Van’s Aircraft Navigating Bankruptcy: Customers Face Tough Decisions on Price Increases

Van’s Aircraft Navigating Bankruptcy: Customers Face Tough Decisions on Price Increases

Van’s Aircraft, a renowned kitplane manufacturer, is currently grappling with bankruptcy and is striving to steer itself towards financial stability. In a bid to address its financial challenges, the company has announced price increases for engines, propellers, and avionics, ranging from 3 to 12 percent, and is giving customers a two-week window to decide whether to accept or reject these hikes.

The company, which boasts a legacy spanning over 50 years and having produced more than 11,000 aircraft, has emphasized the criticality of customer acceptance to its reorganization efforts. With approximately 70 percent of its 4,800 customers needing to agree to the increased prices, Van’s Aircraft faces a crucial juncture in its path to recovery. Failure to garner adequate support could potentially lead to liquidation if a viable reorganization plan fails to materialize or if no buyer emerges.

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Customers who opt out of the price increases will find themselves among the pool of unsecured creditors, necessitating a prolonged wait for potential recovery through the bankruptcy proceedings. Conversely, accepting the new prices will entail entering into new contracts with the company. Van’s Aircraft is actively working to fulfill updated orders, having already delivered nearly 100 kits since customers began accepting the revised pricing.

The decision-making process for customers has been extended due to the inclusion of non-airframe components in the price adjustments. Notices have been dispatched to all customers with pending orders, providing a 14-day window for decision-making. This extension recognizes that many customers are awaiting clarity on the cost implications for third-party items before finalizing their decisions.

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Despite the hardship imposed by the price increases, Van’s Aircraft asserts that such measures are imperative for its survival. The company underscores its commitment to continuing operations and supporting its customer base for years to come.

Notably, some vendors have offered concessions to mitigate the impact of the price hikes. Hartzell has kept its price increase minimal, while Dynon is providing affected customers with a 5-percent rebate, acknowledging the challenges faced by Van’s Aircraft and its clientele.

As the company approaches its reorganization plan deadline in early March, the decisions made by customers will significantly influence its future trajectory. The court holds authority over critical deadlines and operational aspects during the Chapter 11 process, underscoring the complexity and importance of the ongoing proceedings.

Van’s Aircraft finds itself at a pivotal juncture, balancing the need for financial stability with the concerns of its loyal customer base. The decisions made in the coming weeks will shape the company’s path forward as it navigates the challenges of bankruptcy.

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About the Author: Jim Kerr, Chief Pilot and Aviation Industry Expert

Jim Kerr, with over 35 years in the aerospace sector, is the founder of SkyboundGear, Chairman of LJ Aero, a next-generation aviation data aggregator. A Embry Riddle Aeronautical University alumni and a seasoned Pilot, Jim holds an array of FAA certifications, including Airframe and Powerplant, and Part 107 Commercial Small Unmanned Aircraft Systems (sUAS) remote drone pilot. His extensive piloting experience spans thousands of hours in single and multi-engine aircraft.

At the forefront of aviation advancements, Jim's career has been marked by his contributions as both a skilled pilot and an industry insider. His insights into aircraft manufacturing trends and market dynamics are shaped by his hands-on experience and deep understanding of the aviation sector.

Driven by a passion for aviation, Jim is dedicated to enriching the industry's knowledge base, sharing his expertise to foster a deeper understanding of aviation's evolving landscape among both enthusiasts and professionals.

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