Quest Aircraft Sold!

Bushplane builder Quest Aircraft has been sold.

Quest builds the Kodiak ten-seat turboprop STOL utility aircraft at its plant in Sandpoint, Idaho. The company is privately owned and thus always on the lookout for investors to help it grow. The company produces the Kodiak as its sole product, but has always planned to expand into producing new aircraft designs.

A few years ago Setouchi Holdings of Japan became a dealer for the Kodiak and the company recently decided to buy Quest Aircraft. Setouchi Holdings is part of the part of the Tsuneishi Group. Setouchi has said that the company will remain in Sandpoint and retain its existing staff.

Here is my ever-expanding list of western aerospace companies bought out by non-western interests:

• Cirrus Aircraft - Government of the Peoples Republic of China
• Continental Engines - Government of the Peoples Republic of China
• Enstrom Helicopter Corporation - Chongqing Helicopter Investment Co, China
• Epic Aircraft - Engineering LLC, Russia
• Flightstar Sportplanes - rights, tooling and parts inventory purchased by Yuneec International, China
• Glasair Aircraft - Jilin Hanxing Group, China
• International Lease Finance Corp - 90% New China Trust Co Ltd, New China Life Insurance Co Ltd, P3 Investments Ltd and China Aviation Industrial Fund
• Liberty Aerospace - 75% owned by the Kuwait Finance House, a wholly owned subsidiary of Kuwait Finance House of Bahrain
• LISA Airplanes - 75% owned by Heima Mining Company, China
• Mooney Aviation Company - Soaring American Corp, backed by Chinese investors
• Piper Aircraft - Government of Brunei
• Quest Aircraft - Setouchi Holdings, Japan
• Superior Air Parts - Weifang Tianxiang Technology Group, China
• Thielert Aircraft Engines - Government of the Peoples Republic of China

External links

• Turboprop builder Quest Aircraft sold to Japanese group on AOPA
• New Ownership For Quest Aircraft on AVweb
• Quest Aircraft website
• Wikipedia

Free Enterprise in the 21st Century

I guess I just don't understand free enterprise or capitalism here in the 21st century. I always thought it meant that the market, buyers with money, would decide whether products and ultimately companies would sink or swim, based on the quality of their ideas and their ability to turn those ideas into something people will pay for.

So this week in Duluth, Minnesota, mayor Don Ness is hopeful that the Minnesota state government will put up US$4M, to go with the US$6M the city has committed, to build a new US$10M plant at the Duluth Airport. The plant will be leased to Cirrus Aircraft who will use it to build their new SF50 Vision personal jet aircraft in. The jets will sell for about US$2M each. Cirrus CEO Dale Klapmeier indicated that time is running out for the state to commit. Mayor Ness is very concerned that without the city and state building the plant for Cirrus that the company will move its manufacturing of the SF50 elsewhere, lured by incentives from other cities in the US.

You see in free enterprise there is lots of competition, at least between US communities willing to give tax breaks or even build facilities for companies, in an attempt to lure jobs to their communities.

The odd thing is that Cirrus was bought out for US$210M in February 2011, by China Aviation Industry General Aircraft (CAIGA), a subsidiary of Aviation Industry Corporation, which is wholly owned by the Government of the People's Republic of China. The Government of the People's Republic of China is currently arguably the richest entity of any kind on earth. So why do they need handouts from small US cities? It is also a communist government and a bit totalitarian, but let's not get into that.

Okay so let's summarize: The City of Duluth and the State of Minnesota want to provide a total of a US$10M taxpayer subsidy to the Government of the People's Republic of China as an incentive for them to establish their Cirrus SF50 production in Duluth instead of having it lured away by greater government subsidies from other cities. The new plant will build jets for rich Americans, since I doubt that poor or middle class Americans, like most of the taxpayers in Duluth, will be buying too many personal jets.

That all seems to add up to the taxpayers of Duluth and Minnesota subsidizing lower aircraft purchase prices for wealthy Americans via the intermediate step of providing facilities to a Chinese government state-owned enterprise.

Is it worth mentioning that government subsidies like this are not permitted under most trade agreements, like GATT? Of course that would be applicable if the City of Duluth was subsidizing a private company, but in this case they are really subsidizing a foreign government, so I guess that doesn't count.

I guess I just don't understand free enterprise, at least 21st century free enterprise.

External links

• Cirrus Eyes Jet Factory At Duluth, by Russ Niles, AVweb

ASAP Moves to the USA

It appears that long time Canadian kitplane manufacturer Aircraft Sales And Parts (ASAP) has been sold and the company is being moved to Sealy, Texas.

ASAP was founded by Brent Holomis in 1988 as a parts supplier for the then discontinued Spectrum Beaver and Birdman Chinook ultralights. Over time Holomis went far beyond parts though, redesigning both those aircraft as the ASAP Beaver RX550 Plus and the ASAP Chinook Plus 2 and adding new aircraft to the line, like the single seat Beaver SS. His business expanded into making propellers, powered parachutes and their canopies as well, spinning those off to separate companies, GSC Propellers, as well as Summit Powered Parachutes, Steel Breeze Powered Parachutes and ASAP Canopies.

It seems that after 25 years of being located in Vernon, British Columbia, the company is now in the process of being packed up by its new owners, John and Kim Couch, and moved south to Texas and will be located at Gloster Aerodrome (1XA7) in Sealy, Texas.

The relocated company is expected to be open to accept orders early in 2014, under a new name, the Aeroplane Manufactory.

