Sounding Board: Five Minutes With Geoff Miller, American Aviation Industries Managing Director
Of all the things Geoff Miller has tried, retirement is the only one he seems to have struggled with. “I’ll work ’til the day I die,” he says. “I just can’t stand sitting still.” He first tried it in the early 1990s, after winning a court battle with GE arising from an aborted program to remanufacture Lockheed JetStar aircraft with turbofan engines. Instead, he began making bespoke one-of-a-kind guns, for a client list that included everyone from Gulf War commander Norman Schwarzkopf to President George W. Bush. Now 80 and living in Paso Robles, California, he is still going to extreme lengths to avoid a life of leisure. His company, American Aviation Industries, has for several years been touting the Turbine Eagle project—a plan to remanufacture Cessna 414As and 421Cs with Pratt & Whitney PT6-135A powerplants—for a marketplace which, he believes, could number up to 600 aircraft.
Q. What is it that, you believe, makes the Turbine Eagle a viable program for today’s market?
A. First off, we know 100 low-lead gasoline is on its way out—so the entry-level twin-turboprop today is the Beechcraft 260, which is a $6 million airplane. The other thing is the emergence of the single-engine turboprop airplanes; the Piper, the [Daher] TBM, and the Pilatus. There is still in general aviation a paranoia about flying in single-engine airplanes. It’s more of a perception than a reality because these things are very reliable.
Also, the 421Cs and 414As are fairly big airplanes. By the time we get done with them, they’ll have flushing toilets with outside servicing, and we can haul eight people. The Piper and the TBM are four-passenger airplanes; the Pilatus is a big airplane but it’s fairly slow. We’re going to get this thing up to at least 327 kts, and we’re hoping for 340. Speed sells.
The 421C and 414A airframes are good for about 30,000 hr. before they’re going to fatigue out. The average one has between three and 7,000 hours on it. We don’t have to build an airframe, which is the major cost. The component cost is getting cheaper and cheaper, especially the avionics. So we can put the airplane out for a little less than $3 million. And with the new tax laws that Trump put in that nobody’s changed, in the United States today you can write a third of it off on the day you buy it. So essentially, you’ve got a 330-kt., eight-passenger turboprop airplane for $2 million out of pocket.
Q. You’re still seeking investors willing to put up another $12 million to get the program off the ground. What work is still to be done?
A. Half the money is to finish up the engineering. I’m trying to increase the pressurization by a pound and a half, so we’re going to have to over pressurize the airplane, put strain gauges on it, and go fly it for a few hours to make the FAA happy. The airframe can take it. That means we can go up to 30,000, 32,000 ft. without having to put on a nose hose. At 28,000 ft. you’ve got about a 10,000-ft. pressurization in the cockpit. If we can go up another pound, we can hold a 9,000 cabin at 32,000 ft., so we’re good. The other thing that we’re going to have to do is certify the Hartzell five-bladed props on the airplane. It’s already been certified on a million other airplanes with the same engine, so it’s a matter of taking it up and flying it and get vibration studies on it.
That’s going to take us probably about $4 million. We’re figuring on $6 million, because stuff always comes up. And then the other $6 million is G&A [general and administrative expenses] for two years, and marketing for two years.
We’re giving the investor 100% of the profits until they get all their money back, which should be about 25 airplanes. And we will surely sell 25 airplanes. After that, he becomes a 50% equity owner. And if we start to build up to 10, 20, 30, possibly 40 airplanes a year, depending on how well we do, the guy would get somewhere between an 80% and 115% annual return on his investment.
Q. If the proposition is so solid, why do you think you’ve had difficulty convincing people to commit?
A. We had our money lined up, but our key investor had too much to drink at his daughter’s wedding in Hawaii, went scuba diving and drowned.
The problem is, I’m 80 years old. I was friends with a lot of guys where I could call them up and have the $12 million by tomorrow, but they’re all my age and have their money set up in trusts, or they’re dead. So, I’m going to talk to these young guys in New York and overseas, and they’re going, ‘Well, old airplanes ...’ It’s a real tough learning curve to explain that these things are not ancient and falling apart. All these little startups are raising millions of dollars for this electric stuff. It’s the tooth-fairy business, you know?
Q. Your market research that predicted likely sales of 400-600 airplanes was conducted a few years ago. Do you think the COVID pandemic, and how it seems to be bringing new customers into the private aviation industry, might have increased those numbers?
A. Absolutely. I have an orthopedic surgeon, there’s five of them in his office, and besides practicing here at least one day a week, one or two of them go to LA or San Francisco or Fresno. They formed a partnership and bought a Piper Meridian or Matrix, or whatever they call the damn thing; and they have a part-time pilot, so they can go out here to the Paso Robles Airport in 8 min. and be in Santa Monica or some other airport in 25 or 30 min. We’re starting to see more and more of that.
Q. You have previous experience of a similar project, getting the FanStar program—replacing four engines on a Lockheed JetStar with two turbofans—to first flight in 1986. But instead of going into production, you ended up in court with your engine partner, GE. (According to a UPI article dated July 6, 1990, a Los Angeles Superior Court jury ordered General Electric to pay more than $64 million to American Aviation Industries. And in turn, GE was awarded $9 million to $10 million in a countersuit in the same trial.)
A. We had a bunch of investors wanting to put money in the company. We had everybody all lined up after the first flight. We needed another $4 million. GE came out, we had a big meeting. The plane performed as we wanted. They said, ‘Forget about any more investors, we’re going to do the damn thing.’ They had all our stock as collateral. We didn’t hear anything for about two or three weeks, and then we were informed that General Electric now owns the company.
The mistake they made with us was, I had somebody that was over 70 years old who was a stockholder, and in California, if you’ve got a stockholder who’s over 70 or in terminal health you can get on the fast track and get a trial in six months. They were planning to keep us in depositions for four or five years. The trial took five months—I was on the stand for 21 days. They spent $12 million on lawyers; we spent $11 million. We proved you could sue GE and win. But by the time we got through the trial, we lost three or four years, and Gulfstream was now delivering airplanes. So we took our money and went south. I came up here in the country to essentially retire, got bored, and started building the best guns in the world.
Q. Your gun business’s clients included test pilot Chuck Yeager. How did you meet him?
A. He was stealing food from us! When we were building the [FanStar] airplane at Mojave, he had just retired from the Air Force and was flying the Tigershark. Mojave is a decent town now but back then it was just a [expletive]. We were working 24 hr. a day to get this damn thing up, and we had 50 people out there, so I had a deal with a deli in Lancaster that, four times a day, they would bring up these huge trays of sandwiches and cauldrons of spaghetti, coffee and drinks. One Saturday morning I got on my motorcycle and drove out to Mojave and there’s Yeager, sitting on a 50-gal. oil drum, eating a sandwich and drinking a Coke. I go to one of the guys and say, ‘How long has this been going on?’ And he says, ‘Oh, about a month.’ So I went over to Chuck and said, ‘You know, you’re stealing our food.’ And he says, ‘Yeah. Nothing to eat in Mojave, and Edwards is a half-hour ride.’ We were friends ever since.