Van’s Aircraft, which filed for Chapter 11 bankruptcy protection last Monday, announced Saturday morning that it will be updating order forms and raising kit prices “approximately 32%,” the result of “an intensive internal assessment and cost review.”
According to the company, “Prices of individual parts and components will also be increasing, some more than 32%, and others less. While these price changes are significant, they are also necessary. Based upon our review of competitive products, even with these changes Van’s continues to be the value and performance leader in light aircraft manufacturing.”
In addition, Van’s is changing how it handles customer deposits. According to the company, “Deposits received for kits will be held in our newly established customer deposit account, which is not used for Van’s general operating expenses. Your kit deposit will remain in the customer deposit account until we start to manufacture, source, and or assemble the components of your kit. At that time, we will send you a ‘Notice of Production Commencement’ and thereafter, we will move your deposit from the customer deposit account into Van’s operating account. Approximately 60 days before we crate your kit, we will contact you to let you know that you are within our ‘Kit Crating Window’ and you will be given 14 days to submit the remaining balance due for your order. More details on the timing of deposits and payments are set forth in the purchase agreement that you will need to sign as part of placing your order.”
From now on, kit orders will require a 35% deposit that must be made within 14 days of order placement. “If Van’s has not received a deposit within 14 days of an order being submitted, the pending order will be canceled without further notice,” the company says.
Van’s is also changing its policies around how it packages and sells airplane kits. “Moving forward, Van’s is standardizing our kit offerings. We have reviewed what is included (or not included) in each kit and made a number of changes. In addition, we are implementing a no-deletions policy and revising our kit deposit terms and payment schedule. The changes to our kit prices and policies apply to new orders, as well as orders that were placed before the company filed for Chapter 11 bankruptcy protection. Van’s will soon communicate with customers who had unfulfilled, open orders about these changes, and give them an opportunity to review our modification to their previous order(s) and to accept the new terms, conditions, and pricing.”
Van’s, with these moves, has changed its longstanding policy of allowing “deletions” from airframe kits. “Historically, Van’s allowed customers to make numerous additions, deletions, modifications, and customizations to each kit order (whether a standard or quick build kit). This led to a substantial variance in the number of kits that could be picked, crated, and shipped per day, which ultimately impacted our purchasing, planning, costs, and revenue. Thus, we can no longer continue these practices,” the company says. Van’s is continuing to offer different options per airframe, but the number of variations will be narrowed sharply due to this no-deletions policy. Van’s does say that “Customers can always order any additional parts/items they need via our web store or by phone; however, these orders will be packaged and shipped separately from the crated kit.”
Van’s says “these changes are necessary for efficient warehouse operations and will help ensure that Van’s can deliver kits and parts to all customers in a timely and cost-effective manner.”
Van’s was in bankruptcy court in Oregon on Thursday where it disclosed that it expects around 70% of customers with pending orders will agree to higher pricing to move forward. At that time, Van’s had not disclosed the amount of the increase. A second hearing is scheduled for December 19.