JetAlliance seeks to acquire 28 ex-DayJet Eclipse 500s
March 31, 2009
By: Brendan Sobie
Very light jet shared ownership and management company JetAlliance
aims to accelerate its expansion by acquiring the 28 Eclipse 500s
previously operated by defunct air taxi operator DayJet.
JetAlliance
chairman Randall Sanada says the California-based company aims to
conclude by the end of May the acquisition of the VLJs on behalf of
some of the owners who were left holding unfulfilled orders when
Eclipse Aviation filed for bankruptcy in November.
Sanada says these owners stand to receive nothing for their 60%
down payments, given their unsecured creditor status in Eclipse
Aviation's bankruptcy proceedings, but under the proposed deal would
receive an ex-DayJet aircraft after paying the final 40% to United
Technologies through JetAlliance.
Sanada says JetAlliance worked with United Technologies, which was DayJet's primary lender and holds a lien on the 28 aircraft, to
structure the complex deal and has already secured the necessary
approvals from DayJet's trustee. DayJet ceased operations in
September. Sanada says JetAlliance is now seeking approval from
Eclipse Aviation's lender and is confident the deal will close in
30-60 days.
Sanada concedes this is not a perfect solution for the owners as
they will have to pay the full new aircraft price for a used
aircraft that will require upgrades. In addition, some owners will
receive only a half share for an additional 20% payment or a
one-quarter share for an extra 10% payment, but Sanada claims this
is better than receiving nothing for the 60% already paid.
"We have got a substantial group of individual deposit holders who
aren't getting aircraft because of the bankruptcy," he says.
"JetAlliance isn't able to deliver on the failed promise of Eclipse
Aviation, but we've come up with a partial solution for them to come
up with something."
If the deal is concluded it will result in an instant expansion of
JetAlliance's fleet from six to 34 VLJs. Sanada says JetAlliance
manages four Eclipse 500s and one Cessna Mustang. Its first Embraer
Phenom 100 is scheduled for delivery in mid-April. Its Phenom 100 is
the 23rd to roll off the production line and was purchased early
last year from two owners who originally acquired the aircraft from
Eagle Creek Aviation.
Sanada says JetAlliance also has commitments to add a Mustang and
acquire one of the first HondaJets. He adds that JetAlliance is
discussing acquiring aircraft from several Eclipse 500 owners. He
says there is a "substantial secondary market" for the more than 259
Eclipse 500s that were delivered before the New Mexico-based
manufacturer's bankruptcy. JetAlliance is also talking to several
owners who have ordered Phenom 100s.
JetAlliance specializes in acquiring VLJs from up to four owners
and chartering them when they are not in use. For each VLJ it
partners with an air carrier who is fully responsible for operating
the aircraft and helps with selling charters. JetAlliance is also
partnered with jetAVIVA, which helps with aircraft sales and
marketing charters along with other duties including handling
deliveries.
"We endeavor to double or triple the time the aircraft is operated
and generate charter revenues to offset some of the fixed costs,"
Sanada says. He adds that demand to own and charter VLJs continues
to increase despite the downturn in the economy as users of larger
jets look to trade down to more economical and environmentally
friendly VLJs
"Look at the stigma private jets have had since the big three
automakers showed up in Congress with their Gulfstreams," he says.
"It should have been a VLJ they showed up in."
JetAlliance was established in 2000 and took delivery of its first
aircraft, the very first Eclipse 500 to roll of the production line,
at the end of 2006. Sanada says charters began as recently as July.
"We're now just bringing up our marketing efforts to let customers
know about availability of aircraft," he says.
JetAlliance offers only charters from six airports in southern
California, but has been looking at expanding into northern
California and eventually eastward. Sanada says if the acquisition
of the 28 ex-DayJet Eclipse 500s is concluded, this expansion will
be accelerated and JetAlliance will quickly have nationwide
coverage as the new owners are based throughout the USA.
He says JetAlliance is ready to add several air carriers based
throughout the country as new partners. "There are others that have
made bids on the aircraft, but they're pretty much partnering with
us," he says.
JetAlliance has a lot at stake in the deal as it had deposits on
three unfulfilled Eclipse 500 orders. Sanada, who personally owns a
stake in the very first Eclipse 500, has been actively involved in
the drawn-out process of trying to secure a new investor in Eclipse
Aviation's assets as he sits on the bankruptcy committee that
represents Eclipse owners. "That's been my full-time job since
November, entertaining all the proposals, and I'm not even
chairman," he says.
Sanada confirms a group of owners have set aside funds to bid for
the assets should other offers fall through. But he says restarting
production is not likely in the near future and the focus for now is
on supporting the existing fleet.
"We don't believe now is the time to restart production," Sanada
says. He adds that while the owners have not found a "formula" for
restarting production if they assume ownership of the assets,
resuming production could be pursued later if a new investor, in
particular an experienced manufacturer, can be secured.
About JetAlliance
JetAlliance, Inc. is the leading Fractional Jet Ownership Company
in the new VLJ (Very Light Jet) category of aircraft. Headquartered
in Westlake Village, California, JetAlliance is offering ownership
opportunities in the Eclipse 500 private jet, starting at $93,750.
For additional information, call 888-234-7526.
To request additional
information please click here.
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