Flight Design insolvency

[Fly Boss]

I think FD USA has always used dealer and customer airplane in their displays, with the exception of N860LS which was the first CTLS in the states.

They try to get aircraft that are located close to the show, instead of moving them across the country.

In 2008 at Sun n Fun, I first laid eyes on the CTLS.  Turns out it was the first CTLS in the states, number N860LS.  I imagined someday owning a CTLS.  This past December, I bought a used CTLS.  Turns out it was the same one I sat in 7 years earlier, N860LS.  How cool is that?  N860LS is now happily living in Virginia.  The N number will soon be changing to one that I have used in a previous aircraft, but it will always be known as N860LS.

[Cluemeister]

That's a great story Fly Boss!

[gbigs]

There's more to it. Again the situation is crazy whacky. But, I was asked to let official channels speak. Probably because I still don't know the whole story and I could easily mis-convey some of the events, for one.

 

And yes, I am very much upset how the rest of you guys have been treated. But anger is self reinforcing and toxic, which is eapecially bad for me.

 

You and Roger claim to have pertinent information yet refuse to divulge any of it... To wit: "There's more to it."   If you two know something that would help owners understand what's going on....say it....    Sadly, not having the truth is causing more harm than good.

[Ian]

Not often you & I agree on anything Burgers, but I do wish folk would put up or shut up - always strikes me as childish in the extreme to be saying "I know more than you do but I'm not telling"

[Anticept]

And I wish people would stop slandering. FD Germany deserves every bit they are getting, but leave Tom out of it. The man is running at 10,000 mph in the situation AND trying to find the time to write a letter to everyone addressing all the questions and comments turning up in this thread (yes he's reading it) AND fielding a million calls a day with freaked out people that want to know what's going on. He's absolutely SWAMPED.

 

He needs a little time and HE wants to be the one to come forth.

[deckofficer]

And I wish people would stop slandering. FD Germany deserves every bit they are getting, but leave Tom out of it. The man is running at 10,000 mph to the situation AND trying to find the time to write a letter to everyone addressing all the questions and comments turning up in this thread (yes he's reading it). He needs a little time and HE wants to be the one to come forth.

 

+1

[FlyingMonkey]

 

But we do know for certain that underhand activity has taken place, and individuals all over the world have been lied to and cheated out of substantial sums of money.

 

 

Begging your pardon, but no, we don't know that in any way!

 

Business operations are based on *projections*, not certainty.  When a company makes promises based on the best information they have at the time, these are nothing more than guesses.  When sales are generating a certain revenue, and there is no reason to think that number will change, you plan based on those numbers.  Sometimes events transpire that you can't control.  Like say, a WAR in the backyard of your primary production facility.  Even if the war is not right outside the factory door, supply and transport costs will go up astronomically, and will likely be unreliable.

 

When that happens, and suddenly your expenses go way up, bringing revenue way down, all the planning and commitments you have made have to be modified.  No degree of ethical business practice can change mathematics or eliminate the unforeseen.  So you have to decide what makes the most sense to preserve your business and honor the most commitments, or the most important ones to the survival of your business.  You prioritize.  Treating every agreement the same simple assures that all customers will be equally unhappy and the entire venture will fail.

 

This is not "underhanded", it's life, and it's business.  "Lied" and "cheated" are strong words, and imply that at the time the agreements were entered into,  FD had no intention of keeping them.  Do you really believe that?  In that case, I think you are in a quite small minority.  FD Germany has had terrible communication with customers, but that is a customer service issue, not fraud.

[IrishAl]

DeckOfficer. 

I appreciate your post - thanks.  

That's really helpful.

 

Andy, 

Based on the evidence presented and the statements made, I fail to understand how you can say that "we don't know in any way" that customers have been lied to and cheated out of substantial sums of money.   

[FlyingMonkey]

 

Andy, 

Based on the evidence presented and the statements made, I fail to understand how you can say that "we don't know in any way" that customers have been lied to and cheated out of substantial sums of money.

 

Did you read what I wrote?? I stand by those statements.

