Eclipse Aviation files Chapter 11

Eclipse Aviation, a pioneer maker of small, low-cost personal jets, filed for federal bankruptcy-court protection Tuesday amid signs that current economic downdrafts are particularly hurting makers of smaller business aircraft and private propeller planes.

Beset by long-standing manufacturing problems, tightening global credit markets and negative publicity from some technical glitches with its so-called very light jets, the Albuquerque, N.M., company earlier this month temporarily failed to pay its 1,100 employees.

Eclipse builds six-seat aircraft aimed at private pilots, as well as what the company hoped would become a viable industry of air-taxi operators.

As part of the Chapter 11 proceeding in U.S. Bankruptcy Court in Delaware, Europe's ETIRC Aviation, which holds nearly 65 percent of the closely held company's shares, indicated it plans to continue manufacturing operations as it moves to acquire Eclipse's assets.

ETIRC also is expected to be part of a group of existing shareholders and note holders planning to provide interim financing.

Other makers of small airplanes also have suffered from a softening market. Textron's Cessna Aircraft and Hawker Beechcraft previously announced hundreds of layoffs, as they race to cope with the downturn.

On Tuesday, a spokesman for Teledyne Technologies, a major supplier of piston-powered engines for small private planes, said about 15 percent of the 700-person work force at its engine-making unit has been laid off in the past two months.

The unit also closed for all of this holiday-shortened week as a cost-saving move, according to the spokesman. Teledyne started seeing a significant order decline in October.

Some industry officials speculated for months that Eclipse's ambitious production plans and subsequent delays had drained its cash reserves, even as the company scrambled to line up new financing by looking to European and Russian investors. Through it all, Eclipse said it maintained a hefty order backlog of some 2,000 planes and was pushing to ramp up sales in Europe.

But earlier this year, newly installed Chief Executive Roel Pieper indicated the goal was to become cash-flow positive by next spring while producing significantly fewer planes per month than initially planned.

In July, Pieper succeeded Vern Raburn, the charismatic former software executive who founded Eclipse and led the way with innovative aircraft design and manufacturing systems. But Raburn stumbled with his plans to build a powerful six-seat personal jet featuring advanced computers designed to take much of the work out of flying.