UPDATE 1/24/08

The prospects for Adam Aircraft seem to have taken a turn for the worse. In a letter to shareholders, CEO John Wolf warned that without a cash injection of $25 million by the end of January, the company will face liquidation by its creditors. That $25 million will buy the company time, as its looks to raise the $100 million needed to complete the accreditation process for its A700 and gain any financial footing. If Adam Aircraft fails to raise the necessary funds by the end of January, it is likely that the company’s shareholders will lose their investment.

Very light jet (VLJ) manufacturer Adam Aircraft laid off 300 workers and cut back production operations until this summer. The private jet maker will suspend manufacturing at its Ogden, Utah facility until further notice. The move follows a liquidity crisis that has hampered Adam’s efforts to gain certification for its six-seat A700. The company did its best to put a positive spin on the set back. It characterized the terminations, in a company-issued press release, as a “strategic adjustment to streamline processes to achieve goals.” Adam, which is privately owned, will now focus on raising the necessary funds to complete certification for the A700, estimated to be between $75 million and $150 million. The VLJ market seems to have entered a period of turmoil, as the announcement by Adam Aircraft comes on the heels of a shake-up at competitor Eclipse Aviation. A $100 million investment by the European Technology and Investment Research Center (ETIRC) made the Dutch firm the largest minority shareholder in the VLJ manufacturer. As a result, the ETIRC’s Ronald Pieper will replace Harold Poling as chairman at Eclipse. With public interest in VLJs still robust, from both individuals looking for an affordable option in private aviation and corporations interested in developing so-called “air-taxi” services, the long term outlook for VLJs appears strong. The only question is how manufacturers will weather this period of fiscal turbulence and continue to fill their backlog of orders for the jets.