External links

• New website for Aeroplane Manufactory
• Old location of ASAP website
• Wikipedia

Beechcraft Sold!

On Boxing Day, 26 December 2013, Beechcraft was sold for about US$1.4B in cash.

The sale really wasn't much of a surprise as the company had been through a complete turn around and emerged from bankruptcy ready for sale. What was a surprise was that it wasn't bought by Chinese or Middle Eastern interests, but by Textron, an American company that also owns Cessna and Bell Helicopters.

The purchase had been rumoured a week or two ago by multiple news outlets but neither Textron nor Beechcraft confirmed it until Boxing Day.

The news is very good, as, not only will Textron keep building King Airs, which fit nicely into the niche left when Cessna stopped building multi-engined turboprops, but the Hawker Beechcraft 4000 and Premier 1A jets, which Beech had tried to sell off separately, will also be supported. It seems unlikely that they will build more Hawker Beechcraft 4000 and Premier 1A aircraft, but the existing fleet will be kept flying as Textron bought the type certificates.

The question of what will happen to the Bonanza and Baron piston-powered aircraft lines is unanswered at this point in time, but neither aircraft has a competitor in Cessna's current offerings, so their production may continue as well. I expect there will be more news on this in the early part of 2014, so as not to inhibit potential sales.

Here is my current list of western aerospace firms bought out so far by non-western interests. Note that Beechcraft isn't on the list!

• Cirrus Aircraft - Government of the Peoples Republic of China
• Continental Engines - Government of the Peoples Republic of China
• Enstrom Helicopter Corporation - Chongqing Helicopter Investment Co, China
• Epic Aircraft - Engineering LLC, Russia
• Flightstar Sportplanes - rights, tooling and parts inventory purchased by Yuneec International, China
• Glasair Aircraft - Jilin Hanxing Group, China
• International Lease Finance Corp - 90% New China Trust Co Ltd, New China Life Insurance Co Ltd, P3 Investments Ltd and China Aviation Industrial Fund
• Liberty Aerospace - 75% owned by the Kuwait Finance House, a wholly owned subsidiary of Kuwait Finance House of Bahrain
• LISA Airplanes - 75% owned by Heima Mining Company, China
• Mooney Aviation Company - Soaring American Corp, backed by Chinese investors
• Piper Aircraft - Government of Brunei
• Superior Air Parts - Weifang Tianxiang Technology Group, China
• Thielert Aircraft Engines - Government of the Peoples Republic of China

External links

• Beechcraft Press release
• Textron Press release
• AVweb article
• Wikipedia

30 December 2013 Update

Textron CEO Scott Donnelly indicated that Beechcraft and Cessna would be combined to form a new light aircraft manufacturing concern that will result in US$65M-$85M in annual savings over keeping the companies separate.

Meijing Group Buys Mooney Aviation

On 8 October 2013 the Mooney Aviation Company announced that they had been purchased by the Meijing Group of China, for an undisclosed sum.

The fact that Mooney had been looking for investors for a number of years is no surprise. The company had been struggling before the 2008-10 recession and then when it hit they were left with a fair inventory of unsold aircraft. On 5 November 2008 the company ceased production and laid off most of its workforce and the building of new Mooneys has not resumed since. The company has remained in business as a parts supplier to its existing fleet, but by January 2011 had only about ten employees left at work at the Kerrville, Texas plant.

The purchase by the Meijing Group, a Chinese real estate developer based in Zhengzhou, Henan Province, must come as a great relief for Mooney. Without this sort of buyout the company probably didn't have a future. The company is now planning a return to production of the M20 aircraft series.

For the Meijing Group this is a move to diversify the company and their first foray into the aerospace field.

Once again, though, it is apparent, as Mooney looked for a buyer for the past three years, that no one in North America or Europe was going to step in and buy the company. As has been the case often in recent years it has fallen to middle eastern and, more commonly, Chinese interests to buy up western aerospace manufacturers and keep them in business.

Here is my current list of western aerospace firms bought out so far by non-western interests:

• Cirrus Aircraft - Government of the Peoples Republic of China
• Continental Engines - Government of the Peoples Republic of China
• Enstrom Helicopter Corporation - Chongqing Helicopter Investment Co, China
• Epic Aircraft - Engineering LLC, Russia
• Flightstar Sportplanes - rights, tooling and parts inventory purchased by Yuneec International, China
• Glasair Aircraft - Jilin Hanxing Group, China
• International Lease Finance Corp - 90% New China Trust Co Ltd, New China Life Insurance Co Ltd, P3 Investments Ltd and China Aviation Industrial Fund
• Liberty Aerospace - 75% owned by the Kuwait Finance House, a wholly owned subsidiary of Kuwait Finance House of Bahrain
• LISA Airplanes - 75% owned by Heima Mining Company, China
• Mooney Aviation Company - Meijing Group, China
• Piper Aircraft - Government of Brunei
• Superior Air Parts - Weifang Tianxiang Technology Group, China
• Thielert Aircraft Engines - Government of the Peoples Republic of China

External links

• CRI story
• AVweb story
• Multibriefs story
• Wikipedia

Update - 14 October 2013

According to the Wichita Eagle Mooney has received an investment from Soaring America Corporation which will allow it to restart production of the Acclaim Type S and the Ovation 2 and Ovation aircraft. It is unclear if Soaring America is related to the reported Meijing Group take-over or not as Soaring America President Cheng Yuan (Jerry Chen) indicated to Russ Niles of AVweb this week that he couldn't provide more information at this time.

