Message-ID: <003301c18bc8$68b07780$7d6c8a90@direcpc.com>
From: "Fred Moreno" <FredMoreno@bigpond.com>
To: "Lancair List" <lancair.list@olsusa.com>
Subject: "EngineAir Controversy" and Turbine Commentary
Date: Sun, 23 Dec 2001 23:41:33 +0800
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Many thanks to Rick, Harry and others for your comments.  I will try to
respond to the questions raised as best I can. I apologize for my long
and wordy response.  These are not simple issues.  Be advised that this
piece of ground is filled with land mines, and I will proceed
accordingly.

First, some comments on the EngineAir issues.

It is VERY important to keep in mind that TWO companies are (were)
involved - old and new.  The original company was started and run by Jim
Rahm and was called EngineAir Power Systems.  For a variety of reasons
buried in history, the company failed leaving customers high and dry and
Jim broke.  Many customers were angry, to say the least.

I met with Jim at Oshkosh, 2000 as he was coming to the end of his rope
(which had a bit of a Gordian Knot in it as well, if you let me mix my
metaphors), and he was open, candid, frustrated, and troubled about the
situation.  I subsequently undertook the initial efforts to try to
salvage something, and spoke to nearly every customer at length.  Except
for Gerry Hanson because Gerry had filed his lawsuit, and I saw no point
in stepping into that particular cross fire.  I found the customers
enthusiastic about the product, but understandably wary of dealing with
the old company.  A lot of wounds were festering, and many serious
concerns were raised.

After a lot of brainstorming with many customers (including Doug Pohl
who pulled particularly hard on his oar) and in an attempt to address
all these issues and step through a potential minefield as best as
possible, a NEW company, Engine Power Systems was set up.  It has new
investors and new management, and is located at a new facility in a new
state.  It is not as Rick expressed a "...new company [that] is nothing
but the old company with some customers paying the bill."  I can see
where that opinion could legitimately arise, but believe me, it ain't
so.  Al Joniec was designated President.  Formerly his role in the old
company had been primarily technical.  The new company bought certain
assets from the old company and was launched about a year ago under the
oversight of a team of customer/investors who are active watchdogs and
sometimes contributors if and when their skills are needed.  None are
paid.  All are volunteering their time and effort because of their love
of aviation.  Doug Pohl was elected to head the investors' group and
serve as the primary liaison with the company.

Additionally, a limited partnership was set up BY and FOR the customers
to manage the cash flows associated with progress payments.  The
original company sold its products much too cheaply, so customers were
asked to pay more to salvage their prior investment.  As I noted in
prior emails, about 90% of the customers agreed to participate in this
new business construction and financing.  The arrangement was the best
we could do to address all the concerns and potential landmines.

Because of the ongoing lawsuit with Gerry Hanson and other potential
problems, the new company was extraordinarily careful and diligent in
how it was set and managed in order to best protect the interests of the
participating customers who volunteered to bring more money to the
party.  In addition, all agreed that the new company would do its utmost
within its means and capability to run as straight and true as possible.

I should note that having a lot of independent, well educated, and
strong willed Lancair (and some other airframe) pilots involved in a
business deal has not been easy because there are lots of ideas about
how to proceed with a task or problem.  And getting consensus is not
always easy.  Al Joniec had a hell of a time with all these "bosses"
even as well intentioned as they were (and are). But there was and still
is a uniform overriding guideline - to take care of customers.

I have dealt with Al Joniec, Doug Pohl, and many other participating
customers (some also being investors) and have found virtually and all
be well intentioned, ethical, professional, and well informed.  But you
need to understand, when you try to pull something as messy as a failed
power plant project out of the mud with lots of grumpy folks involved,
it can be very messy with lots of pitfalls, and some folks are simply
NOT going to get ALL that they ask for.  (Some asked for a lot.)  It is
simply not possible.

I  noted that 90% of the customers of the original company chose to
participate with the new company and the associated partnership.  The
balance declined for a variety of reasons.  All were urged to
participate Except Hanson, for reasons noted above. I don't know him,
and mean nothing negative in my comments.  I just steer clear of
lawsuits when possible.

In some cases with some of the old customers, the situations quickly
became, ah, well, let's use the word "problematical," and leave it at
that.  You can please some of the people some of the time, but you can
not please all of the people all of the time.  Please believe me when I
state that the company's representatives generally did the best they
could given the stringent limitations imposed by the real world.  But
you can not win them all.

A history as complex and messy as this leads to a lot of wounds that
heal as painful scars, and the truth is frequently the first victim when
emotions and egos get involved.  So let's not rehash the past.  A clear
historical portrait is probably not possible.  My suggestion: let us all
hope that the NEW company (and ALL new aviation ventures ) can achieve
some measure of success, and that they all do their best for their
customers.  Recognize that there have been and will be problems.  Let's
hope they can be overcome.  And let us hope the EngineAir product can be
satisfactorily refined and proven to meet its market needs.  I think
this is an achievable goal.  The people involved in the new venture are
honorable and doing the best they can while many are holding down their
normal full time jobs.   Let's also suspend judgment until some time has
past, and be careful about inflammatory commentary.  It is not helpful.

