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Adam A700 Micro Jet:
 ($2.25 million price range)

AAI Acquisition Launches Search For 'Strategic Partner'
Says Initial Efforts To Market Composites Expertise Have Been Successful

AAI Acquisition, Inc. (AAIA) announced Sunday it is seeking a strategic partner to breathe new life into the fledgling company.

As ANN reported, AAIA purchased the assets of the former Adam Aircraft in April 2008, and announced its intent to continue with certification of the A700 light jet at Oshkosh... but things took a tumble for the Russian-backed investment concern soon after, as declining economic conditions hit the venture capital markets hard.

In late October, AAIA chief Jack Braly announced what the company termed a "strategic realignment," halting further development and certification work on the stillborn A700 and laying off most of its workforce. AAIA subsequently launched an effort to market its engineering expertise to other companies, in order to stay in business.

Steve Patrick, Vice President of Business Development, said this weekend that AAI has been successful in that effort... and is now ready to expand through new investment.

"As we continue to develop this aspect of AAIA," Patrick said, "it is now appropriate to seek new investment partners. Based on our initial efforts, we are building a viable business base for our engineering solutions and services while retaining the option to re-launch the A700 business jet."

AAIA's portfolio includes aerospace design capabilities spanning composite applications to avionics/electrical STC support to rapid reaction fabrication capability.

Principal targets for that initiative include the aerospace and custom automotive sectors, as well as organizations that could benefit from the application of cutting edge composite design and manufacturing skills using low cost, out-of-autoclave methods that AAIA says were perfected while developing the A700 business jet.

FMI: www.aaiacquisition.com, www.industrial-investors.com

AAI Acquisition On The Ropes Due To Economic Slump
Investment Capital "Pared Down" On Fall Of Russian Stocks

ANN REALTIME REPORTING 10.29.08 1600 EDT: Aero-News has been chasing down numerous News-Spy tips over the past 18 hours, stating Englewood, CO-based AAI Acquisition Inc. -- which purchased the assets of the former Adam Aircraft out of bankruptcy earlier this year -- shut its doors Monday and laid off workers. Calls to AAI headquarters and personnel for information have gone unanswered.

ANN has since confirmed the company is cutting back operations rather severely. While AAI isn't technically out of business, the company has "suspended all flight testing and further development" on the A700 twinjet, according to Robert Olislagers, Executive Director for the Arapahoe County Public Airport Authority at Centennial Airport (APA), home to AAI's headquarters.

"It appears investment capital has been pared down... due to last week's fall of the Russian stock market," said Olislagers, who added he had been unaware of any layoffs at AAI until he visited the company's headquarters himself Tuesday "after I received [ANN's] phone call."

Olislagers said company officials reassured him AAI is "definitely NOT closing its doors," and is still receiving investment capital... though substantially less than originally planned.

Exact figures on the number of layoffs number were not released, though Olislagers said it appears "most" workers at AAI were laid off Monday, though the company did retain "a number of senior engineers."

A formal announcement from AAI is planned later Tuesday, Olislagers added.

As ANN reported, Adam Aircraft filed for Chapter 7 liquidation on February 15. Two months later, the US Bankruptcy Court for the District of Colorado approved the sale of Adam's assets to AAI Acquisition, Inc., a Delaware corporation backed financially by the Russian-controlled Industrial Investors group of companies.

AAI kept relatively quiet about its plans until Oshkosh, when company President and CEO Jack Braly announced AAI planned to continue development of the A700 very-light jet and see it through to certification, expected early in 2010. The company discontinued production of the jet's predecessor, the problematic A500 inline twin-engine piston aircraft.

During the NBAA 2008 convention earlier this month, Braly said AAI employed about 200 people at its facilities at APA -- many of them former Adam Aircraft workers. The company had originally planned to double its workforce by the end of the year... but that was before the bottom fell out of the US stock market, affecting markets and investors around the world.

FMI: www.a700jet.com

AAIA's Braly Announces 'Strategic Realignment'
Development Of A700 Suspended As BoD Eyes Economic Conditions

Confirming earlier reports to ANN, on Tuesday AAI Acquisition (AAIA) President and CEO Jack Braly announced what the company termed a "strategic realignment" of the company's goals and objectives in response to worldwide economic conditions.

