Gates a big investor in aircraft start-up

Speaking at Flight School, an offshoot of the PC Forum here run by News.com publisher CNET Networks, Eclipse CEO Vern Raburn acknowledged that the world's richest man--and his former boss at Microsoft--is one of the many equity investors in the company. Gates holds the second-largest stake, behind another Fortune 500 individual, he said. To date, Eclipse has not formally disclosed its investors.

The Albuquerque, N.M.-based company is working on the Eclipse 500, a six-seater that can fly at a maximum speed of 375 knots. Designed for flights of about 300 miles to 600 miles, the plane, which will sell for $1.3 million, will likely be used by companies promoting on-demand flight services. Raburn said he expects the company to get Federal Aviation Administration approval to use the planes in a commercial setting in about a year.

Raising money is a serious issue for the company and others with new ideas for transportation. Eclipse has designed the plane and said it will remain the manufacturer when it goes into commercial production. Production facilities cost money. So far, the 450-employee company has raised $400 million in debt and equity, and most of that total is equity, Raburn said. About $175 million alone was spent on nonrecurring engineering costs.

Planes also don't easily lend themselves to standardized components. "All of the parts are custom-designed. There are 40,000 parts in it," Raburn said.

Aircraft like the Eclipse 500, however, will eventually change the way planes are made. For one thing, the engine, which comes from Pratt & Whitney, is incredibly small--about 14 inches in diameter. Smaller engines enable engineers to eliminate much of the weight of the plane, which leads to better fuel efficiency and distance. Mass production of such engines can reduce costs.

"All of the advances in this field have occurred because of breakthroughs in propulsion," Raburn said. The Wright brothers, for example, were successful largely because they were the first to use an aluminum block engine, "which changed the thrust to weight ratio," he said. (Raburn participated in a wind tunnel test of the Wright's plane, which determined that its prop was 82 percent efficient.)

The Eclipse designers have also eliminated about 60 percent of the rivets on the plane, using strong welds instead. Many of the traditional mechanical functions on a plane are performed by semiconductors and software, he added.

Besides cutting costs, these design changes also cut weight--key for airplanes.

"We live and die by grams," Raburn said.

There will be no bathroom on the Eclipse 500.

"We modeled our airplane on a car, and most people don't have a lavatory in their car," he deadpanned.