Update - 21 October 2013

The details of Mooney's purchase are becoming a bit more clear as time goes by. According to AVweb Mooney has been purchased by Soaring American Corporation, a new company started in California last year with Cheng Yuan (Jerry Chen) from Taiwan as President and CEO. Chen, a PhD in aeronautical engineering, is now the new CEO of Mooney as well. It seems Chen represents a group of Chinese investors that may well include the Meijing Group, who have plans to restart Acclaim and the Ovation production and market the aircraft predominately to the Chinese market, which they feel is ripe for private aircraft and advanced trainers.

This video interview with Chen by AVweb outlines some of the ideas they are working towards:

• Mooney's Fortunes Tied to China - AVweb video on You Tube

See Also

• Paul Bertorelli's editorial Mooney's Future With Chinese Investment

Continental Purchases Thielert

On 23 July 2013 Continental Motors announced that they had purchased Thielert Aircraft Engines for an undisclosed sum.

At first blush this purchase by Continental looks like a great match. Thielert has been in bankruptcy for five years now and run by a temporary administrator who has been looking for a buyer through the Long Recession. The company has other concerns, as founder and ex-president Frank Thielert has been charged with fraud over misrepresenting the value and finances of the company during earlier attempts to find buyers and investors. Frank Thielert was arrested and jailed in mid June 2013 by a German bankruptcy court judge as a potential flight risk.

Continental Motors has been pursuing diesel aircraft engine technology itself and is actively working on its TD-300 engine, a derivative of the French SMA SR305-230 diesel engine. So with that interest in diesel engine technology and Thielert's need for a buyer, the purchase seems like a good move for both companies.

But there are also larger forces at work here. It helps to recall that in December 2010, Continental itself was purchased by AVIC International, and AVIC is wholly owned by the government of the People's Republic of China. That all adds up to the Thielert purchase being just another part in the Chinese government's large and growing portfolio of western aerospace firms. At this point it isn't clear how far they want to go in buying up companies, but time will tell if they just want a slice of the light aircraft business or something larger than that.

As part of the purchase the Thielert name will disappear. The company will become a division of Continental and will be called Technify Motors GmbH. Given the troubles the company has endured this is probably a good move on Continental's part.

Here is my revised current list of western aerospace firms bought out so far by non-western interests:

• Cirrus Aircraft - Government of the Peoples Republic of China
• Continental Engines - Government of the Peoples Republic of China
• Enstrom Helicopter Corporation - Chongqing Helicopter Investment Co, China
• Epic Aircraft - Engineering LLC, Russia
• Flightstar Sportplanes - rights, tooling and parts inventory purchased by Yuneec International, China
• Glasair Aircraft - Jilin Hanxing Group, China
• International Lease Finance Corp - 90% New China Trust Co Ltd, New China Life Insurance Co Ltd, P3 Investments Ltd and China Aviation Industrial Fund
• Liberty Aerospace - 75% owned by the Kuwait Finance House, a wholly owned subsidiary of Kuwait Finance House of Bahrain
• LISA Airplanes - 75% owned by Heima Mining Company, China
• Piper Aircraft - Government of Brunei
• Superior Air Parts - Weifang Tianxiang Technology Group, China
• Thielert Aircraft Engines - Government of the Peoples Republic of China

External links

• AVweb
• Continental Diesels: Crunching the Numbers, by Paul Bertorelli, AVweb
• Wikipedia

Foreign Ownership - Huh?

After struggling along financially though the recession of 2008-2011 Cirrus Aircraft was running short of aircraft orders, cash and laying off staff. Things at the Duluth, Minnesota aircraft builder were not looking good. Then in February 2011, Cirrus was sold for US$210M to China Aviation Industry General Aircraft (CAIGA), a subsidiary of Aviation Industry Corporation. CAIGA is wholly owned by the Government of the People's Republic of China.

At the time AVweb's Russ Niles said "Chinese participation in the aviation industry isn't necessarily a bad thing and the folks in Duluth and Grand Forks could have suffered a worse fate. In the absence of a sale, bankruptcy was a real possibility for Cirrus and it might have been hard for a trustee to justify operating the business with the numbers it was showing. As for where it leaves current Cirrus owners and those thinking of buying one, the sale is probably a positive thing." I posted about this event and I agree with Russ, it was either Chinese ownership or the company was probably finished.

Every time North Americans buy Chinese goods, at places like Walmart, the Chinese government makes money and then uses that cash to buy up North American companies. That is just the way whatever we have that passes for free enterprise works these days, at least regarding Chinese state owned companies.

So Cirrus got settled into being owned by probably the richest entity of any kind on the planet, the Government of the People's Republic of China. Suddenly investment was available for mothballed programs like the Cirrus Vision SF50 single engine jet, workers were recalled and production increased. All well and good and as expected.

Then, in early March 2013 it seemed that the company was going, hat in hand, to the city council of Grand Forks, North Dakota, where Cirrus has its secondary plant, asking for a US$950,000 loan to buy a new autoclave. The company already has large outstanding loans from the city and this loan would have just increased the payments.

Even more surprising was the way it turned out, with council initially refusing the loan, concerned about the company's ability to repay it, then relenting, apologizing for the doubt and granting the loan. So now Cirrus can go and order their new autoclave, something they claim will create ten new jobs in Grand Forks.