[Gryphon]

Hi Adam, you personally have not got my goat but the system you are illustrative of, receiving your plane in 7 months and I am still waiting after three years. I am a farmer and contractor and if someone paid me in full up front I would endeavor to get his job done first rather than someone paying in installments. It is additionally upsetting that you have an easier payment plan than the rest of us as by your method I would still have most of my money still in my pocket. You could say my money is worth more as FD has it all rather than a bit at a time. Why ?

[FastEddieB]

As a data point, this was how the payment for my Sky Arrow was handled:

 

 

(click to enlarge)

 

Initial payments (a+ were made in March, 2007.

 

The plane arrived about June 25, 2007 and was assembled and ready for me to pick up on July 10, 2007.

 

I think that's roughly how purchases like this are handled in the US.

 

For those curious, this is how it arrived from Italy:

 

[deckofficer]

DeckOfficer. 

I appreciate your post - thanks.  

That's really helpful.

 

Andy, 

Based on the evidence presented and the statements made, I fail to understand how you can say that "we don't know in any way" that customers have been lied to and cheated out of substantial sums of money.   

IrishAl,

 

Your reply has corrected in my mind that I misunderstood your feelings towards Tom P., and I appreciate being set straight, so thank you. Tom Peghiny IMHO has been a visionary in light/ultralight aviation. I believe he was a player in our domestic market of the HKS-700 and turbo version, which is a perfect power plant for our type of flying. 80 hp in the turbo version, intercooler, EFI, 120 lbs, and 2.4 gph @ 75%. Unfortunately the parent company of HKS got cold feet about their exposure to liability in our market and ended distribution of this great, light 4 stroke engine. More recently Tom has been involved in electric training aircraft which could create the same big numbers of new pilot training as Cessna did in the 60's with their promotion of low cost training. If some of you haven't noticed, numbers of pilots have been falling off for the last 4 decades and we need someone to reverse that trend. My bet is on Tom Peghiny, his background lends itself well to reviving aviation in the US, his roots are in true minimalist flying (hang gliding and ultralights) and the electric trainer that can currently offer 2 hours of pattern work at about 1/3 the cost of other trainers is a step in the right direction. Airport neighbors do get annoyed at constant touch and go's, but in electric trainers they won't even notice the training activity.

[Patrnflyr]

Forgive me if this has already been posted but i thought it might have been missed.  I just pulled this off of Dan Johnson's site and explains the "end around" that Tom P is doing for FD USA:

 

Breaking News ... Recently Flight Design in Germany sent a letter to their dealers including this statement, "We have applied for a planned receivership which allows for reorganization of the company." What does this mean?

 

Since Light-Sport Aircraft burst on the aviation scene in 2004, Flight Design built the largest fleet in the United States. Using internationally-accepted ASTM standards to good advantage, CT series aircraft also sold well in other countries. Flight Design USA president Tom Peghiny was the first ASTM Airplane Subcommittee chair for several years in the mid-2000s while Flight Design Germany's Chief Technical Officer, Oliver Reinhardt served as overall F37 chair until very recently.

 

Parlaying their prowess in aircraft design, testing, and certification, Flight Design engineered an all-metal version of their carbon fiber CTLS, called MC, plus a four-seat certified aircraft design named C4, among other projects.

That may sound positive, but engineering-intensive projects require costlier talent and can consume boatloads of money. Several projects were started years ago and were underway as the global economy took a sharp turn for the worse in 2009. With funds stretched, serial production of existing products slowed. Something had to give.

Faced with a "liquidity crunch," Flight Design GmbH filed for insolvency on February 11th. A local German court provided Knut Rebholz, an attorney with experience in restructuring, to be interim receiver of the German corporation. After his assessment, court appointee Robholz reported, "The order situation of the company is good and the products have a very good international reputation in the market." He continued, "[The] most urgent task to enable intensive negotiations to fund operations."

 

Jack Pelton, actor Harrison Ford, and Tom Poberezny prepare for remarks at an NBAA event with the EAA sweepstakes MC as a backdrop.

The problems faced by Flight Design in Germany slowed aircraft deliveries motivating Connecticut-based Flight Design USA to recently announce a new source of supply for their CLTSi models from a properly licensed and very capable builder. 

 

Introducing AeroJones Aviation ...

