To a large extent, the winglet owners are an investor in the sense they have committed assets tied to the successful outcome of the issue.

Your advice is sound from the business side, but forming an owner's group has a much more immediate use, to interface with EASA and FAA. I don't know what the EASA interface is like, but the FAA interface seems to work better when an organization is involved rather than a collection of individuals.

In the TPE331 FCU AD, the FAA dealt with the TPE331 Council, a group of TPE331 related vendors outside Honeywell who represented maintenance shops, airlines, large users, and some owner type clubs (MU2 among them). At the ACO meeting I attended, the presence of an organization appeared to have far more influence than any individual would have had. The fact the FAA was willing to have such a meeting was a good sign to start with.

The owners are just as much a party to this issue as Tamarack is, maybe even more so. While the FAA won't share Tamarack proprietary data, having a voice at the table is still valuable and the owners can propose unique solutions that Tamarack won't. In the end, there might not be any Tamarack at all, so the owners are the only voice left. The FAA will NOT create a viable solution on its own, somebody has to carry the torch.

I'd think the very first step is to form an informal owners group, appoint a lead, and have that lead contact the lead FAA guy who issues the AD. An in person meeting might be the next step, so selecting a lead near the FAA ACO office where the issue is being addressed would be ideal to allow face to face and easy interaction.

(As an aside, the FCU AD was amended saving owners about $100M and averting a possible grounding due to lack of capacity to implement the original AD terminating action. A big thanks goes out to the TPE331 Council. I'll note that Mitsubishi was the only manufacturer who sent representatives to the meeting (not even Honeywell, who was invited), another indication of the support the MU2 gets despite being so long out of production.)

Mike C.

Hi Mike,

You have forgotten about Cranfield Aerospace, the STC owner that the EASA AD refers directly to, we should be talking about them too. EASA deals directly with the STC holder not Tamarack.

The FAA harmonisation is a unique animal and relies on EASA for the solution as they drove the AD.

Andrew

I'd be surprised if Tamarack's purchase contract doesn't exclude such damages right from the get go.

If not, hugely incompetent lawyers on their side.

Thus, I don't think bankruptcy is due to customer claims, at least not claims with validity.

Mike C.

This STC is as dumb as the geniuses that got a field approval to skin the fuselage of their Staggerwing in aluminum!

Exactly - spot on comment. Successful owners groups that have formed to purchase and support a type generally involve an aircraft or mod that is mature. In those cases it was primarily a case of managing contract manufacturing of established designs. Tamarack is a work in process that will be sucking cash for the foreseeable near-term.

It would seem that the owners have a decision to make now. Other posts state that there are about 90 conversion and that the cost to remove the conversion would take 150 hours and may cost as much as the original conversion. For the sake of argument let's assume that it will cost $150,000 to remove the mod. That means the 90 owners have $13.5 million to spend.

They can rip the mod off their planes now and know with complete certainty that they will have a safe plane that they can fly.

Or they can pool the funds in order to try to buy Tamarack once it goes Chapter 7 (side note - With no revenue coming in for the foreseeable future Tamarack will need cash. Who is going to invest or loan money to Tamarack now?...only someone with deep pockets and a strong stomach to swallow losses that is also a strong believer in the technology and BUSINESS MODEL? That potential investor will secure the assets and company with a loan such that they will own everything).

Now the owners group won't have all $13.5 million available for Tamarack because they have to fund fixed costs on their idle grounded planes (hangar, insurance, some maintenance, avionics licenses, etc.). Let's assume that is $50,000 per year per plane. If it takes a year to perfect the Atlas mod and resolve the AD then $4.5 million will be eaten up by fixed costs on 90 idle jets leaving $9 million for the owners to buy and turn around Tamarack.

However the risk for the owners group is that the mod cannot be fixed easily, requiring more funding and the investment will fail. They will then have to pay the $150,000 to remove the mod regardless. So in the case of the owners buying Tamarack, there is a risk that the owners will wind up paying twice as much for ultimately the same outcome and suffer an idled plane for the entire time.

How strongly does this owners group of 90 believe in the technology? How concerned are they about the opportunity cost of not being able to fly their jets for the foreseeable near-term? How deep are their pockets? What is their stomach for risk? How committed are they to stick together?

Hmmm, I was thinking much smaller, I wasn't suggesting that the owners buy Tamarack. Instead I was thinking that helping to keep them alive (for the short term) would be good for the owners.