Personally I don't really get it. Since when is a US city council now a bank, loaning money to companies? Since when do small US municipalities, in one of the most indebted nations on earth, the USA, lend tax money, collected from their residents, to the communist Government of the People's Republic of China, as I noted, probably the richest entity on earth right now? Is this what is meant by capitalism and free enterprise in the 21st century?

I realize that this is all tied to jobs and if Grand Forks wants manufacturing jobs to stay in the city then they have to pay companies to stay there or else some other municipality will lure them away, but the way this loan looks, I think it is really time to rethink that whole flawed premise. Foreign buyouts and investments should not turn out to be a hostage taking.

Americans always tell me how much they hate communism and love their free enterprise system, where anyone can build up a business though sheer determination and hard work. To me a US municipality lending money to the Chinese government to build airplanes to sell to rich Americans doesn't seem to fit any notion of capitalism I know of, no matter how hard I squint.

Feel free to tell me that I am wrong!

Background

• Wikipedia

When Foreign Takeovers Fail

I have written quite a lot about the middle and far eastern buyout of North American and European aerospace manufacturers recently, but then there has been lots to report! Back in 2011 it was announced that Diamond Aircraft Canada had been purchased by the Medrar Financial Group of Dubai. Things went bad, though and the repercussions are just being felt this week.

In the 2010-11 period Diamond had embarked on a program of developing new aircraft designs, like the DA50 Super Star, the twin-engined DA52 and especially the D-Jet, its single-engined jet program. This all required capital and the company was running short of money. During the May 2011 Canadian federal election campaign Diamond threatened to close its London, Ontario plant if government help was not forthcoming. The Conservative government didn't bite, said no and the company finally settled on the buyout by Medrar instead in November 2011.

But it was just today that it was officially revealed by Diamond that the deal with Medrar was never completed and no cash changed hands. Diamond had not previously announced that, just quietly taken down the original press release on the deal, although the announcement can still be seen on Archive.org. There was a rumour on 19 February 2013 that the deal with Medrar had failed so I wasn't totally surprised when the lay off announcement quickly followed.

It seems that the company has been surviving on its own shareholder funding for the last 16 months, while it looked for alternatives. That money seems to have run out this past week and Diamond has now laid off the majority of its workers, leaving only those building ordered aircraft and the parts department, to keep the existing fleet flying. The company has indicated that it needs to restructure and then hopes to bring back the majority of its workers. I guess we will see how that pans out over time.

In general I have stated that these sorts of foreign buyouts are good for the aerospace industry, because investment from North American and European sources seems to be totally absent these days. Without these middle eastern and far eastern buyouts companies like Cirrus and Continental would probably not be in business today. Diamond obviously needs some investment and right away, or it may not be in a position to reopen its doors and carry on its development projects.

In a way it is too bad that Diamond's management took such a secretive approach to the Medrar buyout, not announcing that it had failed, because a potential buyer may have seen that and come forward on their own. With this secretive approach I think most people reading the aviation press would have thought that everything was rosy and no help was needed, until the announcement of the lay-offs this week. Perhaps there is a lesson there for other companies?

Hopefully Diamond will find a buyer quickly and get their employees back to work soon.

Here is my revised current list of western aerospace firms bought out so far:

• Cirrus Aircraft - Government of the Peoples Republic of China
• Continental Engines - Government of the Peoples Republic of China
• Enstrom Helicopter Corporation - Chongqing Helicopter Investment Co, China
• Epic Aircraft - Engineering LLC, Russia
• Flightstar Sportplanes - rights, tooling and parts inventory purchased by Yuneec International, China
• Glasair Aircraft - Jilin Hanxing Group, China
• International Lease Finance Corp - 90% New China Trust Co Ltd, New China Life Insurance Co Ltd, P3 Investments Ltd and China Aviation Industrial Fund
• Liberty Aerospace - 75% owned by the Kuwait Finance House, a wholly owned subsidiary of Kuwait Finance House of Bahrain
• LISA Airplanes - 75% owned by Heima Mining Company, China
• Piper Aircraft - Government of Brunei
• Superior Air Parts - Weifang Tianxiang Technology Group, China

Further reading

• AVweb
• Wikipedia

Another Aircraft Manufacturer Take-Over

I keep asking which western aircraft manufacturer will be the next one bought up and I never seem to have to wait long for the answer.

This week the answer is LISA Airplanes of France. The company is a relatively new start-up that has been working on developing the very sleek and innovative, if expensive, LISA Akoya amphibian. The Akoya is intended to be a two-seat light-sport design with a price tag of US$350,000.

Development had been going well and the design had attracted ten orders already, but in the summer of 2012 the company ran out of money, laid almost everyone off and was placed in receivership. As usual no western investment was forthcoming and things were not looking good for the company until the Heima Mining Company of Leshan City, China offered US$20 million for a 75% stake in the company, controlling interest and the right to name the chairman.

The Heima Mining Company is, well, in the mining business, but has indicated that it is interested in future aerospace acquisitions.

The Heima investment seems to have put things back on track at LISA, the staff rehired and talk of two more production lines being added. The buyout happened just in time, it seems.