AeroJones Aviation is headquartered in Taichung, Taiwan, often referred to as the "Silicon Valley" of Taiwan. AeroJones negotiated and signed an exclusive agreement to license Flight Design products. The program to begin production called for the Taiwanese company to assemble new production tooling and equipment including a five-axis CNC machine, water and Laser cutters, TIG welding, composite layup and post-cure ovens, plus a modern paint booth. AeroJones also obtained production worker training, received training to provide quality management, and gradually built up to finished airplanes, which first occurred in 2014. AeroJones' production facility has passed numerous audits including earning a Production Certificate from China's CAAC at the end of 2015. 

This is not a new, small start-up company but instead one with impressive credentials. AeroJones' parent company, GSEO (Genius Electro Optical), is a manufacturer and supplier for industrial LED products and laminated lenses for many popular smartphones; it has around 20,000 employees. 

AeroJones has been building CTLSi aircraft and shipments to the USA are already scheduled. This will allow Flight Design USA to move forward with its business while the German company works to restructure.

 

Flight Design's four seat C4 made its first flight in 2015.

Flight Design USA noted, "Roughly 35% of a CTLS presently comes from the USA — wheels, tires, brakes, radios, antennas, GPS, autopilot, EFIS and EMS systems, intercom, Whelen lights, BRS parachute, ELT, headsets, and miscellaneous parts like the gascolator." Tom Peghiny continued, "The Austrian-made Rotax engine, propeller, composite materials, windshield and windows, paint, seats, and numerous other parts come from Europe. The planes made by AeroJones Aviation should correctly be called 'world aircraft' (just like Boeing and Airbus) as only about 25% will be of non-western origin."

 

All these steps — Flight Design in Germany reorganizing, Flight Design USA arranging a new, second source for completed airframes, solidifying components from all over the globe, and preparing for a refreshed American operation — lead to their newest product announcement: the CTLSi "2020" Edition.

 

A new season of flying will feature AeroJones-produced CTLSi aircraft with fully compliant ADS-B hardware.

"For 2016 we wanted to do a light upgrade to the avionics on the CTLSi centered around dual Dynon SkyView and the Garmin 796," said Peghiny. "We asked what would we want in addition if we were the customer?"

 

"Working closely with John Hurst, the technical and sales director of Americana Aviation [a Flight Design USA distributor], we came up with a package we think is very appealing."

"Since 2012, we have been delivering the Dynon SkyView SV-261 Extended Squitter (ES) transponder — which sends additional info for ADS-B out use. In conjunction with the new Dynon SV-2020 GPS source, this provides an FAA Next Gen-compliant ADS-B out solution," added Tom.• Many LSA have ADS-B in today but FAA requires the extra "out" data by 2020, which suggested the new CTLSi edition name Flight Design USA chose.

"For ADS-B in we are offering three options," said Tom. "Customers can choose the Dynon SV-470 ADS-B in, which has the NEXRAD weather in the cockpit, UAT traffic displayed on the screens in vertical and horizontal position and TAFs and TFRs. Alternatively, the Garmin GDL-39-3D offers both 978 UAT traffic and 1020 ES traffic, Bluetooth connectivity to other devices, and a backup ADAHRs-like panel displayed on the Garmin 796. The third option is to have a mini iPad in an AirGizmo panel mount with a USB power supply and choose the ADS-B in software such as Garmin Pilot or ForeFlight. The 2020 Edition will come with the Dynon WiFi adapters installed which also allows loading flight plans into the Dynon mapping software."

"All this refers to just the ADS-B," noted Tom. "Of course the CTLSi 2020 also comes with the Rotax 912is fuel injected engine, the Dynon SkyView autopilot, standard airframe parachute, and all the other creature comforts that Flight Design owners have always enjoyed."

While the Germany company moves to restructure, it is good to see the American LSA fleet leader showing refreshed activity and many interested pilots will look forward to examining a new AeroJones-produced CTLSi at summer airshows.

• Peghiny added, "The good news is that many existing LSA using appropriate Dynon hardware can meet the ADS-B 2020 requirements quickly and with less expense.

[DECZR]

FD-USA go further!

We have been of the wrong side of Atlantic

[Adam]

Hi Adam, you personally have not got my goat but the system you are illustrative of, receiving your plane in 7 months and I am still waiting after three years. I am a farmer and contractor and if someone paid me in full up front I would endeavor to get his job done first rather than someone paying in installments. It is additionally upsetting that you have an easier payment plan than the rest of us as by your method I would still have most of my money still in my pocket. You could say my money is worth more as FD has it all rather than a bit at a time. Why ?