Braly said AAIA's development schedule, which had originally projected certification and first delivery of the company's A700 all-composite Very Light Jet (VLJ) program, is being reconfigured in light of recent economic developments around the world.

Members of AAIA's investment team and Board of Directors are currently evaluating economic and market conditions before announcing a new schedule for the A700 twin-engine business jet. Flight test and other development activity have been suspended. AAIA's workforce is being pared to a size necessary to sustain the company while a new schedule and strategic plan are developed.

Originally, AAIA had projected FAA certification and first deliveries of the A700 in 2010. Members of AAIA's workforce were notified of the realignment -- and resulting layoffs, which AAIA declined to give firm numbers on -- at the close of business Monday.

Braly declined to speculate when a new schedule might be announced, noting that worldwide economic conditions are unprecedented and will need to play out somewhat before a proper evaluation and plan can be formulated.

FMI: www.a700jet.com

Adam Aircraft Lives To Fly Another Day

Court Approves Russian-Owned Company's Acquisition Of Assets

Adam Aircraft will fly again... thanks to more than little outside help. Last week, the United States Bankruptcy Court for the District of Colorado approved the sale of the assets of Adam Aircraft Industries, Inc. to AAI Acquisition, Inc., a Delaware corporation which is part of the Russian-controlled Industrial Investors group of companies.

As ANN reported, Adam Aircraft filed for Chapter 7 bankruptcy on February 15, 2008. Legal counsel for the purchaser was Industrial Investors' advisor, Orrick, Herrington & Sutcliffe LLP, whose Washington, DC-based team included corporate partner Olga Sirodoeva and associate Paul Zarnowiecki, and bankruptcy partner Richard Wyron; Holland & Hart LLP was its local Colorado counsel.

Legal counsel for Jeffrey A. Weinman, the trustee in bankruptcy, was Lindquist & Vennum, whose Denver-based team included bankruptcy partner J. Smiley and corporate partner Harold G. Morris.

The purchase price was $10 million plus amounts due under the contracts assumed by the purchaser.

While Adam Aircraft currently has two aircraft product offerings -- the A500 inline-twin and A700 very light jet -- there's little mention of the former in company statements. "We plan to revive Adam Aircraft's operations, including continuing the process of certification for the A700 jet," said Dmitry Shokhin, Vice President of AAI Acquisition, who added the company plans to 'broaden' its product line, as well.

Industrial Investors is a large Russian private equity asset management company, specializing in transportation projects. The company manages assets of over $3 billion US. The company has a Colorado connection, as well... as former Governor Bill Owens is on the board of directors of FESCO, one of the companies of the Industrial Investors group.

Industrial Investors own Russian air-taxi operator "Dexter" and the first business jet airline "Velvet Club."  Industrial Investors expect the new acquisition to hold its own ground as the manufacturer of very light jets for air taxi and general aviation markets.

FMI: www.adamaircraft.com

Reports: Buyer Agrees To Pay $10 Million For Adam Aircraft

Hearing On Sale Expected This Week

They may be down... but not necessarily out. Less than two months after Adam Aircraft Industries announced it would enter Chapter 7 liquidation, a possible buyer has emerged that might allow the A500 inline piston twin aircraft, and its A700 VLJ sibling, to return to the skies.

The Denver Post reports the trustee in the bankruptcy case agreed Saturday to sell Adam to an entity called AAI Acquisition for the sum of $10 million, plus settling up with some of the planemaker's other creditors. Paul Zarnowiecki at the Washington, DC-based law firm Orrick, Herrington & Sutcliffe LLP is listed as the contact person for the buyer.

As ANN reported, Adam Aircraft filed for liquidation February 19, eight days after the company shut down its operations in Denver and Pueblo, CO. Hints of significant problems at Adam came to light the month before, with the company's announcement of layoffs for close to 300 workers, and the suspension of operations in Pueblo and Ogden, UT.

At the time, the company cited the need to overcome past issues with the certification of its A700 very light jet, and obtain capital to see that program through to TC, as reasons for the decision.

