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Reorg Plan Approved!

I have not followed the proceedings. Can someone summarize how Vans can move forward from this point on? Thanks.
 
I have not followed the proceedings. Can someone summarize how Vans can move forward from this point on? Thanks.
They have to follow the plan they submitted a while back and was approved today under the watchcare of the trustees.
 

Attachments

  • Van's-Aircraft,-Inc-113.pdf
    2.2 MB · Views: 219
Coupe of things in the plan that caught my attention. One is that the RV-15 kit is planned to go into production:

"...Debtor’s primary revenue sources for the next three years will come from the sale of its eight different kit airplanes, one model of production ready-to-fly plane, and one future back country airplane kit."

The other is that this has been a profitable business. Van was able to supply loans totaling $10.65 million.

So far I'm only on page 17, and after the first several pages, it's an interesting, readable document. Have a look for yourself.

Dave
 
The other is that this has been a profitable business. Van was able to supply loans totaling $10.65 million.

Dave
I wouldn’t make any assumptions on how Van made his money. Might have been real estate, inheritance, wise investments, who knows…..
 
I wouldn’t make any assumptions on how Van made his money. Might have been real estate, inheritance, wise investments, who knows…..
Agreed. Also it may have been a profitable business historically but it's not the same business anymore. Up until the last several years a middle class income could build and own an RV. With the increased costs of engines, props, hardware, paint, kits, hangars, fuel, housing, food, and everything else, that's just not realistic anymore. Is there enough increased margin in the new kit prices to cover the reduction in available market? Who knows? It might work out great, it might not.
 
Another interesting thing is this:

"Upon the occurrence of the Effective Date, the board of directors of the Reorganized Debtor shall consist of Richard Van Grunsven, Cheryl VanGrunsven, Mikael Via, Don Eisele, and Rian Johnson."
 
Is there enough increased margin in the new kit prices to cover the reduction in available market? Who knows? It might work out great, it might not.
What reduction in market? Remember, it was at least partially Vans attempt at supplying a rapidly expanding market that got them into this mess in the first place. Prices have gone up, yes - but I don't see anything that looks like a market reduction.
 
Relative to Vans orders, I wonder what MOSAIC will do to the market. With the introduction of higher performance, more capable aircraft in the LSA category, will the equation shift away from Vans? Will the build/buy calculus get close enough, that only those that really want to build will go that path? Of course, Vans is capable of adapting and, as the RV12 LSA has show, building aircraft.
 
What reduction in market? Remember, it was at least partially Vans attempt at supplying a rapidly expanding market that got them into this mess in the first place. Prices have gone up, yes - but I don't see anything that looks like a market reduction.

Well, it was Van's attempt to keep up with a surge in demand during the pandemic. I think that surge has passed, so, in that sense, there has probably been a reduction in the past year or two.

But yes, I know that this is not what Jjackh10 meant. He meant that, as prices go up, fewer people can afford to build an RV. However: (1) This is debatable. And (2) Even if he's right and fewer people could afford to build an RV in 2020 than in 1990-2000, it's still quite possible that more people have actually been choosing to build an RV, for whatever reason (e.g. Maybe because kits are getting easier to build, maybe because of stagnation in the certified airplane market, maybe because of better marketing/communications about kitplanes in general and/or RVs specifically, etc.).

I wrote "this is debatable" because... Is it really true that fewer people can afford to build an RV? Sure, prices jumped up recently, but until the pandemic, they were not going up much faster than inflation, i.e. RV kits were not actually getting much less affordable. Also: Given the way that wealth distribution in the US has been shifting over the past few decades, the number of people who make six figures (or whatever income you consider appropriate for barely being able to afford an RV) has actually been going up, i.e. the fraction of the US population that can afford expensive hobbies like ours has been going up.

Relative to Vans orders, I wonder what MOSAIC will do (...) With the introduction of higher performance, more capable aircraft in the LSA category, will the equation shift away from Vans? Will the build/buy calculus get close enough...

I think that depends on whether the MOSAIC minimum stall speed is increased.

If it's not increased, then MOSAIC LSAs will probably still not include airplanes as fast or as roomy as an RV-10 or RV-14 (but, yes, LSAs will come closer in size and speed, which could eat into RV-10/14 sales).

If it's increased, then I'm sure that the RV-14 (or whichever two-seater Van's thinks would sell best) and the RV-10 will be available alongside the RV-12 as factory-built S-LSAs.

Edit: What I'm curious about is whether anyone will buy an RV-12 after MOSAIC passes. The RV-12 is less expensive than many of its competitors; However, in a post-MOSAIC world, it doesn't have much more going for it. You could ask the same question about the Icon, Vashon, Tecnams, and other S-LSAs currently in the market, and maybe the kits too (although most LSA kits seem to also be already available in heavier/higher-powered versions for builders who don't need to stay within the LSA limits).
 