So here is the current list of western aerospace firms bought put so far:

• Cirrus Aircraft - Government of the Peoples Republic of China
• Continental Engines - Government of the Peoples Republic of China
• Diamond Aircraft - majority owned by Medrar Financial Group, Dubai
• Enstrom Helicopter Corporation - Chongqing Helicopter Investment Co, China
• Epic Aircraft - Engineering LLC, Russia
• Flightstar Sportplanes - rights, tooling and parts inventory purchased by Yuneec International, China
• Glasair Aircraft - Jilin Hanxing Group, China
• International Lease Finance Corp - 90% New China Trust Co Ltd, New China Life Insurance Co Ltd, P3 Investments Ltd and China Aviation Industrial Fund
• Liberty Aerospace - 75% owned by the Kuwait Finance House, a wholly owned subsidiary of Kuwait Finance House of Bahrain
• LISA Airplanes - 75% owned by Heima Mining Company, China
• Piper Aircraft - Government of Brunei
• Superior Air Parts - Weifang Tianxiang Technology Group, China

So, who will be next?

Further reading

• AVweb
• Wikipedia

Enstrom Helicopter Corporation Is Purchased

Enstrom Helicopter Corporation has recently been purchased by the Chongqing Helicopter Investment Co of the People's Republic of China, adding to the long list of US-based aerospace companies to be bought out.

In some ways Enstrom is a bit of a different case as it hasn't been US-owned in a decade. It was founded by Rudy Enstrom in 1959, but he sold a controlling interest to Purex Industries in 1968. After that it had a long list of owners, including F. Lee Bailey who bought control in January 1971, but he sold out in 1979 to a string of owners that included Remington shaver "I bought the company" entrepreneur Victor Kiam and later Segway designer Dean Kamen. In 2000 it was sold to anonymous Swiss interests, moving ownership out of the US. It was those same anonymous Swiss who this week sold it to the Chinese company.

Enstrom has had some lean years though the recession, cutting helicopter production and laying off staff. In 2010 they only shipped six helicopters. Things seem to be looking up lately, though, as the company has been selling helicopters in Asia and is expanding both its workforce and looking to build more plant space at its Menominee, Michigan location.

At this point in its history Chinese capital and expertise in Asian markets is probably a good thing for the company and will help it grow further. Of course, as usual, North American investment was not forthcoming, a story seen very often in the aerospace industry in recent years. As a result Enstrom Helicopter Corporation gets added to my growing list:

• Cirrus Aircraft - Government of the Peoples Republic of China
• Continental Engines - Government of the Peoples Republic of China
• Diamond Aircraft - majority owned by Medrar Financial Group, Dubai
• Enstrom Helicopter Corporation - Chongqing Helicopter Investment Co, China
• Epic Aircraft - Engineering LLC, Russia
• Flightstar Sportplanes - rights, tooling and parts inventory purchased by Yuneec International, China
• Glasair Aircraft - Jilin Hanxing Group, China
• International Lease Finance Corp - 90% New China Trust Co Ltd, New China Life Insurance Co Ltd, P3 Investments Ltd and China Aviation Industrial Fund
• Liberty Aerospace - 75% owned by the Kuwait Finance House, a wholly owned subsidiary of Kuwait Finance House of Bahrain
• Piper Aircraft - Government of Brunei
• Superior Air Parts - Weifang Tianxiang Technology Group, China

So I wonder who will be next?

Further reading

• AVweb
• Wikipedia

Foreign Takeovers - Ultralight Style

I have written here about the recent and extensive buy-out of the North American aerospace industry by middle-eastern and far eastern interests before. It is always interesting to note this business trend and how North American investors just won't go near their own aircraft manufacturers, while foreign investors, especially Chinese investors, will.

Recently I discovered that the Flightstar Sportplanes website was up for sale and after a web search turned up no news at all I wrote to owner Tom Peghiny to find out what that meant.

Thousands of Flightstars have been built and flown since the type was introduced in 1987. They are very popular in the USA where the single seaters can qualify under FAR 103 Ultralight Vehicles rules.

It seems that Flightstar's business dropped off in the early part of the 2008-2010 recession, to the point of mostly just supplying parts and few new aircraft. A contributing factor was the introduction of the US light-sport aircraft rules and the elimination of the two-seat trainer exemption under FAR 103.

Flightstar Sportplanes had been working with Yuneec International of Kunshan, Jiangsu, China on an electric version of the the FlightStar Spyder, called the eSpyder and it seemed a promising aircraft for the future. Flightstar provided the airframe and Yuneec the drivetrain.

When Flightstar sales dropped off Yuneec bought out the Flightstar aircraft line in 2009, including the rights, tooling and the parts inventory. Flightstar Sportplanes business was quietly wound up the same year, with neither company putting out a press release on the deal. The aviation press seems to have missed it altogether.

Yuneec is engaged in developing the single seat eSpyder, and they now have a web page on it that explains design changes coming:

"The already efficient and lightweight airframe, made from aircraft grade aluminium, Carbon Fibre and Chrome-Moly tubing, will be further enhanced with wing tip extensions, new body design and numerous other changes to allow operation under FAR-103 whilst using the Yuneec 20Kw (27Hp) ‘Electric’ Power Drive motor system. Easy to use, extremely quiet, virtually vibration free, low cost operation and environmentally friendly Electric power is the future and E-Spyder leads the way."

Perhaps the two seat Flightstar II model will be re-introduced with one of Yuneec's own brand of Power Drive electric engines as well.

So even on the very light end of aviation it once again looks like Chinese investors have moved in where no one else will, kept existing products flying and continued innovative development.