Adam delivered about seven A500s to customers in 10 years of operations, and had pinned its hopes on the A700 -- which had attracted far more orders than the A500, including several from air taxi operators, and also shares several components with its piston-powered sibling.

A hearing on the sale is to occur Wednesday, the Post added. It is believed AAI Acquisition's bid was the only qualified one received; it's not known yet whether the new owner will hire former Adam workers.

FMI: www.adamaircraft.com, www.orrick.com

Aero-News Alert: Adam Aircraft Files For Chapter 7 Liquidation
Bankruptcy Court Petition Lists "Hundreds" Of Creditors

ANN REALTIME REPORTING 02.19.08 1430 EST: Aero-News has learned Adam Aircraft has filed for Chapter 7 liquidation, effectively dashing hopes the company would manage an 11th-hour funding miracle and continue operations.

"In the absence of additional funding for the company to continue operations, it is ... in the best interest of the company, its creditors, shareholders and other interested parties" to file Chapter 7, the company said in a court filing, according to the Denver Business Journal.

The Denver Post reports the petition was filed last Friday in US Bankruptcy Court in Colorado, and includes "hundreds" of creditors -- including company founder George F. "Rick" Adam, Jeppesen Sanderson, several city and state offices and utilities throughout Colorado and Utah, and Denver's "Wings Over The Rockies" Air and Space Museum.

Also listed as creditors are those who had taken delivery of Adam's A500 twin piston aircraft -- including Mike Leahy, who took delivery of the first A500, and the New Mexico State Patrol, which took delivery of the last A500 shortly before the company announced it was in serious financial trouble.

As ANN reported last week, Adam shut down ALL operations February 11, and laid off its remaining workers... but held open the possibility of a last-minute bailout, with an Adam spokesperson calling rumors of an impending bankruptcy filing "premature."

Sadly, that hope proved overly-optimistic... and the last Adam official, CEO John D. Wolf, tendered his resignation effective February 15.

Hints of significant problems at Adam came to light in January, with the company's annoucement of the layoffs of close to 300 workers, and the suspension of the planemaker's operations in Utah. At the time, the company cited the need to overcome past issues with the certification of its A700 very light jet, and obtain capital to see that program through to TC, as reasons for the decision.

One week later, details of a January 15 letter to stockholders from Wolf came to light, outlining the company's financial issues. The letter stated the company's future hinged on completion of two successful financing transactions, the first of which called for Adam to raise $30.5 million by the end of January. The company reportedly secured $5.5 million of that in late December... but follow-up funding never materialized.

The company delivered approximately seven A500s to customers.

FMI: www.adamaircraft.com

ADAM AIRCRAFT SUSPENDS OPERATIONS

Adam Aircraft has suspended operations at its Colorado facilities. In a short news release, the company said the action was taken "due to the inability of the company to come to terms with their lender for funding necessary to maintain business operations." The news release doesn't identify the lender, but previous rounds of financing, totalling almost $300 million, have included such major investment houses as Goldman, Sachs and Co. and Hunt Growth Capital as participants.

In January, Adam announced that it needed $30.5 million in interim financing to allow its current financial partner, Citibank, the time to find the $75 million to $150 million it needed to get into production and start selling against a backlog of orders the company estimated to be worth $1 billion, according to some reports. In a letter to shareholders leaked to the media in late January, CEO John Wolf said that if the company didn't have the $30.5 million by the end of January, the company was likely doomed. Monday's announcement seems to echo that sentiment while leaving the door for a miracle open a crack. "The company is currently exploring all of its alternatives and will provide further guidance when decisions are made, which is expected to be later this week," the release said.

As little as a week ago, company officials were claiming that the search for funding was continuing and that production of the fifth A700 jet was under way. The jet has not achieved FAA certification but the A700 push/pull piston twin has. Adam has reportedly sold 17 of the piston aircraft and delivered seven. Meanwhile, the city of Pueblo, Colo. didn't wait for Monday's announcement to demand $2 million in incentives it says should be returned. The city says Adam promised to create 448 jobs and actually created about 90, most of which disappeared in a round of layoffs and plant consolidations in January. The city of Pueblo has placed liens against Adam's equipment in the city-owned buildings that were part of the incentive package.

