March 23, 2005 3:01 PM PST

Gates a big investor in aircraft start-up

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March 23, 2005
SCOTTSDALE, Ariz.--Bill Gates is betting some of his considerable fortune on a new plan: energy-efficient aviation.

Speaking at Flight School, an offshoot of the PC Forum here run by publisher CNET Networks, Eclipse CEO Vern Raburn acknowledged that the world's richest man--and his former boss at Microsoft--is one of the many equity investors in the company. Gates holds the second-largest stake, behind another Fortune 500 individual, he said. To date, Eclipse has not formally disclosed its investors.

The Albuquerque, N.M.-based company is working on the Eclipse 500, a six-seater that can fly at a maximum speed of 375 knots. Designed for flights of about 300 miles to 600 miles, the plane, which will sell for $1.3 million, will likely be used by companies promoting on-demand flight services. Raburn said he expects the company to get Federal Aviation Administration approval to use the planes in a commercial setting in about a year.

Raising money is a serious issue for the company and others with new ideas for transportation. Eclipse has designed the plane and said it will remain the manufacturer when it goes into commercial production. Production facilities cost money. So far, the 450-employee company has raised $400 million in debt and equity, and most of that total is equity, Raburn said. About $175 million alone was spent on nonrecurring engineering costs.

Planes also don't easily lend themselves to standardized components. "All of the parts are custom-designed. There are 40,000 parts in it," Raburn said.

Aircraft like the Eclipse 500, however, will eventually change the way planes are made. For one thing, the engine, which comes from Pratt & Whitney, is incredibly small--about 14 inches in diameter. Smaller engines enable engineers to eliminate much of the weight of the plane, which leads to better fuel efficiency and distance. Mass production of such engines can reduce costs.

"All of the advances in this field have occurred because of breakthroughs in propulsion," Raburn said. The Wright brothers, for example, were successful largely because they were the first to use an aluminum block engine, "which changed the thrust to weight ratio," he said. (Raburn participated in a wind tunnel test of the Wright's plane, which determined that its prop was 82 percent efficient.)

The Eclipse designers have also eliminated about 60 percent of the rivets on the plane, using strong welds instead. Many of the traditional mechanical functions on a plane are performed by semiconductors and software, he added.

Besides cutting costs, these design changes also cut weight--key for airplanes.

"We live and die by grams," Raburn said.

There will be no bathroom on the Eclipse 500.

"We modeled our airplane on a car, and most people don't have a lavatory in their car," he deadpanned.


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Now Aircraft?
I'm sure there's a joke in this somewhere . . .
Posted by Marcus Westrup (630 comments )
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A Picture
I remember seeing a cartoon about a plane that had something like Activation Required on the screen when the plane was landing.

I didn't read the article, but the head line was enough to make me laugh and cry. I don't want Microsoft in a plane or a car or a toaster for that matter.
Posted by System Tyrant (1453 comments )
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Give it a break
Just because Bill is investing in a company it does not mean that Microsoft is involved. He donates to charity too, does that mean that they need to be restarted 10 times a day?
Posted by Andrew J Glina (1673 comments )
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Why Try Re-Invent The Wheel... Re-Introduce The Concorde
While I think that the participation of Microsoft and other companies in the aviation industry is a very good direction to go I feel that given the limited conveniences (Bath-Rooms, Luggage Compartments, Medical Facilities) that will not be incorporated into the design of such aircrafts, without the appropriate business analyses... how can one be convinced that this experiments will not go the way of the Enrons. Instead, I would suggest that another look be taken at the once operated BA/Air France Concorde; and, with the appropriate re-designs for better economic and reduced noise levels during operations... this will be for the greater good of communities and individuals around the world. Some of the benefits - faster travel time over long distances all over the world, less air traffic in the already congested airspaces in some US Cities, less chances of would-be terrorists highjacking aircrafts (Lest we forget 9/11). I will follow-up in terms of a perceived limitation with regards the software industry - a matter in which companies like Microsoft should address leaving aviation and space travel matters to the folks at NASA and the SpaceShip One complexes.
Posted by (187 comments )
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That would be great. However most companies are too scared to do it. The is a biz jet project (S-21) between Sukhoi and (now) Boeing but it has been going on since the late 80s.

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Posted by Andrew J Glina (1673 comments )
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Not a bad idea
The idea of more efficient planes that can land at any airport is not new. In fact, it is one of the largest pushes behind the new 787 that Boeing is developing. Only, if efficiency is the ultimate goal, one must wonder why the organization is still constructing the airplane body with metal and welds.... the 787 is constructed of carbon fiber instead of aluminum. As I recall, it also uses a hydrogen fuel cell for power on the ground....

The comment made about the Concorde is quite off base. The concorde is a completely different approach to travel. It is large, expensive, and can land at only a couple of airports worldwide. It is also extremely expensive, and it was shut down because of increasing costs. The Concorde is likely comparable to the new government-subsidized Airbus A380 jumbo plane... Efficiency through capacity... Unfortunately for Airbus, I think Boeing has taken the right approach. And a focus on efficient planes seems like a good strategy for any new aircraft company. At roughly $1.2Million, a 6-8 seat aircraft will be very competitive in the market, and if it has an efficiency bonus over the competition, it should sell well.... just remember to use the restroom before you board the plane!
Posted by David Arbogast (1709 comments )
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I love when people get confused about aviation...
Airplanes are airplanes, right? Sure, and a bus is a car. There are a number of major catagories in aviation, across which you really can't draw parallels, or make sweeping statements. Airliners are a class in and of themselves, they serve very specific purposes for a small number of clients. Business aircraft server other specific requirements but for a much larger market. Private aviation can be anything to anyone. Since this story relates to a business aircraft, comments about the Concorde are quite irrelevant.

However, I'll join in the fray with this: the Concorde is the airliner equivalent of the Space Shuttle, in almost every way. It's a supposed "high-tech" machine created from extremely low-tech components. It's well past it's anticipated age. It serves a very limited niche market that is quickly being phased out. It's a waste of money, and always operates at a loss. It had an extremely long, very safe career, which unfortunatly culminated in a tragic accident. It only differs from the Space Shuttle in one way: whereas the Concorde was grounded, using the crash as an excuse (although it was really because there was no market for such an aircraft anymore), the Shuttle has been "returned to flight"... twice, because politicians are more concerned about appearances than finances.

Good luck to all innovative new aviation companies, I look forward to the next Space Ship One.
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