I am certain that the people at FD GMBH had no intention of screwing any customers.  The reason I say this is because they have been in business for 25 years and have built over 1800 airplanes.  If they had criminal intent it would have surfaced years ago.  I'm sure they got behind and as circumstances deteriorated got caught with their pants down (figuratively speaking) and ran out of cash.  Customer lawsuits would have forced their hand into bankruptcy protection as they indicated.

 

My point on managing cash flow (which is just conjecture as an experienced senior business guy) is that your money kept the lights on in the past and is not held in escrow, but rather has been spent.  FD GMBH doesn't have the current cash flow to finish the fully paid orders but needs cash to pay employees and keep the lights on.  Tom gets some hulls because he is a source of continuing cash, FD GMBH ships the hulls they have, Tom short pays for what is missing and then uses his cash to fund finishing the aircraft which are sold to USA customers.  Again, I am just guessing but trying to give you an illustrative potential answer to your question.

 

Building yours first would be the ethical or even moral thing to do, but without cash to complete the order, getting fresh cash in the door by filling my order would help them keep the lights on a little longer while they seek to reorganize.

 

Here are pics of my bird as received in Las Vegas.  I got these from the dealer today.  Looks like a jubilee paint scheme.

[Mike Koerner]

DECZR, Gunther, Gryphon, Ramses, and others apparently mistreated by Flight Design,

I am very sorry to hear of your of your plight... and I am sorry that my comments made matters worse.

The policy you describe - telling you that your plane is ready for delivery pending final payment, taking your money, then delivering nothing - is despicable.

Adam's conjecture as to the financial logic of preferential deliveries to U.S. customers - you have just completed the manufacture of another plane, you have one customer who has already paid you for it and another who has not, so you give the plane to the customer who hasn't yet paid so you can collect additional money - is equally disheartening.

The argument that they were just trying to keep the lights on, can never justify such fraudulent business practices.

I appreciate your stepping forward to describe your experiences. I also appreciate your need to seek a legal remedy. I hope you are successful in recovering whatever is owed to you.

Mike Koerner

[DECZR]

Thank you Mike!

I sent a question to my lawyers regarding the possibility to start a legal action against the management of FD Germany: Matthias Betsch, Daniel Günther and Christian Wenger.

I have some documents and I hope to bring this guys in front of the court to explain, as we say in Romania, how they sold the fur of the the bear from the forest so many years...

[Adam]

I'm not defending the practice Mike, just giving a logical potential rationale.  Cash is King.  Anytime things go fubar at a company follow the cash trail.  God knows anyone of us would be mad as hell to have paid in full 3 years ago and not have received a plane while others are still getting them.  Just so people know too, my original order slot was not 7 months ago, it was also about 3 years ago.  In my case, I was content to let my Jubilee order slot slip 2 years ago because I was building a new house and my wife was having a baby.   I was contacted 12 months ago to see if I wanted to pick up another slot and said "yes". 

 

BTW, I see you are in PV?  I live in Yorba Linda, keep my plane at KHHR and my office is in El Segundo.  Wayne,  another CT forum member (has a CTSW) also flies out of KHHR.  Do you have a CT at KTOA?

[IrishAl]

IrishAl,

 

Your reply has corrected in my mind that I misunderstood your feelings towards Tom P., and I appreciate being set straight, so thank you. 

Appreciated, Deckofficer.  I confirm I have absolutely no ill feeling towards Tom P. 

 

Adam, I agree with your assessment that FD Germany initially had no ill intent, but only up to a point.

 

When a business faces failure, the people who own it will often go to extraordinary lengths, and sometimes that includes a sudden willingness to act illegally.  

 

FD Germany has continued trading for some time while insolvent, and they have been issuing promises of delivery as recently as a few months ago when it was clear there was no hope of fulfilment.  

 

This is wilful criminal activity, and because of that wilfulness, it amounts to theft from creditors - some of which are member of this forum.

 

In my view, such activity ought to receive the severest of responses, whereas the victims should be supported in every way possible. It seemed to me that far too much of the the opposite was happening on this forum.    