Report: Letter To Stockholders Details Adam Aircraft Woes
Company Must Secure Two Rounds Of Financing To Avoid Liquidation

A recent letter to stockholders in Adam Aircraft details the plane maker's current financial woes, and spells out what needs to happen for the company to survive.

The Wichita Eagle reports the letter, dated January 15, states the company's future hinges on completion of two successful financing transactions -- the first of which calls for Adam to raise $30.5 million by the end of this month. The company reportedly secured $5.5 million of that in late December.

"A successful completion of this financing transaction will enable AAI to continue to operate until a second, larger equity financing of at least $100 million led by Citibank can take place on or before May 31," said the letter, signed by Adam Aircraft CEO John Wolf.

If either of those funding rounds proves unsuccessful, the company would be forced into liquidation, the letter continues -- meaning stockholders would have "little possibility of a recovery" of previous investments.

As ANN reported last Thursday, Adam laid off approximately 300 of its 800 workers, and halted operations at its production facility in Ogden, UT. The company cited a need to conserve existing funds as the planemaker works to overcome past issues with the certification of its A700 very light jet, and obtain capital to see that program through to TC, as reason for the layoffs.

To sweeten the deal, Adam is also offering a 49.9 equity interest in a newly-formed subsidiary company to those who invest this month.

"I believe that AAI is offering its stockholders a unique investment opportunity today," the letter said. "I believe the Company is on the verge of a major upturn in revenue."

"It's like every other loan or any other type of funding," said company spokeswoman Shelly Simi, of the drive to obtain financing. "There's always stipulations or requirements and that's what we're working through as every other company would."

The company's present financial difficulties come as Adam had prepared to ramp-up production of its A500 twin-engine prop plane, and is close to obtaining FAA certification for the A700 very-light-jet -- which shares much in common with its piston-powered sibling.

FMI: www.adamaircraft.com

Adam Aircraft Lays Off Over 300 Production Workers
Cites Need To Manage Existing Funds As Company Seeks New Funding

ANN has confirmed with company officials that Adam Aircraft has cut approximately 300 workers from its staff of 800, due to what the company says is a need to conserve existing funds as the planemaker works to overcome past issues with the certification of its A700 very light jet, and obtain capital to see that program through to TC.

"Adam Aircraft Industries is announcing today a strategic adjustment in operations designed to focus on two key objectives: obtain a TC on our A700 jet design and complete our "MPF" initiative," said Adam Aircraft President Duncan Koerbel. "To provide for our future growth, we must be strategic in our focus by managing current cash expenditures to ensure adequate time to secure financing for the long term. We're off to a good start in this effort with assistance from our partner, Citibank, but we need to be able to provide them with sufficient time working with potential investors to secure long term financing."

The layoffs are part of what Adam officials call a "strategic adjustment," that also includes suspension of operations at the company's Ogden, UT facility through early summer. The company will also reschedule completion of the composite lay-up portion of the Ogden facility.

Lay-up and bonding operations for the empennage will be transferred from Adam's Pueblo facility, to Englewood. Machine shop operations will continue in Pueblo, but all other activity will be suspended.

"We regret that these actions will result in a layoff for many of our employees, but it is in the best interest for the long term success of Adam Aircraft Industries. We have two excellent products in the A500 and A700 with a very strong global market and will continue to move the company forward in achieving our goals."

Adam stressed its long-term objectives remain unchanged... and fully intends to return to normal operations once it clears its current hurdles. The company will retain 'MPF' staff, to make sure the company is ready for full-rate production of Adam's A500 twin-piston aircraft in the summer, and future A700 production.

FMI: www.adamaircraft.com

Adam Aircraft Earns TIA For A700 Type Certification
Planemaker Says VLJ Program Remains On Track

Adam Aircraft's quest to certify its latest aircraft received a shot in the arm this week. The planemaker received Type Inspection Authorization for the A700 program from the FAA... authorizing agency representatives to begin flight tests on the A700 for certification credit.

