But countering the success of the company’s designs and their unprecedented popularity were challenges compounded by the COVID pandemic, a failure by a key supplier and missteps of its own. Monday’s Chapter 11 filing gives some clues to the situation Van’s faces that pushed the company into a form of bankruptcy that most often precedes a reorganization and recovery. (Van’s is not liquidating. Chapter 11 is designed to give a company some relief from liabilities and enable a reorganization into a sustainable business.)

In the Chapter 11 declaration is this summary: “Until recently Van’s operated successfully without bank loans or other lines of credit, relying on customer deposits and earnings for its working capital.” But then Van’s faced “a combination of unforeseen, significant events occurring over a relatively short period of time increased Debtor’s [Van’s Aircraft’s] costs, doubled its normal inventory levels, slowed deliveries, and strained Debtor’s cash flow to the breaking point.” Support from founder Dick VanGrunsven since September has kept the company afloat.

• READ MORE: Van’s Aircraft Files for Chapter 11 Bankruptcy Protection

One could argue that Van’s trouble started with an issue regarding quickbuild kits. The offshore constructor failed to adequately corrosion-proof parts of the assembly, which led Van’s to a time-consuming side project to understand the nature of the problem and its scope, and construct a remedy. The issue is described in the declaration as a “multi-million-dollar setback” for Van’s. Moreover, it contributed to a growing backlog in ordered kits and extended delivery times for customers.

At the same time, there was unprecedented demand for kits during the early stages of COVID. (In fact, the entire homebuilt industry witnessed a surge in popularity, with all major kit manufacturers reporting greatly increased sales in 2020 and 2021.) For Van’s, kit sales rose from 1594 during 2019 (already a very good number for the company) to 2508 in 2020 and 3982 in 2021. According to the filing, revenue actually decreased from $31.5 million in 2019 to $31.1 million in 2020, despite a 1000-unit increase in orders. Van’s didn’t get the bulk of the kit payment until shipment. In 2021, however, the big increases in order began to show up in revenue, increasing to $37.6 million in 2021 and $52.6 million in 2022. Net income, as described in the declaration, was $2.6 million in 2019, $3 million in 2020, but dropped to $2.1 million in 2021 as investments to increase capacity began to appear in the financials. In 2022, Van’s net income turned red, with a loss of $3.3 million; it lost $1 million through the end of August this year against revenues of $43 million.

It’s important to understand that Van’s was already operating at or near capacity in 2019. Along with technical changes to the kits over time that placed more work at the factory (steps the builder would not have to perform, an expectation in the modern kit-aircraft world), Van’s found itself with greatly increased demand and set about finding ways to meet it.

Because the vast majority of the company’s kit parts are known as “pre-punched” parts and the machines that do the punching formed the production roadblock, Van’s looked for ways to increase capacity by outsourcing some of this step. One way was to have the parts normally punched instead have their holes cut by a laser. This is a common method for automating manufacture of sheet metal parts, along with CNC routers, punches and water-jet cutting. In fact, Van’s had been using laser cutting for some parts and then elected to laser-cut more of them.

Builders began to notice that some laser-cut parts would crack during the dimpling process—where the metal is formed for the purpose of installing flush rivets—and that eventually started Van’s engineering department down the path of discovering why this was happening. Many builders felt that Van’s was slow to acknowledge the problem and that by the time it did, there was a significant quantity of laser-cut parts out in the world. Van’s turned its full attention to the problem and identified the parts in question—more recently, they were able to far more accurately predict which specific airplane kits were likely to have the suspect parts. Latest estimates are that some 1800 kits are affected.

These issues would challenge many companies but they were compounded by other events, as the declaration shows. “Van’s order file doubled in the 2020 and 2021 period. At the same time, supply chain issues, and supplier shutdowns slowed productions of key components, increasing back orders and delaying order completions, requiring Debtor to hire and train more staff. Wages increased, and shipping costs rose more than four-fold during this period. Stated simply, without realizing it, Debtor was selling a high volume of aircraft kits below its cost. The combination of all these factors overstressed Van’s workforce, operating support systems and management skills resulting in a series of one-off but very costly errors.” The declaration also notes that, “Some of its senior employees with deep familiarity with both office and manufacturing process workings chose to retire during COVID.”

