Off the ground: Local businessman provides lift, leadership to small jet maker
It was Jan. 9, a “typical day” for Mason Holland.
He woke before dawn that Wednesday at his creekfront house across from the Daniel Island Club and headed to the airport, where his pilot and plane were waiting.
Holland met a customer for breakfast in Austin, Texas, and another for lunch in Dallas. He flew to Albuquerque for a 3 p.m. meeting and stayed in New Mexico until that Friday, when he returned home to spend the weekend with his wife and young sons.
How did Holland crisscross the country as if it were the Lowcountry, a feat he acknowledges is “sort of insane”?
The big-picture answer is a successful career in business that has supplied the means and motivation. But the literal answer is the Eclipse, the miniature, twin-engine jet that is at once Holland’s air limousine and his biggest bet to date.
“I like to get home in time for dinner with the kids, and the Eclipse allows me to do that,” Holland explained. “I’m actually Eclipse’s perfect customer.”
But Holland, 48, is not just an Eclipse customer; he’s also the boss.
And as chairman and CEO of Eclipse Aerospace, he’s looking forward to an emergent 2013, highlighted by the company’s first delivery of its new plane model this summer.
Speaking last month in “the Charleston flight deck,” the glass boardroom of his Daniel Island office where the table is fashioned from a wing and the chairs contain nosepieces of Ferrari Formula One race cars, he recounted the journey from customer to chief executive.
A former stockbroker who made his fortune in Charleston by founding American Pensions Inc. and then Benefitfocus, Holland ordered one of the cutting-edge jets in 2006. But Eclipse Aviation went bankrupt in 2008, and he lost his deposit.
“It was a lot,” Holland recalled. “It was close to seven figures.”
Instead of wallowing in that misfortune, he assembled an investment group and bought Eclipse out of bankruptcy. They paid $40 million, a bargain considering Eclipse had attracted $1.4 billion in investment over its history, and set to fulfilling the promise of the jet program that captivated the aviation world when it was conceived more than a decade ago.
They’ve been refurbishing the 260-odd Eclipse 500s that did make it into the hands of customers, upgrading Eclipse 500s they bought back into freshly warrantied “Total Eclipses,” and finalizing the Eclipse 550 for first delivery in July.
The turnaround has impressed industry insiders including Ernest Arvai.
“It’s made a nice recovery from what it once was,” Arvai said of Eclipse.
“They’ve got a nice design. They’ve got a nice airplane,” said Arvai, CEO of the New Hampshire-based Arvai Group. “Now the question is, can they make a go in the market?”
A major determinant — of the plane’s marketability and the company’s future success — is the 550’s price. Eclipse Aviation had tried to sell its 500 model for as little as $1 million, a losing plan given what it costs to build them. The 550 lists at just under $2.7 million.
“The problem with the old company wasn’t the product at all,” Holland said of his strategy.
“They priced it to the market before they knew what it cost to build it,” he said. “And everybody in the industry said, ‘You’re crazy.’ They thought that volume would solve that problem.”
“In software, you can do that,” Holland said. “In manufacturing, you can’t do that.”
Eclipse’s plan is to deliver 14 or 15 550s this year, while also upfitting the final 500s. Then it will ramp up the production rate into the 30s or 40s next year, and settle into a “steady state” of about four planes per month, around 50 per year, by 2015. Arvai called that plan “conservative” but “achievable.”
Holland said Eclipse could make up to 120 per year, if there’s a market.
Tom Klein, the president of Mount Pleasant-based PhoneDog who keeps his plane, a Cirrus, in Holland’s hangar, called the purchase of Eclipse “a very wise and shrewd investment” but said selling the 550 could prove tricky because it’s such a niche product.
“It’s not the minivan of jets,” he said. “It’s the sports car of jets.”
Klein, however, deferred to Holland’s business acumen and aviation enthusiasm.
“I don’t doubt he knows exactly what he’s doing,” he said.
Local business consultant John Carroll has known Holland since the API days and has helped guide Benefitfocus.
“I don’t know if he has the Midas touch,” Carroll said. “I do know that if I was looking at a company that Mason was heading up, I would look at it very favorably.”
The son of a teacher and a contracts administrator for Newport News Shipbuilding, Holland spent the first half of his life in Norfolk, Va.
He went to college at Old Dominion, where he met his wife, Mary, and then worked as a stockbroker for First Investors before moving to Charleston on the first day of 1988.
Holland intended to open a branch of First Investors here, but the stock market crash changed his plans, and he started American Pensions Inc. instead.
“The ’90s were a blur to me,” Holland said last month. “I worked so hard.”
