Article Posted on : - Nov 28, 2008

An official photo of Eclipse 500 on its maiden flight in 2002.

NEW YORK (BNS): World's leading maker of small corporate jets, Eclipse Aviation, has filed for bankruptcy.

The company has sought the court's permission to sell most of its assets under section 363 of the US bankruptcy code following which it would then be open for public auction.

Eclipse Aviation is the market leader in small corporate jet business. Its three to four-seater aircraft was popular among corporate fliers until the aviation industry was gripped in recession.

The corporate jet business has suffered a great deal and Eclipse Aviation was among the biggest players to collapse. Other companies like Cessna and Hawker Beechcraft have also decided to substantially reduce their production.

Cessna, for instance, would reduce its production by 10 per cent in 2009 while Beechcraft, run by Onex Partners and Goldman Sachs Capital Partners, would cut 500 jobs.

The industry in the US is grappling with multiple issues. The global economic decline has put pressure on resources. People simply have no money to buy expensive products like an aircraft. The corporates, who would use private aircraft during good times, prefer cutting down their business meetings and are resorting to other measures to save money.

Eclipse is looking to raise more than a billion dollars through the sales of its assets. The auction would be through competitive bidding under the guidelines of the court.

Before going out of business, the company had cut down its employee strength by 38 per cent. The company had planned to move production of its frontline Eclipse 500 jets to a facility in Russia. The plant was to come up at Ulyanovsk in Russia.

The company produced around 275 jets in 2007. Eclipse 500 has been classified as a Very Light Jet and became an instant hit due to its compact size ideal for four to five travellers. The production of the aircraft was halted after recession in aviation industry.

Eclipse aviation is one of the leading aircraft manufacturers to fold up in the US. The officials see no signs of its revival in near future. After assessing the situation, it decided to file bankruptcy application. Some other companies are expected to follow suit as the industry is closely watching the fate of the Eclipse’s application in court.