The picture painted is of a company overwhelmed by overlapping challenges, started by the primer issue with quickbuild kits and followed closely by a global pandemic that simultaneously cut into its manufacturing capacity, dramatically increased costs and, perhaps ironically, also greatly boosted demand. That in the effort to catch up with demand the company also lost track of internal costs and failed to increase kit prices (as one remedy) is one inescapable takeaway from the factual descriptions in the Chapter 11 declaration—and a good indication of the remedies needed to define its path forward.

Editor’s Note: This article first appeared on KITPLANES.

The post Van’s Bankruptcy: How Did It Get Here? appeared first on FLYING Magazine.

The move comes a little over a month after Van’s announced a series of changes designed to combat “serious cash flow issues, which must be addressed quickly to ensure ongoing operations.” According to the company, the problems stem from COVID-related supply chain challenges, faulty primer that led to corrosion problems on quick build kits, and recent issues with defects in laser-cut parts.

• READ MORE: Van’s Updates List of RV Parts Reportedly Forming Cracks

“As a result of this combination of issues, the company experienced serious cash-flow problems from which it could not recover through the normal course of business,” Van’s said in a statement. “During that time, Van’s built up a significant and high-value parts inventory. As we manufacture the additional parts needed to balance this inventory, we will leverage it to fulfill orders for kits and parts over the next 12 to 18 months.”

Van’s is expected to file a proposed reorganization plan with the court within the next 90 days. The company says it will continue to provide parts, service, and support, along with shipping kit orders, during the reorganization. Plans are being developed for customers affected by the Chapter 11 filing, though the company noted that those plans are ultimately dependent upon court approval.

Plans for Existing Customers

For customers who received laser-cut parts, Van’s says it has now “completed a careful, detailed review that delineates the specific list of laser-cut parts for each individual customer kit order.” If approved, the company says it intends to begin contacting impacted customers with detailed information on the parts and its parts replacement program with the goal of beginning to ship replacements this month. Van’s hopes to have delivered replacement parts to all affected customers, estimated to be more than 1,800, by the end of 2024.

Van’s reported that it is also reviewing all open parts orders, some of which will be hit with price increases. “Customers with open parts orders that require updated pricing will be contacted soon and will receive access to a website where they will be able to review and act upon the details of their existing orders and Van’s proposed order modifications,” Van’s said.

In addition, prices for kits and parts are expected to increase. Van’s plans to “begin contacting customers with open kit orders that were placed prior to the filing date within the next 7 to 10 days with an offer to apply the full amount of their existing deposits toward the purchase of the same kit, under new terms and conditions including a price increase.” Customers with deposits on kits should be on the lookout for an email with a link “to a website where they will be able to view the details of their existing order, the amount of their deposit and Van’s proposed order modifications.”

“Van’s expects to resume shipping in-stock kit orders within the next 7 to 10 days,” the company said. “We will do our best to prioritize those who have waited longest, but our kit fulfillment schedule must be financially acceptable to the court, based substantially on cash flow rather than the traditional and historical method of order fulfillment that Van’s customers have experienced in the past. We will be constrained by – and will make prioritization decisions based on – the rate and timing of order renewal, availability of in-stock parts, and our need to ship kits that generate positive cash flow. Where we are able to do so, we will also consider the age of the original customer order.”

The company says it is still working with its engine, propeller, and avionics partners to get a plan in place for customers with deposits on those products. Van’s noted that orders that don’t require modifications will be shipped as usual.

“The purpose of the Chapter 11 filing is to allow Van’s to continue to provide ongoing support for its customers, suppliers, and employees for many years to come,” Van’s said. “We understand that this situation creates a hardship for everyone involved. However, without these changes we do not see a viable path forward that would allow Van’s Aircraft to remain in business and support its customers.”

Editor’s Note: This story was originally reported on by KITPLANES.

The post Van’s Aircraft Files for Chapter 11 Bankruptcy Protection appeared first on FLYING Magazine.

In childhood, speed people were inching off first base, looking for the first twitch of the pitcher’s windup so they could take off and steal second. Altitude people were in right field wondering what kind of airplane just flew over and completely missing the lazy fly ball headed their way.

Once they grow up, speed people race sports cars; altitude people go on road trips. Speed people own center-console offshore fishing boats with outsize outboard engines; altitude people go sailing across far horizons at 5 knots while listening to Jimmy Buffett.