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What reduction in market? Remember, it was at least partially Vans attempt at supplying a rapidly expanding market that got them into this mess in the first place. Prices have gone up, yes - but I don't see anything that looks like a market reduction.
AeroEngineer said "(1) This is debatable. And (2) Even if he's right and fewer people could afford to build an RV in 2020 than in 1990-2000". I am right, I can't afford to build one now. Was hoping to start one next summer but the latest increases just won't allow. Small sample I know, but it is a reduction of one. And I'm confident I'm not alone. And before ya'll jump on the "it can be done cheaper" replies. I was already planning simple vfr, build my own engine, fixed pitch prop, and at least some second hand kits.
 
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Will the build/buy calculus get close enough, that only those that really want to build will go that path?
I believe that it has always been so. I personally loved the build process, but if I hadn’t I would have bailed after the tail kit. Even with final size punched holes, QB kits, etc., no one in their right mind would build if they didn’t find some pleasure in the work. What has changed in the last half dozen years is that used prices have soared.
 
I think the main cost drivers for the high priced RVs are the brand new Lycoming engine and the brand new Hartzell CS propeller, and the 787 level IFR panel.
I 've browsed the various build posts and lots of builders don't have issues in equipping their RVs to the max. This includes the smaller RV8 and RV7 too. I think FlightChop mentioned his RV14 is closer to $500K with all the trimming, and this was before the Covid price hike.

For me, I am looking for a rebuildable angle valve engine for my next RV15 project. Since I know all I needed to know about riveting, I need to start learning how to rebuild engine. Without an economical option for engine and prop, the future RV15 project is not financially feasible.
 
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I think FlightChop mentioned his RV14 is closer to $500K with all the trimming, and this was before the Covid price hike.
I don't think that's even possible, unless you paid top-shelf price for all the labor for someone else to build it for you - which of course is against EAB rules. I think that was exaggeration for the sake of Youtube.
 
Maybe I misheard it but 250k is way outside my financial mean
He spared no expense. Still very possible under 175 at today's prices and that is using an empennage kit that cost more than a 10 empennage ? MNS
 
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I don't think that's even possible, unless you paid top-shelf price for all the labor for someone else to build it for you - which of course is against EAB rules. I think that was exaggeration for the sake of Youtube.
If anyone actually thinks Flightchops built that airplane or paid for most of it, I have some ocean front property in TN to sell you.

There is a reason it is a flying billboard.

Also remember that he is from Canada.
 
But yes, I know that this is not what Jjackh10 meant. He meant that, as prices go up, fewer people can afford to build an RV. However: (1) This is debatable.
Not really. It's established fact, that as prices rise, less people can afford things.

That said, a rising tide floats all boats. As prices rise on, well, literally *everything* right now, from food to housing to aircraft, the price for a certified aircraft gets even more out of reach, so maybe more people who would have bought a certified aircraft are moving to the A-B world at the same time people who were looking at A-B to start are backing away.

The range of prices on RV's right now is insane though. You can buy a flying RV-4 here on VAF for $40K right now, and we're talking here about a creampuff RV-14 that cost north of $250K.

Whoever it was just a few posts earlier who said they couldn't afford to build anymore, buy the RV-4 that's for sale and start flying. It'll get your foot in the door.
 
Since Van’s was previously selling kits at a loss, selling a smaller number at a profit will probably be an improvement.
At least they can size the company appropriately for whatever it sells if they don’t repeat past mistakes.
Doesn’t matter how big your soup bowl is if you eat with a fork.
 
Not really. It's established fact, that as prices rise, less people can afford things.

But if the number of people (and fraction of the population) in the upper income brackets increases, then it's possible that more people can afford things, even if prices rise.

Of course, with the price increases during the pandemic and during Chapter 11 (i.e. from 2020 to 2024), fewer people will be able to afford airplanes (in 2024 compared with 2020).

But with the change in wealth distribution (i.e. from 1980 to 2020), it's possible that more people will be able to afford airplanes (in 2020 compared with 1980).

That would mean that the general trend (over my lifetime) is more people being able to afford the airplanes, except for a brief (but, yes, dramatic) discontinuity in that trend during the past ~4 years.

In any case... I'm very happy that the reorg plan was approved and that Van's is now able to sell kits at a profit again. And I am sorry for folks for whom this put the dream of building an RV beyond financial reach. That does suck.
 