Here is how the foreign ownership list now looks:

• Cirrus Aircraft - Government of the Peoples Republic of China
• Continental Engines - Government of the Peoples Republic of China
• Diamond Aircraft - majority owned by Medrar Financial Group, Dubai
• Epic Aircraft - Engineering LLC, Russia
• Flightstar Sportplanes - rights, tooling and parts inventory purchased by Yuneec International, China
• Glasair Aircraft - Jilin Hanxing Group, China
• International Lease Finance Corp - 90% New China Trust Co Ltd, New China Life Insurance Co Ltd, P3 Investments Ltd and China Aviation Industrial Fund
• Liberty Aerospace - 75% owned by the Kuwait Finance House, a wholly owned subsidiary of Kuwait Finance House of Bahrain
• Piper Aircraft - Government of Brunei
• Superior Air Parts - Weifang Tianxiang Technology Group, China

Who will be next?

Chinese Consortium to Buy International Lease Finance Corp

International Lease Finance Corp (ILFC) is a big name, in fact the biggest name in airliner leasing globally and it is on the block to be sold.

ILFC is owned by American International Group (AIG) and they are looking to sell a 90% stake in the company to New China Trust Co Ltd, New China Life Insurance Co Ltd, P3 Investments Ltd and China Aviation Industrial Fund. AIG needs the money from the sale, as they owe $182 billion to the US government for its bailout of AIG in 2008. It sounds like a motivated sale.

ILFC may be the biggest, but the fleet of aircraft they own is not the newest, in fact Richard Aboulafia of the Teal Group referred to the new owners as becoming "a curator of an old jet museum."

So what gives? Could this consortium just be looking to coast on ILFC's reputation in the airline industry? Somehow I doubt it. Chinese business is always on the move and I suspect they will want to modernize the leasing fleet and the company itself. I have a feeling they are thinking of Chinese airline expansion, too.

This is not a small Chinese purchase, like Epic Aircraft or even Cirrus was. This purchase could be a global game changer in the world airliner business, depending how it plays out.

Once again Chinese investors show that they not only have the money, but also the verve to go big and buy what no one else seems to want to risk. As time goes by the aerospace world is looking increasingly Chinese these days!

Here is how the foreign ownership list now looks:

• Cirrus Aircraft - Government of the Peoples Republic of China
• Continental Engines - Government of the Peoples Republic of China
• Diamond Aircraft - majority owned by Medrar Financial Group, Dubai
• Epic Aircraft - Engineering LLC, Russia
• Glasair Aircraft - Jilin Hanxing Group, China
• International Lease Finance Corp - 90% New China Trust Co Ltd, New China Life Insurance Co Ltd, P3 Investments Ltd and China Aviation Industrial Fund
• Liberty Aerospace - 75% owned by the Kuwait Finance House, a wholly owned subsidiary of Kuwait Finance House of Bahrain
• Piper Aircraft - Government of Brunei
• Superior Air Parts - Weifang Tianxiang Technology Group, China

So who will be next?

• AVweb story
• Wikipedia

Hawker Beechcraft Buyout Off

As I previously reported Hawker Beechcraft was under offer to be purchased by Superior Aviation Beijing. The deal looked close to a done-deal in the middle of the summer, but it failed to be completed and Hawker Beechcraft is back to looking at emerging from bankruptcy on its own.

So what scuttled the deal? That depends of who you listen to. Different sources have each attributed it to:

• national security concerns as "the company's defense operations were integrated with its civilian businesses that proved difficult to untangle"
• "advisers in the U.S. had trouble negotiating with Chinese representatives unfamiliar with U.S. finance and bankruptcy law."
• CEO of Hawker Beechcraft, Steve Miller, had attributed the failure to "China-bashing by U.S. presidential candidates may have contributed to failure of the talks"
• A press release from Hawker Beechcraft simply said that, "the proposed transaction with Superior could not be completed on terms acceptable to the company."

So what now?

The company has indicated that it plans to emerge from bankruptcy protection as a stand-alone company and will be renamed Beechcraft Corporation. The new entity will focus on the company's most profitable products, which will mean piston aircraft manufacturing and refurbishing older aircraft, including turboprop and diesel upgrades for piston planes. In other words ending jet production.

The latest news this week is that the Beechcraft Premier will be produced as a single engine turboprop design with seating for up to 11 passengers, that looks remarkably like a Pilatus PC-12.

It will be interesting to see what happens over time as the company emerges from bankruptcy protection.

Glasair Aircraft Sold to Jilin Hanxing Group of China

In what is becoming an increasingly frequent story yet another US aircraft manufacturer has been sold to a Chinese company. This time it is kit maker Glasair Aircraft, who build the Glasair and Glastar series of kit planes in Arlington, Washington, that has been sold.

The buyer is a private Chinese company, Jilin Hanxing Group, who have formed a new company to operate Glasair, Glasair Aviation USA LLC.

The new owners say that they plan to certify the Glastar Sportsman design and retain all production and jobs in the USA. Of note a certified version of the Glastar was previously produced for a short time in Canada as the Symphony SA-160.

So here is how the foreign ownership list now looks:

• Cirrus Aircraft - Government of the Peoples Republic of China
• Continental Engines - Government of the Peoples Republic of China
• Diamond Aircraft - majority owned by Medrar Financial Group, Dubai
• Epic Aircraft - Engineering LLC, Russia
• Glasair Aircraft - Jilin Hanxing Group, China
• Hawker Beechcraft - Superior Aviation Beijing, China
• Liberty Aerospace - 75% owned by the Kuwait Finance House, a wholly owned subsidiary of Kuwait Finance House of Bahrain
• Piper Aircraft - Government of Brunei
• Superior Air Parts - Weifang Tianxiang Technology Group, China

I wonder who will be next.