Some of my best friends are thoroughgoing speed freaks. There’s a great deal I admire in them, and a surprising amount of their thrill-seeking ways have rubbed off on me (motorcycling, dirt-biking, skydiving). But from earliest childhood, I have spiritually belonged squarely in the altitude camp. 

All of which perhaps explains why I have never been to the Reno Air Races until this past year. On the face of things, overpowered P-51 Mustangs going the speed of sexiness 50 feet off the scrub-desert floor should have had me driving to Nevada the same sun-soaked summer of ’98 that my beat-up Ford Ranger first pulled into Oshkosh, Wisconsin. But as I recall, my airy altitude-oriented teenaged self was then focused on sharing that transcendent change of perspective with the girl friend I wanted to make my girlfriend. (I failed miserably; she puked in my lap on a bumpy Wisconsin afternoon and declared me a great friend as I swabbed her vomit from my lap and the Cessna 150 cockpit.) I’ve never had a strong desire to go to the races since, presuming them to be a sort of sun-blasted aerial NASCAR catering to speed tweakers of the Daytona infield set in Florida.

And yet, here I am in the top row of the grandstands at Reno for the very first time, watching intently as Jeff LaVelle’s green-winged Glasair III carves around Pylon 9 and roars across the finish line at well over 400 mph. Its double-supercharged Lycoming IO-580 engine damn near bursting with some 80 inches of manifold pressure, putting out ungodly amounts of horsepower and driving his little composite kitplane to speeds it was clearly never meant to go.

And I want to stand up and yell at the top of my lungs until my pitch matches the horrific scream of that apocalyptic powerplant. I want a giant foam No. 1 mitt to wave obnoxiously in the air. I want to spill popcorn and beer on the mild-mannered man in front of me clicking away with his $5,000 telephoto-camera rig. I want to be Jeff LaVelle, flashing a few feet above the desert scrub at reality-bending speeds, a mere misplaced wrist-twitch from disaster.

I let out an exultant whoop and a fist pump as the little Glasair roars into a steep bank around Pylon 1, and Dawn looks at me like I’ve gone completely bonkers. I have come to Reno, it seems, to sacrifice my dignity and identity as a lofty disciple of altitude on the bloodstained altar of the “Temple of Speed.” 

How I Got Here

Characteristically, I ended up here more or less by accident. Having just recently completed our migration to the Seattle area, Dawn, Piper and I took off on a spur-of-the-moment road trip to look at a tiny house in Northern California we were interested in. Well, one thing led to another, and soon we were quaffing cab in wine country, then toasting the inimitable California sunset aboard a friend’s sailboat anchored in Sausalito, and then surveying the epic sweep of Yosemite Valley. Five days turned into two weeks as we rediscovered all the West Coast delights of our newlywed youth. We turned north to Lake Tahoe, and it seemed inevitable that we should subsequently make our way down to Reno, where our friend Joe Coraggio was set to race his nearly stock Lancair Legacy in his sophomore year with tentative hopes of flogging his steed a place or two higher in the Sport Silver Class.

The Big Day

It was Thursday, the least attended (and cheapest) day of race weekend, and the grandstands were still mostly empty as Dawn and I took our assigned seats to cheer on the early morning warriors of the Formula One and Biplane classes. These are simple single-place airplanes completely impractical for anything but aerobatics and racing (indeed, most of the Formula One airplanes arrived disassembled on trailers), and completely attainable to the old-school speed-mad garage tinkerer of modest means. You can pick up an older Cassutt Special for well under $20,000. Intriguingly, all the Formula One aircraft are powered by the same venerable Continental O-200 that powered the 150 in which I learned to fly. But despite the comparatively slow speeds (read: only twiceas fast as a 150) and the lack of adoring crowds, the racing looked really, really fun. And like something I could see myself doing, were I to ever completely ditch my fuddy-duddy altitude-pilot status. 

• READ MORE: Sam Weigel Archive

The Jet, T-6 and Unlimited classes are equally entertaining with considerably faster lap speeds (or in the T-6s’ case, at least higher decibel output), but I didn’t find these classes very relatable; I couldn’t see any realistic way into any of those cockpits short of winning the lottery or belatedly devoting my life to professional warbird wrangling (an unlikely development: too many varied interests—jack of all trades, master of none). And as thrilling as it should have been to see Dreadnought thundering around the course at 450 mph—or jets flashing by at another 70 knots faster—I kind of expect outrageously powerful all-metal military fighters designed to kill Nazis and subjected to 70 years of aggressive development to go stupid-fast. I especially expect jets to go fast. I’d personally like to take the Boeing 737 for a lap, and I suspect it could turn in a respectable time; though I’d definitely exceed G-limits, and the 118-foot wingspan would keep my line a bit high.