The notes from Tamarack suggest that this problem is solved and I believe that Andrew said they don't think the Indy crash was related to winglets so maybe the modified planes can get cleared to fly pretty soon. This still leaves all the problems that Mike talked about. It is hard to envision Tamarack selling winglets after all this so how do they survive? If winglet CJs are allowed to fly, the long term support of the winglets is a question but that question can get kicked down the road for awhile.

Is there a way to make this the insurance comoany’s problem? File a claim that the aircraft is totaled due to this. Let them subrogate with whoever...

I have seen people get their insurance to pay for all kinds of things I would have never thought possible.

Insurance generally requires an event to occur to the insured object to trigger the obligation to pay. I have never seen any kind of property loss insurance that allows a regulatory act to be a loss payment event trigger. I suspect they might exist in some esoteric markets (nuclear power plant?) where the process is itself heavily regulated but that almost crosses the line into a business interruption type of loss, no where near like any aircraft hull policy which fundamentally provides for physical damage from an event to the hull of the plane.

I think most insurers would just laugh at a hull loss claim here - and maybe post the claim on the bulletin board for laughs.

RAS

Insurance generally requires an event to occur to the insured object to trigger the obligation to pay. I have never seen any kind of property loss insurance that allows a regulatory act to be a loss payment event trigger. I suspect they might exist in some esoteric markets (nuclear power plant?) where the process is itself heavily regulated but that almost crosses the line into a business interruption type of loss, no where near like any aircraft hull policy which fundamentally provides for physical damage from an event to the hull of the plane.

I think most insurers would just laugh at a hull loss claim here - and maybe post the claim on the bulletin board for laughs.

RAS

I think there are a few points to keep in mind.

• as annoying as this situation is, EASA is now poised to accept that the existing SBs are the remediation measures to resolve the SB. Remember these were in place before the ADs were issued.
• I am told that the Chapter 11 is accompanied by new capital to support the business when it emerges after the AD is lifted
• When the AD is lifted, this is a product which has been through a second very intense round of certification which should create some confidence
• other than the AD issue, most owners I speak to are really happy with the winglets
• removal is straight labour, no parts so the downside case for owners is dramatically lower than supposed in this thread ie 10-20k not 150k.
• Tamarack was always good to deal with. They provided the SBs free including labour and were always very proactive

In the end, this was not an AD seeking a solution, the process at least in Europe has been Cranfield showing the regulator that the existing solutions work. Those of us affected have obviously suffered greatly but let’s not overdo it.

How can a company be bankrupt if they aren't soon out of money?

With a ch 11 filing, the courts get to make the big decisions, including rejection of the bankruptcy petition entirely if the merits aren't there.

To me, the ch 11 filing seems more aimed at providing a barrier to possible future lawsuits than based on financial fundamentals.


I doubt this makes up for the confidence lost by being grounded.


If you kept the parts they removed. Otherwise, you are buying some new parts (wing tips for example).


Why is nobody doing it then? For $10K, put your plane back into stock condition, fly, and then return it to winglets if/when that gets approved again. For a $2-5M asset, getting it flying again is worth $10K easily.

I don't really believe your numbers on the restoration costs. If they were true, people would be doing it.

Mike C.

I know absolutely nothing about the situation or the winglet modification other than what I have read here. I did visit the Tamarack site but that was pretty general "it does these things better" info.

So, with this issue now alive, what is the real marketability of the modification??

Is it safe? Is it worth the cost/risk?

You know, regardless of the end outcome, the "skunk has been thrown into the jury box".

Jg

How can a company be bankrupt if they aren't soon out of money?

No reports of someone undoing the mod here on BT, on CJP, nor through other sources I have.


Aviation is full of highly optimistic estimates, especially when it comes to cost to do anything, and especially the cost to do something that has never been done before and based solely on a paper assessment.

I remain skeptical it is as easy and low cost as you have indicated. If you don't take the entire airplane back to true stock configuration, then you have to get some sort of approval (STC, field approval, etc) for leaving the plane in a half state with parts of the Tamarack system still inside it (control boxes, wiring, etc). I don't see that being easy from a regulatory standpoint. If you have to remove everything back to stock, that's pretty invasive and will cost a lot and make restoration of the winglets harder.

Mike C.

Mike:

I am aware of at least two aircraft that are in the process of getting them removed as we speak. They wouldn't be posting on CJP or BT about it.

I have no idea what they are paying.

-Jason