Let's move this forum onto other topics, leave the folks of Engine Power
Systems to work toward their objectives, and return when there is some
solid, documented progress to report.  I think about 6 months should be
about right for a progress report.  Until then, let's talk Lancairs and
other Lancair topics.  Like...

Turbines

I love turbine engines.  I even started a turbine engine company using
venture capital money in the early 80's to develop and sell small, low
pollution stationary turbines for cogeneration applications (combined
heat and power).  I had to kill the company when the Saudis unplugged
their oil wells in 1986 and drove oil prices below $10/barrel.  Third
round venture financing dried up, and so did we.  But I know a bit about
turbines.  I also had the joy of flying Frank Fry's Walther-powered
Lancair IV not once, but twice!  (Frank has developed and sells turbine
engine kits for the Lancair IV from his business, Laser One, in Perth,
Australia.  His installation is beautifully engineered and executed, and
a wonderful thing to fly.)

So here is Fred Moreno's partially biased view on turbines in Lancair
IVs:  They are NEAT.  Smooth, quiet, powerful, fast, climb like hell and
all that stuff.  Wonderful for rejuvenating the hormones.  But....

Here are the "buts" as I see them.

1) Burn fuel.  LOTS of fuel.  More than you expect.  The Walther burns
12 gallons per hour at idle so ground delays are a bit of an issue.  You
can climb at 4000 feet per minute (at 120 knots indicated - it is STEEP)
and get to the flight levels fast, but if (as noted) you must step
climb, you will burn a BUNCH of fuel down low.  Think over 60 gallons
per hour.  Or more if you keep the throttle pushed up while low.  Once
up at altitude you will burn 35 gallons per hour at 24,000 feet, more or
less (probably more).  And the fuel weighs 6.7 pounds per gallon.  So
your hormone hot rod is really a two person airplane if you plan on
covering any territory.  Even then you will be departing at 3500-3600
pounds.  I think I would flight plan at 50-55 gallons for the first
hour, and 35-40 thereafter.  Bring a Platinum Exxon card.

2) You cannot fly low.  Even at modest power settings, the fuel burn at
low altitude is high.  Push the throttle up and the fuel burn is mind
bending.  (Think 60-70 gallons per hour clawing along on the deck.)  So
going west bound in winter to stay out of the wind is NOT an option.
Climb to FL240 and grit your teeth into those 100+ knot head winds.
Think of your range while burning 35 gallons per hour and making (maybe)
200 knots ground speed.  The Cherokees will be down low where 20 knots
of headwind is more the norm.  (Me too.)

3) Turbines degrade with time.  The numbers quoted are for fresh
engines.  Talk to experienced turboprop pilots (King Airs, MU-2, etc.)
and they will tell you that unlike a piston engine that puts out about
the same power old or new, the old turbine burns more fuel and delivers
less power as it ages.  This is because erosion (and corrosion) of
compressor and turbine blades and vanes causes a slow decay in
performance.  Tip clearances increase.  So performance degrades with
time, and the harder you drive it, the faster the decay.  You can run
the turbine right at red line at FL240 if you want, but it will cost you
in more rapidly fading performance and more fuel flow as time wears on.
My brother-in-law (now a Southwest captain) flew MU-2s for years in air
ambulance service, and he said that the fuel burn and performance of an
MU-2 with mid-time or high time engines was no where like what is shown
in the handbook.  Burn more fuel, go slower, or overhaul the engine.
It's like running a TSIO-550.  Pay me in fuel, or pay me in cylinders,
but pay me.

4) I am troubled by the business model using the Walther turbine.  The
current market pricing situation is a strange aberration arising from a
lot of spare engines floating around Eastern Bloc countries that thirst
for U. S. dollars.  I understand that the number of folks in the free
world that can do a truly first class overhaul can be counted on one
hand with lots of digits left over.  You are captive to the Walther
factory for a lot of parts.  I would worry a LOT about the potential
spare parts problems.  (FedEx delivery from Chezkoslovakia?)  Some
overhaulers are trying to refurbish parts that were not designed for
refurbishment.  As I understand it, you can either get a cheap engine
with reasonable overhaul from a good US shop (one and only, I have been
led to believe) or you go to Walther like Lancair has recommended, get a
factory overhaul, and spend $90K plus for the engine, and then a bunch
for propeller, etc.  I do not like being reliant on only one shop and a
Eastern Bloc company far, far away.  Maybe the situation has improved.
Be careful with your due diligence investigation.  Keep eyes fully open.

In the end you need to decide what you want in your airplane.  If you
want a climb-like-hell go-like-hell hot rod to impress that movie star
blonde girl friend on week end excursions, and money is not an issue
(translation: airplane is a toy), go for the turbine.  I have no problem
with toys.  I would own more if I could afford it.  If your mission
statement is for go-fast transportation with some range, speed, and
payload that arrives 10 minutes later with at a more modest cost, think
piston.

For these reasons, I think the turbine and piston airplanes are in very
different markets because I think the owners have very different mission
statements, and very different ego needs.  Go stare in the mirror, look
at your checkbook, and then make your decision.  And either way, be
careful, and have fun.

The opinions and errors are all mine.  Insert two cents into that slot
in front of you.  :-)

Fred Moreno


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