The Sport Class is what really intrigues me, and based on my cumulative Reno experience of spectating on a single Thursday, I’m ready to declare it the modern soul of pylon air racing. It’s open to all experimental aircraft of under 1,000 inches displacement capable of a 200 mph lap. That’s it. The simple entry rules have made it a hotbed of racing innovation. In its 23rd year, Sport has grown to become Reno’s largest class, with up to 40 hopeful entrants chasing 32 race slots in four subclasses. Mind you, it’s a fairly accessible class for mere mortals: near-stock RV-4s, -6s, and -8s (albeit those built light and with a bit more horsepower than Van originally envisioned) regularly qualify in Sport Medallion. And this same class fields several entrants (namely Jim LaVelle, Andy Findlay, Jim Rush and formerly Jon Sharp) who show up every year with genuinely shocking examples of what modern experimental aviation is capable of.

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I use the word “shocking” here in its most literal sense that doesn’t involve considerable voltage. I feel like modern Americans have become pretty blasé to the incredible. Formerly shocking developments in politics, business, entertainment and sports fade from the headlines in 24 hours. Crime requires a triple-digit body count to be shocking anymore. Billionaires chasing each other to space in private spacecraft theirown companies developed elicits indifferent eyerolls (and outright scorn for Richard Branson—he didn’t even make the Kármán line). “Been there, done that” is today’s byline of cynical cool. 

I challenge you. Go to Reno, and watch a little composite kitplane—that you know damn well was built in someone’s garage—as it darts 50 feet above the desert with the throttle wide open, the engine putting out twice the horsepower it was designed for, and emitting a commensurately appalling scream as it flashes by at 400 mph, and then tell me you’re not shocked to your core. Tell me you don’t want to yell and wave and spill your popcorn and beer. (“Are you not entertained!?”) Tell me you don’t imagine yourself in that cockpit, straining against the Gs pushing you into your seat and fighting tunnel vision as desert scrub flashes by your left wingtip at warp speed. Tell me you don’t want that stick in your hand as you dive for the checkered flag, utterly alive and utterly in the moment with eternity in your fingertips. Tell me I’ve gone completely round the bend.

Hmm. I may have gone completely round the bend.

The post Finally Visiting ‘The Temple of Speed’ appeared first on FLYING Magazine.

Approximately five months after Bearhawk Aircraft announced a two-seat, taildragger kit design—the Companion—the Austin, Texas-based company has delivered the first two airplanes.

Both of the new owners, Chad Marks and Greg Charest, are new to aircraft building, and both are expecting assistance from Mark Goldberg of AviPro (the Atlixco, Mexico-based builder of Bearhawk’s quickbuild kits), who, they say, has been very supportive so far. The build process is expected to take a few years, based on data from previous Bearhawk builders.

Marks considered several airplane types before settling on the Companion. “This type of backcountry aircraft was what I wanted,” he said. “Metal wings, payload, speed, all I read about, it fit the criteria.” Marks has an aviation-related degree, with a focus on systems.

Charest said he chose the Companion because of its economic cost of ownership and side-by-side seating configuration. He plans to teach his daughter to fly once the airplane is built. Charest was choosing between Bearhawk’s other kits—the 4-Place and the Patrol—when the Companion was introduced. According to Bearhawk, Charest wanted an airplane with proven strength and a wide performance envelope. He also chose the Companion because it offers an affordable path to a new airplane. “I’m super excited about eventually being able to fly and maintain a new airplane, rather than something built in the 1970s,” he said. Charest has owned several vintage Cessnas and currently owns an Aeronca Champ.

Bearhawk offers several engine selections for the Companion, providing 150 to 210 hp. In addition to the side-by-side configuration, the airplane has a large cargo compartment and a max gross weight of 2,200 pounds, which is why the company refers to the airplane as a “sporty SUV/pickup.” Bearhawk expects the Companion to cruise between 113 to 130 knots.

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