LEGENDARY KIT MANUFACTURER ANNOUNCES CASH FLOW ISSUES
In October this year, Van’s Aircraft announced they were facing “serious cash flow issues, which must be addressed quickly”. Known as the world’s most successful kit aircraft manufacturer, the news of financial struggles at Van’s was shocking for aviation enthusiasts around the world. It also raised serious concern for the future of the company. So, what does the future hold for Van’s Aircraft, and its 11,000-strong fleet?
To understand the future, it’s important to get a grasp of how the organisation’s issues came about. The COVID-19 pandemic in 2020/21 left a lot of people with vastly more time on their hands. Many took this opportunity to build their dream aircraft, with the company reporting “the largest months of kit sales in the history of Van’s Aircraft” in January, February and March 2021.
This massive, sustained growth was a great boon to Van’s in increasingly uncertain times, but a problem soon unfolded. The company found that an assembler of their Quick Build (QB) kits in the Philippines had made changes to the primer they were using, which was causing corrosion issues in a number of kits, some already delivered to customers. Some issues were able to be rectified, but for many of them, replacements were the only option.
To supply replacements while also trying to fulfill an unprecedented number of orders required a massive ramp-up in production. Even at full capacity, the time cost involved with punching parts was causing significant delays. In early 2022, following extensive evaluation and testing, Van’s introduced a laser cutting process to manufacture some parts at a much higher rate.
The troubles seemed to have been solved, until Van’s began receiving reports of cracks forming around some laser-cut holes. The company immediately launched an investigation, and found that hot spots on hole edges from parts manufactured by a specific vendor were causing the probability of cracking. Van’s had provided specific cutting paths for every part to avoid this problem; however, the vendor had reprogrammed their own tooling paths.
These two problems have contributed significantly to the company’s cash flow issues, as millions had been poured into rectifying them. Coupled with skyrocketing shipping costs and significant inflation on raw materials, Van’s soon found themselves on the verge of disaster.
The good news is that confidence in the company remains high. Van’s have been praised for their swift and thorough investigations, actions and overall transparency through this difficult period, with support flowing from across the globe. The company has appointed Mikael Via as interim CEO, the man responsible for rescuing Glasair Aviation from bankruptcy in the early 2000s. The company went into a two-week “internal assessment” in mid-November, which will help Van’s to recalibrate and formulate a plan for the next chapter in a 50+ year story.
Van’s aren’t out of the woods just yet, but it seems they’re well positioned to rebound. With the support of one of the world’s largest ownership bases behind them, there’s hope this legendary company will continue to thrive into the future.