"This event confirms we are on target for achieving FAA certification of the A700 in 2008," said Adam Aircraft President Duncan Koerbel. "We have steadily moved from our first flight of the fully conforming A700 this spring into FAA testing by taking advantage of the commonality with the already certified A500 twin piston as well as over 900 hours of development flying with the first two A700 prototypes."

In order to secure Type Certification of the A700, Adam Aircraft will have four flight test aircraft dedicated to TIA tasks. The FAA TIA validates that Adam Aircraft has submitted all necessary information -- including technical data, required to begin type certification and concurred that the system under test reached a point where it will meet all applicable FAA regulations.

"We are meeting and exceeding our performance goals and will deliver what we believe to be the best value for price, performance and cabin size in the VLJ class," Koerbel said.

"Our first A700 TIA from the FAA is the formal starting point for FAA compliance certification flight testing of the aircraft. This event is a culmination of the efforts of the entire company and is a testament to the work accomplished to date," said John Wolf, Adam Aircraft Chairman and CEO. "We are grateful to the FAA team for their support throughout this process."

"Historically, new aircraft programs that have gone through the rigorous testing to receive a TIA have also successfully obtained a Type Certificate. TIA for the Adam Aircraft Flight Test Program will be the first of many that the company will receive for the A700 which will lead to the final goal of full Type Certification," said Wolf.

Adam Aircraft is currently testing A700 Engine Handling Characteristics. Environmental testing is slated to begin next week at the McKinley Climatic Chamber, located at Florida's Eglin Air Force Base. Aircraft tests are conducted at extreme temperatures and in severe weather conditions including hot weather, cold weather, freezing rain and blowing snow.

Testing will involve Adam Aircraft personnel, Williams International and the FAA.

FMI: www.adamaircraft.com, www.faa.gov
The training center will sport an Advanced Aviation Training Device (AATD) and Virtual Flight Deck (VFD) supplied by Aerosim Technologies, and Flight Training Devices including a full motion Level D simulator developed by Mechtronix Systems Inc. designer and manufacturer of full flight simulators.

The Adam training regimine will also utilize computer based training learning programs created by Pelesys Learning Systems Inc. Both the A500 and A700 will utilize elements of the FAA/Industry Training Standards (FITS) program, a partnership between FAA, Industry, and Academia designed to enhance general aviation safety, including Learner Centered Grading, Single Pilot Resource Management for owner operators and Crew Resource Management for flight department and fleet operators and Scenario Based Training.

SAFERjett is in the process of building the first A700 full motion Level D simulator with Aerosim and Mechtronix which will allow A700 pilots to receive their type rating without flying the actual aircraft. The company’s new 50,000 square foot facility at Alliance Airport will be completed by late 2008.

“SAFERjett has extensive experience in Advanced Qualification Program training that uses proficiency based advancement and a scenario based training theory,” said Paul Hinton, SAFERjett CEO. “These elements are critical in providing a realistic, effective training experience that will properly prepare the Adam Aircraft clients for operation in today’s demanding aviation environment.”

“This is a long term partnership that will mature and will be a part of the new breed of training. While we may compete on execution with other training companies, we will never compete on the content of the program and we look forward to making history,” said Hinton.

FMI: www.saferjett.com, www.adamaircraft.com
Aerosim Technologies is launching their Virtual Flight Deck (VFD TM) and Virtual Procedure Trainer (VPT TM) for the Adam A500 at the 2007 NBAA Conference in Atlanta, Georgia. Both trainers will be on display in the Adam Aircraft booth #4933.

David Thompson, Adam Aircraft Director of Pilot Training comments, "Adam Aircraft is dedicated to providing the highest quality training in the world that is convenient and accessible to our customers. The Aerosim Virtual Flight Deck is vital to this effort. The VFD will allow our customers to become intimate with the systems of their aircraft without taking time away from their day-to-day lives."

The Adam A500 marks Aerosim's move to general aviation aircraft with the Virtual Procedure Trainer. It joins a long list of VPT devices already developed for wide range of commercial aircraft from Boeing, Airbus, Bombardier, Embraer and others. Aerosim Director of Sales, Joe Hartmann says, "We are very excited to bring our proven training technology to the general aviation market." He continues, noting, "Our ability to provide a full range of training devices - including distance learning capabilities - makes us very well suited to this market."