• AVweb story

Hawker Beechcraft To Be Purchased By Superior Aviation Beijing

In what has become the repeat of a very familiar story, another financially ailing US aerospace company has been bought out by Chinese interests.

Hawker Beechcraft Corporation (HBC) was a new company put together in 2006 from the old Raytheon Aircraft, purchased for US$3.3B by Onex Partners and GS Capital Partners, part of Goldman Sachs. That was all well and good, but the owners insisted that the company pay for its own purchase, which meant it was carrying US$500,000 a day in interest payments. It was just staying afloat when the 2008 recession hit and bizjet orders dried up. Anyone who thought a company with that kind of debt could survive the recession wasn't paying attention.

The company hired a new CEO, turnaround specialist Steve Miller, who planned to keep it out of bankruptcy, but on 3 May 2012, it filed for Chapter 11 bankruptcy anyway. Despite attempts to restructure the huge debt burden of more than US$2.14B (the last count, as of September 2011), it seems that it was either going to be sold or cease to exist. The final result was that Superior Aviation Beijing of The People's Republic of China made the best offer for US$1.79B. The deal does not include Hawker Beechcraft Defense Co., the subsidiary that builds two military aircraft, the T-6 trainer and the derivative AT-6 light attack aircraft. That exclusion was most likely to avoid any hold-ups in US government approval of the sale.

Superior Aviation Beijing and HBC now have 45 days to put the details together, but it is probably close to a done deal, putting HBC on the same list as a growing number of US aerospace companies that have been recently sold to foreign interests:

• Hawker Beechcraft - Superior Aviation Beijing, China
• Superior Air Parts - Weifang Tianxiang Technology Group, China
• Epic Aircraft - Engineering LLC, Russia
• Diamond Aircraft - majority owned by Medrar Financial Group, Dubai
• Cirrus Aircraft - Government of the Peoples Republic of China
• Continental Engines - Government of the Peoples Republic of China
• Liberty Aerospace - 75% owned by the Kuwait Finance House, a wholly owned subsidiary of Kuwait Finance House of Bahrain
• Piper Aircraft - Government of Brunei

As I have noted before while selling out the whole US aerospace industry to foreigners may not be seen as a good thing, when these companies all needed domestic financial help none was forthcoming. This has meant that each had a choice between the company ceasing to exist or being bought out by middle eastern or far eastern interests.

The bottom line is that if Americans are really worried about this issue then they would put up the money and buy these companies themselves. In the capitalist system the market sorts these things out and if Americans don't want their domestic aerospace industry then apparently other people do.

• AVweb story

Epic Aircraft Bought Out Again

One of the subjects that I have tried to cover here in this blog is the increasing foreign ownership of the North American aerospace industry.

One of the companies that became foreign-owned in 2010 is Epic Aircraft and there was another twist in this story recently.

Epic was started by Rick Schrameck in 2004 in Bend, Oregon, to build the Epic LT single turboprop cabin airplane as a kit, with factory assistance available. Schrameck intended to certify the LT and also to produce a large range of kit and certified turboprops and jets, but he never got beyond delivering a few LT kits. In August 2009 the landlord seized the plant for non-payment of rent. There were, of course, many reports of "financial irregularities". In September of 2009 founder Schrameck was fired by the company's board and the company entered Chapter 11 reorganization and when that wasn't successful, finally Chapter 7 liquidation.

An irate group of seven kit owners who had been building their aircraft at the plant formed the LT Builders Group and made a bid for the company. So did the Chinese government, as the China Aviation Industry General Aircraft Co. Ltd, which announced that they planned to move the operation to China. In the end the court awarded ownership to both jointly, with the company ordered to remain in Bend.

The new venture seemed to be working out okay and CEO Doug King announced in the summer of 2010 that production was on and that they were taking orders.

Then this week came the announcement that Epic had been sold to Engineering LLC, a Russian company.

The Epic Aircraft press release is, of course, full of all the right positive-sounding noises, like "The move allows Engineering LLC to leverage Epic Aircraft’s leading kit aircraft manufacturing knowledge and will allow Epic to expand its services and offerings to a more global audience." But there are far more questions than answers here.

King is still the CEO, so the LT Builders Group influence seems to still be there, but what happened to the Chinese involvement? Did they decide that it was a poor investment? Did they not get along with the US partners? Was the order to leave everything in Bend not going to work for them? There is no mention of them at all in any of the stories on the Russian purchase. The Chinese government has been very methodical in buying North American aerospace companies, so if they sold out their portion there was probably a very good reason for it.

So what is in store for Epic? I suppose time will tell. I have been looking for even one example of a foreign company buy-out where Russian ownership has worked out well and I am still looking. Perhaps Epic will be that sterling example?

Further reading:

* AVweb story
* Portland Business Journal story
* Wikipedia

Canadian Light Aircraft Equip Ecuadorian Air Force

The Fuerza Aerea Ecuatoriana has taken delivery of the first six of twelve Diamond Aircraft DA20-C1s that will be used as military pilot trainers in the equatorial South American nation.

Diamond built the military trainers at their Canadian plant in London, Ontario, showing that the company is quickly bouncing back from its financial woes in early 2011 under its new ownership by Medrar Financial Group of Dubai.

The twelve aircraft sale includes maintenance training, as well as operational training and a technical support package.

(Diamond Aircraft press release photo)

* Diamond Aircraft Press Release

Things Are Looking Up At Diamond Aircraft

Since Diamond's buyout by Medrar Financial Group of Dubai the company has been on a more even financial footing. This has has all kinds of benefits, like inspiring customers to buy planes. Diamond just put out this press release on a big order for up to 26 DA40s.

