Adam Aircraft suspends operations....


#1

ADAM AIRCRAFT SUSPENDS OPERATIONS (from AvWeb)

Adam Aircraft has suspended operations at its Colorado facilities. In a short news release, the company said the action was taken “due to the inability of the company to come to terms with their lender for funding necessary to maintain business operations.” The news release doesn’t identify the lender, but previous rounds of financing, totalling almost $300 million, have included such major investment houses as Goldman, Sachs and Co. and Hunt Growth Capital as participants.
From AvWeb,

In January, Adam announced that it needed $30.5 million in interim financing to allow its current financial partner, Citibank, the time to find the $75 million to $150 million it needed to get into production and start selling against a backlog of orders the company estimated to be worth $1 billion, according to some reports. In a letter to shareholders leaked to the media in late January, CEO John Wolf said that if the company didn’t have the $30.5 million by the end of January, the company was likely doomed. Monday’s announcement seems to echo that sentiment while leaving the door for a miracle open a crack. “The company is currently exploring all of its alternatives and will provide further guidance when decisions are made, which is expected to be later this week,” the release said.

As little as a week ago, company officials were claiming that the search for funding was continuing and that production of the fifth A700 jet was under way. The jet has not achieved FAA certification but the A700 push/pull piston twin has. Adam has reportedly sold 17 of the piston aircraft and delivered seven. Meanwhile, the city of Pueblo, Colo. didn’t wait for Monday’s announcement to demand $2 million in incentives it says should be returned. The city says Adam promised to create 448 jobs and actually created about 90, most of which disappeared in a round of layoffs and plant consolidations in January. The city of Pueblo has placed liens against Adam’s equipment in the city-owned buildings that were part of the incentive package.

Adam Aircraft Website


#2

Wasn’t Cessna looking for a new twin?


#3

thats too bad. I wonder if someone would buy the design out (like Beech). Aern’t they pretty close to certification also?


#4

Or the ChiComs


#5

Unfortunate… And there will be others…

Interestingly though, and this happened before I heard the Adam Aircraft announcement, I was preparing to depart KAPA today when an A500 and an A700 approached in formation and performed a military style overhead break. A last hoo-rah of sorts… :cry:


#6

Adam Assets On the Auction Block

Mar 5, 2008 From Aviation Week

The assets of Adam Aircraft Industries–which suspended operations Feb. 11–will be auctioned in Denver, Colo., on Apr. 4.

The bulk sale will include aircraft, intellectual property licenses, customer contracts, aircraft certifications, and manufacturing equipment.

Bids must be submitted to marketing agent General Capital Partners by Apr. 3. Qualified bidders are required to submit an asset purchase agreement with a minimum bid of $10 million plus a $250,000 earnest-money deposit into an escrow account. For more details, contact wcg@generalcapitalpartners.com.

Adam Aircraft, founded in 1998, designed and manufactured carbon-composite, high-performance general aviation aircraft, the A500 twin piston and the A700 very light jet powered by two Williams FJ33 engines. A700 deliveries were to start this year.

The Adam Aircraft sale will also include “significant backlog orders,” according to General Capital. For example, in May, 2007, Hainan (China) Zhong Hang Tai General Aviation Airlines placed a firm order for 50 A700s. In addition, in October 2006, Magnum Jet placed an order for 101 A700s for its planned air limo service.

In 2006, Adam Aircraft aimed to accelerate growth plans, raising $93 million in financing. The company also expanded its engineering and executive teams. However, in January 2008, the company had to streamline operations in an effort secure long-term financing. And on Feb. 15, Englewood, Colo.-based manufacturer filed for Chapter 7 bankruptcy protection in Colorado District Bankruptcy Court.


#7

Really sad to see it end this way. Rick Adam was a real aviation entrepreneur. Even when you have smart, knowledgeable people and a LOT of money, it is very tough to make it in aviation.


#8

Jeez that sucks. I really wanted to see the A500 make it, too. I’m just a little surprised to see that they couldn’t find any more investors…Hey, after looking at that backlog, I’d do it if I had a few million laying around. I hope someone will buy the pieces and put them back in place…Someone mentioned Cessna before. I might see them buying the rights and tooling, etc to the A500, but not the A700, as they have their own jets as it is.


#9

What do you think of Beech? They just hired Russ Myers III to work on new product development. On the GA side they haven’t introduced a new product in about 50 years.


#10

Didn’t realize that the Starship, Premier I and Hawker 4000 were 50 years old already. :unamused:


#11

I think wazzu90 was referring to the Bonanza/Baron “GA” products. the “Premier I and Hawker 4000” aren’t exactly mainstream “GA” airplanes… :unamused:


#12

I think Beech is unlikely. The main market for the A500 was to replace the aging King Air fleet.


#13

Beech wants no part of that!


#14

I don’t think I agree with that CA… The A500 isn’t really in the same class as the King Air. Maybe you meant the Baron…

The King Air is different market. More versatility, large cabin, very reliable. While the original design may be over 40 years old, it still has it’s own niche and new ones still sell well. And with the new ones having more power (the GT models) and Proline 21 avionics, they’re still a great all around airplane.


#15

Not to mention power plant difference. Two piston powered engines vs. a PT6 powered King Air.


#16

That are actually mounted backwards on the airframe. :wink:


#17

Not my opinion, I saw the original business plan for Adam Aircraft and that’s what they said - I believe it was the old 90 model they were referring to. Agree that it doesn’t have the PT6 engines, but they showed a part of the market that didn’t care about that.


#18

Wow…I guess that partly explains why they missed the mark.

Again, they focused on the wrong market. A major industry concern is the future of avgas, hence the push toward diesel and affordable turbine technology. Maybe they should have forgone the A500 and focused entirely on the A700.

I still believe that there will be more VLJ industry casualties. It all sounds good on paper, but the market and industry reality just doesn’t support it. Even if there are all of these order backlogs…apparently it’s just not enough. Eclipse is on its way but is in a struggle, and they don’t have any competition except for Cessna’s Mustang which is a different price point and not really considered a VLJ.


#19

I really like the A500 from an aesthetic standpoint. I think it’s a cool little plane. A PT6 powered A500 would have been off the charts. I <3 turboprops, pusher props, and twin boom pusher/puller arrangements.


#20

If they had used twin PT6’s, I think they would have also missed the market as their price point would ave been too high. As I said, they did very thorough market research and their order backlog for the A500 sugggests that there was a good size market for the plane. The main reason they went bust is that the FAA kept changing the requirements delaying certification for a couple of years and the company just couldn’t dig out of that hole.

Remember, the engines for the A700 weren’t available when Adam started the A500 project. When they became available, Adam started the A700 work.

I partially agree with you. I think there is a limited market for the VLJ, but nothing like the numbers, and number of VLJ manufacturers, that people are talking about.