And I am sorry for folks for whom this put the dream of building an RV beyond financial reach. That does suck.
Yes, it does suck - but the truth is that those people would not be building an RV anyway. Either it would be too expensive (todays reality) or Vans wouldn't exist anymore (almost reality). The prices of the previous kits were unrealistically low, and all buyers in the last 5 years essentially got an unrealized discount, that Vans (and the bankers) have now figured out was way too deep a discount.

Vans is still the best deal around (by far) for a top-shelf EAB airplane. It's just that the shelf got placed a little higher.
 
Yes, it does suck - but the truth is that those people would not be building an RV anyway. Either it would be too expensive (todays reality) or Vans wouldn't exist anymore (almost reality). The prices of the previous kits were unrealistically low, and all buyers in the last 5 years essentially got an unrealized discount, that Vans (and the bankers) have now figured out was way too deep a discount.

Vans is still the best deal around (by far) for a top-shelf EAB airplane. It's just that the shelf got placed a little higher.
Prices of kits and parts has increased substantially, not only due to inflation, but also to help pay for the LCP remediation and the bankruptcy process. It will be interesting to see if prices may reduce somewhat in future, once the multi-million dollar costs have been recovered.
 
I usually try to stay out of threads like this and can understand both side I guess.

But having worked in corporate America, has anyone of the Vans executives/boards members been 'let go'? Or are the same people now running the new/reorganized Vans? I understand there are new COO, CFO and a "interim" CEO (whatever that means).

It has been my experience that when profits drop so do the people responsible for the drop.
 
I usually try to stay out of threads like this and can understand both side I guess.

But having worked in corporate America, has anyone of the Vans executives/boards members been 'let go'? Or are the same people now running the new/reorganized Vans? I understand there are new COO, CFO and a "interim" CEO (whatever that means).

It has been my experience that when profits drop so do the people responsible for the drop.
Well two of them retired not long before they filed. Seems they got out while the getting was good. There was no board to speak of before. Appears that Rian and Greg got demoted but Rian somehow ends up on the new board.
 
Thanks. Interesting.

While I hope for the best, good smart business people make a difference. And yes, money/profit matters. Can't say I'm overly impressed with the the reorg.

I fully understand our passion, it is still disposable income that drive our passion.

Best regards
 
Well two of them retired not long before they filed. Seems they got out while the getting was good. There was no board to speak of before. Appears that Rian and Greg got demoted but Rian somehow ends up on the new board.
This is just my opinion, if I had two people ,that I had entrusted to run my business, and they this kind of thing happen , they would be the first that were Axed ! That being said , just maybe Van wasn’t paying attention to what was happening is the reason they are still there? Only Van knows the answer to this .
At any rate, there are people that will no be able to afford a Vans aircraft now , with the price increase.
 
This is just my opinion, if I had two people ,that I had entrusted to run my business, and they this kind of thing happen , they would be the first that were Axed ! That being said , just maybe Van wasn’t paying attention to what was happening is the reason they are still there? Only Van knows the answer to this .
At any rate, there are people that will no be able to afford a Vans aircraft now , with the price increase.
I think someone once said in one of these threads that people tend to get promoted one level past their competency.
Given how much “tribal knowledge” that exists at Vans it’s likely much better for the business to demote people back to what they were good at than fire them and loose their knowledge.
Firing people as punishment may end up hurting the company more than the individual, especially in small companies.
 
I think someone once said in one of these threads that people tend to get promoted one level past their competency.
Given how much “tribal knowledge” that exists at Vans it’s likely much better for the business to demote people back to what they were good at than fire them and loose their knowledge.
Firing people as punishment may end up hurting the company more than the individual, especially in small companies.
Promoting a person past their competency is a management problem for allowing that to happen .
As far as knowledge goes in an employee, there’s always someone that can be trained to do a job , may take some work to train that person to do the job correctly .
In some cases they may not be as good as the one you let go , that’s just the way it is.
Firing a person from their job is not necessarily punishment . It happens all the time in business .
These are just my thoughts after having a successful business for 37 years that I retired from .I went through a lot of people and those 37 years . There was very few of them that were there for the full duration , I can think of only two , and I overall 40 employees on a daily basis , six days a week. When thinking about it, I probably went through several hundred. But that’s just the way it is when you run a business.
I understand it’s extremely difficult to find good help that you can rely on , and trust .
 
Vans is still the best deal around (by far) for a top-shelf EAB airplane. It's just that the shelf got placed a little higher.
I think the kits have incredible value given the performance envelope, especially if you build from a standard kit. Those who want the quickbuild have to eat much higher cost of labor. A couple of items that really increase the build cost are NEW engine and NEW propeller. Vans didn't make money on engine before, and after the huge engine price inflation,
 
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