The VPT utilizes simulation to actively engage students in the learning process. For the Adam A500 configuration, four touch panel screens replicate the cockpit and allow students to view and manipulate all panels, controls, indicators and displays therein. The VPT allows real-time interaction with every aircraft system in a structured training environment or in complete free-play mode. Theory, practice, technical details, operational issues and human factors are brought together in a realistic environment.

FMI: www.aerosim.com, www.adamaircraft.com 

Chinese Enterprise Orders 50 Adam Aircraft A700s

Englewood, Colorado, June 6, 2007—- Adam Aircraft announced that Hainan Zhong Hang Tai General Aviation Airlines, the Hainan, China based operating entity of Ameritech Aerospace has placed a firm order for 50 Adam Aircraft A700 VLJs on May 21, 2007. The order was formalized during the European Business Aviation Convention and Exhibition (EBACE) in Geneva, Switzerland.

Adam Aircraft was chosen because of its handling capabilities and innovative look. A leading designer and manufacturer of advanced carbon composite aircraft for the twin piston and very light jet (VLJ) markets, Adam Aircraft provides the largest cabin and greatest value for fleet customers.

"The business plan of the Chinese company has been developed with the goal of capitalizing on the fast growing general aviation market in China with fractional-share program and air taxi operation in mind," said Jason Fan, CEO, Hainan Zhong Hong Tai General Airlines LTD. "Due to the immediate charter and air taxi growth opportunities in China, we made the A700 our choice because it has the largest cabin space of all the VLJs. In addition, the aircraft combines prestige luxury and speed with its innovative twin tails that remind people of a Formula 1 racecar."

There is currently a serious shortage of professional pilots in China, and aircraft management is often faced with difficulties related to flight planning application, ground handling and maintenance for individual aircraft owners. "The A700 owner will be served by a professional pilot/aircraft manager who will be available for all flights and training during a renewable six month period. This new revolutionary program provides the owner with a stress-free aircraft ownership experience," stated Fan.

"We are delighted to partner with Ameritech to bring the A700 into the China aviation market," said Jan D'Angelo, Director International and Fleet Sales. "This order shows that the A700 is truly a worldwide product that will bring innovation to the operators who are offering cost efficient air travel."

Hainan Zhong Hong Tai General Airlines LTD plans to sell the A500 and A700 aircraft for Adam Aircraft and provide lease back options to owners for air taxi operations following delivery of the roomy carbon fiber A700 in 2008.

HZHT GA Airlines LTD web site: www.myairplane.com.cn

The Adam A700 AdamJet is a six-seat civil utility aircraft under development, as of 2004. It is one of several new small jet aircraft known as very light jets, often abbreviated VLJ. The aircraft has been developed in parallel with the generally similar Adam A500, although while that aircraft is piston-engined, the A700 is powered by two Williams FJ33 turbofans.

The prototype first flew on July 28, 2003.

Configuration

As with the earlier-designed A500 piston-engine model, the A700 features a straight tapered wing, a central fuselage, and twin wing-mounted booms which support aft twin rudders linked by a high horizontal stabilizer. Unlike the A500, the A700's two jet engines are mounted on the sides of the fuselage and are not truly thrusting directly on the centerline, which makes part of the design advantages of the A500 configuration moot in the jet model.

In order to balance the now twin rear engines properly, the fuselage is stretched about 4 feet further forwards. In the A500, the front and aft engines roughly balance, though the tail provides balancing down force. In the A700, the longer front fuselage balances the rear engines to some degree.

Specifications (A700)

General characteristics

  • Crew: one or two pilots
  • Capacity: four to six passengers, depending on cabin configuration
  • Length: 40 ft 9 in (12.42 m)
  • Wingspan: 44 ft (13.41 m)
  • Height: 9 ft 7 in (2.93 m)
  • Powerplant: 2× Williams FJ-33-4A , 1,350 lbf () each

Performance

  • Maximum speed: 382 mph (612 km/h)
  • Range: 1,611 miles (2,646 km)
  • Service ceiling: 41,000 ft (12,500 m)