[Tip]

I think that it would have been tough to test fly Adam's plane, prior to shipping from Germany as it looks in his pictures. But, anything is possible.

[gbigs]

And I wish people would stop slandering. FD Germany deserves every bit they are getting, but leave Tom out of it. The man is running at 10,000 mph in the situation AND trying to find the time to write a letter to everyone addressing all the questions and comments turning up in this thread (yes he's reading it) AND fielding a million calls a day with freaked out people that want to know what's going on. He's absolutely SWAMPED.

 

He needs a little time and HE wants to be the one to come forth.

 

There is nothing so far stated on this thread that is different than what Tom P has been saying to we owners already....so it appears you and Roger are not privy to special information....that is, if Tom is your source. 

 

Tom is busy keeping the US in parts and planes (by dealing with the Taiwan ops directly)...and his announcement of the '2020 CTLSi'  is the same as a standard CTLSi with Dynon ADS-B and Garmin 796...they are simply equipping the plane with Dynon's current WAAS GPS Dynon claims is 2020 compliant.   Customers in the US ordering the newest copy of the product are benefiting from Dynon's current work...

 

Tom also takes care of warranty work himself....he doesn't say but he may be covering some that out of his own pocket, if so, he is gifting customers because no doubt Tom did not receive the purchase price money himself.  But we are told the warranties are going to be honored despite what's happening in Germany.

 

Of course Rotax parts come from Austria delivered to Rotax distributors in the US as has always been the case...same goes for other subsystems in the plane made by suppliers (like the avionics and the brakes).

[jcbrzusek]

Question, I recently put a down payment on a new CTLSi about a month ago with someone who sells them out of Florida. Really nice people and very helpful, however I am concerned this may have not only an effect for my expected delivery of May, but a refund if a plane can't be delivered. Any advice here from the group on how to approach this properly ?

 

I loved the plane when I did a test flight back in January. I live in the Atlanta area. Thanks, Jim

[deckofficer]

Question, I recently put a down payment on a new CTLSi about a month ago with someone who sells them out of Florida. Really nice people and very helpful, however I am concerned this may have not only an effect for my expected delivery of May, but a refund if a plane can't be delivered. Any advice here from the group on how to approach this properly ?

 

I loved the plane when I did a test flight back in January. I live in the Atlanta area. Thanks, Jim

 First off, welcome to the forum from another new member. I think your question is something you will have to determine for yourself after reading the many threads here on this topic and further research on your part. The reason I'm on the forum might be of some help to you, so I will explain myself. Unlike you, I'm not in a position to spend $150K on a new plane, but would like to get a used one that checks most of my boxes. The aircraft that does check all my boxes and then some just doesn't have any used numbers being offered in the market place, whereas the FD has many used aircraft in my budget. So, if I'm not flamed too bad by sharing my first choice with you, since you are in the position to buy your aircraft new, maybe it would give you a 2nd choice. The Pipistrel Virus SW checks all my boxes, efficiency that exceeds all other aircraft as proved by winning the NASA challenge two years running, modern, strong composite high wing, and the option of beefier gear, tundra tires, and lift spoilers for getting down on small back country strips. On the same 100 hp Rotax, the non LSA version has a 75% cruise of 147 kt, 1680 fpm climb, and 4.7 gph @ 147 kt. Even though the FD took 2nd place in those NASA efficiency contests, it was a distant 2nd.

 

Just maybe food for thought since you are in the enviable position of being able to order a new aircraft. 

[FastEddieB]

Welcome, Jim.

 

I'm not far from you, just north of Blue Ridge, GA. Let me know if you'd ever like to touch base and talk about LSA's!

[Tom Baker]

Question, I recently put a down payment on a new CTLSi about a month ago with someone who sells them out of Florida. Really nice people and very helpful, however I am concerned this may have not only an effect for my expected delivery of May, but a refund if a plane can't be delivered. Any advice here from the group on how to approach this properly ?

 

I loved the plane when I did a test flight back in January. I live in the Atlanta area. Thanks, Jim

 

Since you didn't make a down payment directly to Flight Design GMBH in Germany I think you will be OK. I would bet there is a good chance that you will get one of the new airplanes from AeroJones Aviation. If you have any worries you should give the folks in Florida a call, and make sure you are on the same page.