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Van's Aircraft reports cash crunch, prompts concern

'Internal assessment' underway; 'Changes need to be made'

With more than 11,000 kit builds completed by 2022, and hundreds more still in progress, Van’s Aircraft delivered “difficult” news on October 27 about the company’s financial state, and announced a two-week push to conduct an “internal assessment” that is likely to lead to price increases. Meanwhile, refunds are on hold and many customers voiced anxiety.

Van's Aircraft founder Richard "Dick" VanGrunsven posted a video October 27 explaining the company's "difficult" financial situation, and the plan to recover from it. Van's Aircraft image via YouTube.
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Van's Aircraft founder Richard "Dick" VanGrunsven posted a video October 27 explaining the company's "difficult" financial situation, and the plan to recover from it. Van's Aircraft image via YouTube.

Company founder Richard “Dick” VanGrunsven read a prepared statement in a video posted on YouTube, and presented online along with a detailed Q&A addressed to customers that explains the current state of the company, and plans to concentrate—with the help of consultants who specialize in business emergency management—on developing a plan for next steps by mid-November.

“Due to a number of factors, Van’s is facing serious cash flow issues that must be addressed for ongoing operation,” VanGrunsven said in the video, viewed more than 79,000 times by October 30. “We are confident we can work through the situation, but some changes are required. Candidly, since early September, Van’s has only been able to continue operating through loans of operating capital made by my wife and me.”

In the written Q&A, Van’s detailed three primary causes of the situation: a combination of supply chain snarls and increased demand during the COVID-19 pandemic, which caused shipping costs to spike as Van's hired and trained new staff to work on the increased volume of orders; a “multi-million-dollar setback” related to the use of inferior primer on parts sourced overseas, which led to corrosion "forming on a large number of quick build kits" that resulted in many parts being scrapped; and another issue with outsourced parts with holes that were laser-cut rather than punched, with customers reporting cracks around the laser-cut holes. Company tests determined the parts were usable, but many customers requested replacement of affected parts nonetheless.

“This has resulted in an unmanageable number of requests to replace laser-cut parts and cancel orders,” the company stated. “More than 1,800 customers are currently affected by this issue, some of whom have received more than one kit.”

Kitplanes reported the announcement October 27, with the additional detail that Hamstreet and Associates of Portland, Oregon, will provide advisors to assist with the evaluation of current operations and planning for the future. According to that story, Mikael Via, who previously led Glasair Aviation for just over a decade after it was purchased during bankruptcy proceedings, will become interim CEO of Van’s. The company did not immediately respond to an email seeking confirmation.

Van’s noted that refunds will not be issued during the "internal assessment period" expected to conclude in mid-November, nor are returns or cancellations being processed. “You may place orders for parts, but your shipment may be delayed due to temporary employee reassignments during assessment. We will do our best to ensure timely parts shipment.”

The informal online owner group Van’s Air Force posted the announcement in its user forum, with more than 200 replies and 64,000 views by October 30. Concern for the company's long-term health was nearly universal, though many posters noted that the firm has been commendably transparent throughout its fiscal ordeal, a sentiment echoed by kitbuilders Ken and Melissa VeArd, who document their aircraft project on YouTube.

“I personally feel that Van’s is too important to fail,” Ken VeArd said in the video that the couple posted October 28. If Van’s ceased to exist, he continued, the repercussions would extend beyond the homebuilding community, and all the owners of completed aircraft and kits in progress no longer able to source parts. “I think it’d be a huge blow to general aviation as a whole. I do believe if Van’s ceases to exist in the future, it will be the first domino that will really change for the worse general aviation.”

The company celebrated 50 years of making affordable, popular airplane kits in 2022, and made a splash at EAA AirVenture Oshkosh last year with the introduction of the RV–15, the company’s first high-wing design.

“Changes need to be made,” VanGrunsven said in the video posted October 27. “Beginning today Van’s is going to spend the next few weeks performing a focused internal assessment on inventory, production, and shipping capabilities, and overall operating efficiencies. At the same time we will be reviewing our cost to determine what our kit pricing needs to be for us to operate profitably going forward. And most importantly, we'll be evaluating all reasonable means of satisfying builder concerns regarding laser-cut parts, and formalizing our program for getting parts to builders.”

VanGrunsven said the shipment of kits may be delayed while the company conducts the internal assessment, and while the parts inventory is good, the company is “short on cash. So until our cash situation improves, we will not be issuing any refunds.”

VanGrunsven thanked customers for years of loyalty, and closed his message with “I am deeply distressed over the need to communicate our current constraints to you, and I want to personally assure you that we are working very hard to solve these issues, and to return Van's to a strong position to be here to serve you long into the future.”

Jim Moore
Jim Moore
Managing Editor-Digital Media
Digital Media Managing Editor Jim Moore joined AOPA in 2011 and is an instrument-rated private pilot, as well as a certificated remote pilot, who enjoys competition aerobatics and flying drones.
Topics: Experimental, Financial

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