In 2000, Holland and API colleague Shawn Jenkins founded Benefitfocus, the Daniel Island-based software company that now has more than 700 employees.
Though Holland sold API in 2003, he remains chairman of Benefitfocus and has his main office on the third floor of the newly named Design + Engineering building, which he owns along with several other commercial properties in the Charleston area.
Like many planes nowadays, the Eclipse 550 is composed of parts from around the globe.
Major components come from a Polish subsidiary of Sikorsky, which is Eclipse’s largest shareholder and whose CEO owns one. TIGHITCO, a composites manufacturer owned by North Charleston’s InterTech Group, provides fairings and other composite parts.
It all comes together in Albuquerque, where Eclipse uses a patented technique called friction-stir welding to connect its aluminum fuselage without rivets. Apple uses a similar technique on its iPad minis, Holland noted.
Eclipse uses another patented technology, a fire-suppression agent called PhostrEx, instead of the long-standard but ozone-depleting halon.
The Eclipse also features all-electric controls, like the bigger plane program with a Charleston connection, the Boeing 787 Dreamliner.
The 787 is the focus of an ongoing Federal Aviation Administration review, but Holland is not concerned about that troubled jet program or his jet.
“Since it was based on the 500, we have already straightened out most of the bugs,” he said.
Arvai said that better be the case, given Eclipse’s history with burning customers.
“Getting the product right the first time is essential for Mason and his group,” he said.
Compared to its complex technology and global supply chain, Holland’s pitch for the Eclipse is comparatively simple.
“It’s the most efficient and economical light jet, twin-engine jet that has ever been produced,” he explained.
Burning as little as 59 gallons per hour, the Eclipse is 40 percent more fuel-efficient than its closest competitor, the larger Cessna Mustang, Holland claimed. While it’s more expensive than prop planes, it has speed — 430 mph — and safety features that they can’t boast, like auto-throttle and antilock brakes.
“For a little more money, you can have a jet and fly twice as fast,” Arvai said of prop-plane shoppers.
Since 70 percent of private trips are for three passengers or fewer going less than 750 nautical miles, Holland said, the Eclipse, which can go 1,125 nautical miles, fits that market perfectly.
“We want to take away the lift from the NetJets of the world,” Holland said, referring to billionaire Warren Buffett’s charter company. “Getting on a plane with seven to eight empty seats around you is just not efficient.”
Holland said Eclipse’s customers range from owner-pilots to businessmen who regularly fly around the Southeast. David Hudson, managing partner of Hudson Automotive, whose holdings include a Nissan dealership in North Charleston, is both.
Hudson, 39, bought his Total Eclipse in August 2011 and flies it almost weekly to keep tabs on his five car dealerships between here and Kentucky.
“I was always intrigued by the airplane but was never comfortable to spend that kind of money and make that kind of investment in a company that I wasn’t sure about,” Hudson said last month.
But when Holland bought the company and Sikorsky invested, “I finally got comfortable enough to make the decision to buy one,” he said. “It really is an amazing little machine.”
Eclipse is certified to sell and fly the jet in 49 countries, and Holland plans to make the full tour of industry shows this year, from the National Automobile Dealers Association conference this month in Orlando to the headliner Paris Air Show in late June, around the same time of the projected delivery of the first 550.
He’s working on getting a toy-size model of the Eclipse made and has already shot a series of striking aerial photos for a coffee-table book, “Eclipse Over Charleston,” to be published later this year. The plane program is already the subject of a self-published book Holland supported called “The Great Eclipse” by Johns Island author and consultant Dennis Maxwell.
One of Eclipse’s biggest potential customers is the U.S. Air Force, which is looking for a replacement fleet for its decades-old training planes. Holland believes Eclipse 550s, potentially 100 or more, would serve as perfect trainers for future fighter pilots while saving the cash-strapped federal government more than $1 billion in the process.
“Whenever you can save something that starts with a ‘B,’ then it’s going to raise some eyebrows, right?” he said.
But Eclipse Aerospace’s biggest customer for now, indirectly, is Holland himself, through the North Charleston-based North American Jet Charter Group, a company he bought the same month he bought Eclipse.
“One manufactures them and the other puts them to work,” Holland said of the complementary businesses.
As for Holland, despite considerable financial success to date and diverse holdings going forward, he has no plans to ease off the throttle. Especially not with all those 550s on order and dreams of building larger Eclipse jets “way in the future.”
“I enjoy everything that I do with all the businesses,” he said. “I don’t ever feel like I go to work. It’s fun.”Reach Brendan Kearney at 937-5906 and follow him on Twitter at @kearney_brendan.