Diamond Aircraft and Flight Training Adelaide announce DA40 fleet order

Diamond Aircraft and Flight Training Adelaide announce DA40 fleet order Flight Training Adelaide (FTA) has contracted with Diamond Aircraft, in conjunction with their Australian distributor Hawker Pacific, for the purchase of up to 26 DA40 aircraft, to be based at Parafield, Australia. The first four of eight 2012 deliveries will be made midyear, with options for 18 additional aircraft scheduled for 2013 and 2014 delivery. The single engine Garmin G1000 equipped DA40s replace FTA's aging single engine Socata TB10s and Grob 115s and will complement their seven DA42 L360 aircraft.

"We chose the DA40 because it was the best fit for our strategic acquisition and upgrade program. It offers the technology we desire, simplicity of operation and maintenance and is underpinned by a strong aircraft manufacturer in Diamond Aircraft Industries Canada, who are ably supported by their partner Hawker Pacific in Australia," said Pine Pienaar, CEO of FTA. "We train cadets to become professional pilots for our partner airlines, including Cathay Pacific, Dragonair, Qantas, QantasLink, JAL Express and J-Air. Our airline partners demand competent and technology savvy pilots, regardless of whether we are training to a conventional training syllabus or for the Multi-Crew Pilots licence. The modern low-drag DA40 with its full glass cockpit provides the perfect introduction for cadets and is an easy transition to our DA42 twins. We have been very satisfied with Diamond's after sales support and this is an important element of our decision."

"We're delighted that FTA has selected the DA40 to modernize their substantial single engine fleet," said Peter Maurer, CEO of Diamond Aircraft Industries Inc. "With its modern glass cockpit, superb handling, fuel efficient airframe, demonstrated reliability in high utilization flight training and proven best safety record, the DA40 is ideal for professional flight training and best complements the fleet of DA42 twins that FTA has been operating since 2007. The local parts and service support offered by Hawker Pacific, our distributor for Australia and New Zealand, undoubtedly enhanced our bid and we are grateful to Hawker Pacific for their great work in securing this significant order."

Diamond Solves Financial Woes With Buy Out

As previously reported earlier in 2011 Diamond Aircraft of London Ontario indicated it was in dire trouble and needed a federal government loan or it might not survive.

Company President Peter Maurer said in March 2011 "If we don’t get the funding from the federal government, it puts us in a difficult situation. If the D-JET, for example, in a worse case scenario, were not to continue it would have a negative impact on the rest of the company’s operations...[The debts are] at a level that would be very difficult to satisfy out of piston sales. I’ll let you do the extrapolation."

Of course as we now know the government said "no" and the company went away looking for other options, Maurer oddly saying that he had considered a government bailout a "long shot".

On 13 November the company announced its solution to the crisis. It is now majority owned by Medrar Financial Group, an investment company based in Dubai. The buy-out was for an undisclosed amount.

Stories:
*Diamond press release
*AVweb
*London Free Press

It is hard not to note the trend here, as I have written before many aviation manufacturers have recently been bought out by middle eastern or far eastern countries. A short list:

* Diamond Aircraft - majority owned by Medrar Financial Group, Dubai
* Cirrus Aircraft - Government of the Peoples Republic of China
* Continental Engines - Government of the Peoples Republic of China
* Liberty Aerospace - 75% owned by the Kuwait Finance House, a wholly owned subsidiary of Kuwait Finance House of Bahrain
* Piper Aircraft - Government of Brunei.
* Epic Aircraft - partly owned by the Government of the Peoples Republic of China

Once again, though I will make the point that in almost all of these cases investment from North America, Europe and other western countries was not to be found. That means that while many people from North America will shake their heads and say "this is too bad", that is all they will do. They didn't pony up and put money on the table to keep these companies going. The case is the same with Diamond. It is pretty obvious that the choice was simply between selling it to interests from Dubai or shutting it down.

If westerners want to retain ownership of our aerospace industry, then we need to stop the "tut-tutting" and start buying companies out ourselves.

*Complete rundown on the Diamond story

Diamond lining up for handouts

Diamond Aircraft, with a large plant located in London Ontario, is lining up for money from the federal and provincial goverments and has indicated that the company's future will be very uncertain without the bailout loans. The Financial Post described the company as "in rough shape".

It seems that piston sales have been pretty slow though the ongoing recession and the company has been unable to move its D-Jet single engined jet development project forward, due to lack of investment money, despite a firm 230 orders for the $1.89M per copy aircraft.

To get the D-Jet into production the company has located $20M in private investment, plus a committment of an additional $35M from the Government of Ontario. The Ontario government investment is contingent on Diamond also getting an additional $35M from the federal government. A decision by Industry Canada on that was still pending in late March, due to the government conducting "due diligence on the loan".

If both the federal and provincial loans are provided then, combined with funds already provided, the total provincial and federal government investment would be $100M.

Diamond Presdent and CEO, Peter Mauer indicated "If we don’t get the funding from the federal government, it puts us in a difficult situation. If the D-JET, for example, in a worse case scenario, were not to continue it would have a negative impact on the rest of the company’s operations. [The company debts are] at a level that would be very difficult to satisfy out of piston sales,” he said. “I’ll let you do the extrapolation."

Further reading:

* Financial Post - Planemaker Diamond in rough shape
* AvWeb - Diamond's Future Contingent On Loan?