an early employee of Microsoft (he helped start the consumer products division), general manager of Lotus Development, and CEO of Symantec. But he’d never been involved with the world of airplane manufacturing, which is strewn with the wreckage of companies that have tried and failed to get new aircraft designs approved by the Federal Aviation Administration before running out of cash.
Raburn thought he could apply his technology savvy to airplane manufacturing, creating a streamlined, Dell-like supply chain and embracing new production techniques such as friction-stir welding, which he believed would be faster and cheaper than using rivets. (Friction-stir welding uses a rotating tool to heat up and plasticize the two sides of a joint.)
Raburn’s objective was to build a private jet that could be sold for less than $1 million – one-third the cost of the cheapest jet on the market at the time. He thought the plane would appeal to private pilots who’d always longed to upgrade from a prop plane to a jet, and that its low operating costs (primarily thanks to its fuel-efficient engines, designed to sip about 100 pounds per hour) would enable companies to establish on-demand networks of air taxis.
These networks would use Eclipse jets to fly to and from secondary airports near where people live and work, rather than forcing them to transfer through bigger hubs in metropolitan areas. Raburn often compared the plane’s operating costs to those of driving a New York City cab – it would be cheaper per mile, he claimed.