Epic Awaits Cash Infusion, Reorganizing

Investment by Indian billionaire Vijay Millya in Bend, Ore.-based Epic Air is on hold for the moment, according to Chair and CEO Rick Schrameck, who reported that the company’s Elite very light jet is also on hold given the fact it is now hostage to the Georgian/Russian conflict. Related Story
He reported the aircraft safe and in perfect condition but indicated the airfield is not in operation since the bombing last summer. However, others said the airport is in operating condition. Still, Epic plans to airlift the aircraft out to the commercial airport by helicopter but only when it is safe and would not put a pilot in jeopardy. In the meantime, the company is losing certification time. Epic has three years to gain certification after application but certification in Russia is now out of the question, according to Schramek. Within 60 days of announcing its intent to certify in Russia,the conflict erupted.
As for the industry troubles that have emerged in the past year, Schramek did not blame it all on the economy, but on the financial and management strength of the companies involved. He also said it was more difficult to get funding that it was a year ago. He also pointed to the resistance from legacy builders.
“The issue is not whether or not there are too many products but that they are considered disruptive technology and they think disruptive technology is dangerous,” he said. “That usually means bankruptcy in the aviation industry. You know, aircraft design is a series of compromises with technology and the suppliers and they would prefer to repackage the existing technology rather than expanding it. It is not just throwing money at it.”
“Given the troubles we’ve seen at other VLJ companies, I am happy to report that Epic still stands and we’re profitable putting us reasonably ahead of most new aircraft companies,” he said at an NBAA press conference last week, adding the company enjoys a $100 million backlog.
Schrameck said if he could name one change he’s seen in the last year it is customers holding on to money in favor of financing. “They are not writing checks any more but asking how they can finance the aircraft," he said.
Villya and Airbus, which is involved in the deal financing deal through technology transfer, have done their due diligence for the investment. “The Airbus test pilots reported that what they found, both in what was here and what our capabilities and technologies are, far exceeded their expectations.
Schrameck reported that the parent company – AIR Holding Company – is restructuring, divided into divisions according to their technology and/or products. To that end, it now has an aircraft division for its Epic Victory, Dynasty, Escape and Elite aircraft, the Elite being the only VLJ. It is this unit that is generating revenue for the company “while we learn how to build and certificate and aircraft,"he said. The aircraft division is building the first two conforming Victory and Escape aircraft, the single-engine personal jet and the single-engine turboprop, respectively.
A second division – Composite Aerostructures – is made up of the technology surrounding it’s patented process of a single composite fuselage structure that it is licensing to companies who would like to use more composite structures or would like to change their aluminum or metal structures to composite. “They can use our tooling and manufacturing processes for a single-piece fuselage made with a single piece of carbon fiber,” said Schrameck. “It is a patented technology. I guess the ultimate panacea in building an aircraft would be one with zero parts but this is as close as you’re are going to get to a zero-part aircraft with a single-part fuselage. We have a lot of companies interested in this technology.”
A third division – AIR Design, Research and Development – allows for the rapid design and development to a fully tooled aircraft in six and a half months, said Schrameck. He indicated it applied to any FAR 25 aircraft 12,500 pounds and under. “You can get a completely new aircraft designed from scratch in less than a year,” he said. “You just bring us the idea and a sketch an we’ll do the rest." It is this division that holds the intellectural property rights to all the company’s designs and technology, which Schrameck called “our golden library."
Finally, there is the AIR Certification Group which will focus first on the certification of its Dynasty but will also be available for other companies seeking to certificate their own aircraft. For now it has clocked 300 + hours on the Dynasty, which will be certificated in Canada first while the Victory and the Escape will be certificated in the U.S.
“We are talking to multiple companies around the world as part of our strategic plan,” said Schrameck, “and we are firmly interested in the Chinese, Middle Eastern and India. If we can find the right partner we will help develop their product and their infrastructure."