Van's Aircraft announces price increases

Broader concern over the potentially existential threat to the company if too many customers reject the higher prices was reflected in pricing concessions offered by at least two major vendors—Hartzell and Dynon.

Van’s Aircraft, founded more than 50 years ago, has produced more than 11,000 aircraft, and needs 70 percent of the roughly 4,800 customers with unfilled orders to accept higher prices to make reorganization feasible, the company has said in court documents and hearings. The Oregon firm has a few weeks left to figure out if it will convert enough contracts to higher prices paid to be able to reorganize—or face potential liquidation if no viable reorganization plan is approved by the court and no buyer emerges to take over in such a case.

Customers who reject the higher prices will be pushed into the pool of unsecured creditors who must file a claim and wait months, at minimum, to seek recovery through the bankruptcy proceeding. Accepting the higher price would create a new contract. The company is working to fulfill these updated orders, having recently reported nearly 100 deliveries since customers began accepting higher prices for airplane kit orders. The latest update from the company, posted January 27, extends a previous deadline to accept or reject orders for aircraft kits, with a two-week decision timeframe to be stipulated in individual notices that were to be delivered to all customers with unfilled orders that include engines, propellers, avionics, or any combination of these.

“Customers who receive these notices will be given 14 days to decide whether to accept or reject these modified orders,” the company stated. “We realize that many customers with orders for Van’s airframe kits who are facing the January 31 deadline also have open orders for third-party items. Some of those customers have been waiting to see what their cost increases will be on these third-party items before deciding whether to modify or reject their airframe kit orders. If you receive an official notice to modify or reject a third-party item order and you have not yet decided to modify or reject your airframe kit order, your deadline to modify or reject your airframe kit order is extended to the same date by which you must decide to modify or reject your third-party item order.”

Customers have faced aircraft kit price increases reported to average around 30 percent, though at least one customer reported facing a much steeper percentage increase of 54 percent in a recent court filing.

Van’s Aircraft has its own deadline looming, with a reorganization plan due to be filed in early March.

The new component price increases vary by manufacturer. Hartzell propellers purchased through Van’s Aircraft will increase 3 percent, while Sensenich and MT propellers will cost 6 percent more than original order price, and that same 6-percent increase will apply to RV–12 avionics and powerplant kits, according to the online notice. Customers with Lycoming engines on order will face the steepest hike: either a 12-percent increase over the original order price, or 2024 pricing, whichever is lower.

“We know these price increases create hardship for our customers. However, without taking these steps and making these price changes, there simply is not a feasible path forward for Van’s Aircraft,” the company stated. “Increasing these prices allows us to remain in business to provide parts, kits, and support for the thousands of builders and owners of Van’s products, and to be around to support each of you for years to come.”

Van’s Aircraft noted that “special accommodations made by Hartzell” allowed the company to hold the applicable price “increase to a minimum,” while Dynon, a leading supplier of avionics for experimental aircraft, offered affected Van’s Aircraft customers a 5-percent rebate.

“The difficulties that Vans has experienced over the last six months is known to us. We have seen the effects through decreased sales to RV builders, and know the pain firsthand from our own employees who are in the process of building RVs,” Dynon President Robert Hamilton wrote in the statement, distributed via email and social media, and posted online with a rebate form attached. “My message today is simple: We want to help. Therefore, we are offering a special discount to those builders who are directly affected by the change in pricing on aircraft kits they had previously put deposits on.”

The court has final authority over deadlines, and all other aspects of the company’s operations, during the Chapter 11 process, and has not yet adjusted the February 12 deadline for creditors to file claims against Van’s Aircraft. The two-week timeframe noted by Van’s Aircraft will closely coincide with that court-set date, depending on the timing of delivery to each customer. It means the company should know by the middle of February whether it has re-closed enough sales to proceed with reorganization.