AS2's Demise Reverberates Across Aviation Supply Chain

Supersonic aircraft developer Aerion’s sudden decision to cease operations of its AS2 program after 18 years of development reverberated across the intended supply chain and among operators that had expressed commitments to buy the future business jet.

The startup aimed to build 300 AS2s in the first decade of production; on May 21 it said it had a sales backlog of $11.2 billion.

Fractional ownership fleet operator NetJets in March said it had obtained “rights to purchase” up to 20 AS2s. “Following Aerion’s announcement, NetJets’ addition of supersonic jets to its fleet is on hold for the time being. However, we remain interested in the future of supersonic aircraft and will investigate other ventures,” the company said.

Rival Flexjet announced a firm order for 20 AS2s at the NBAA convention in November 2015.

“Flexjet ordered its AS2s from Aerion Supersonic in 2015 and the company has been a supporter of the program since then,” said Kenneth Ricci, principal with parent company Directional Aviation. 

“We were particularly impressed with the recent design changes and innovations generated by [Aerion CEO] Tom Vice and his current team,” Ricci said. “While we are disappointed to hear from the company that they are ceasing operations, we understand the vast investment required by such programs to bring them to fruition and the inherent risks involved.”

The AS2 program brought together many of the biggest names in aerospace. Boeing was an investor, as was aerostructures manufacturer Spirit AeroSystems.

In 2018, Aerion selected GE Aviation to supply its Affinity turbofan engine for the delta wing trijet, which was expected to cruise at Mach 1.4 to a supersonic range of 4,200 nm.

GE Aviation has halted work on the AS2’s Affinity engine and moved 170 engineers working on the program to other projects, says Perry Bradley, a GE spokesperson. GE began ramping down work on the engine earlier this spring. 

While any new engine program has challenges, there were no particular development challenges with the Affinity engine, Bradley says. 

Aerion had forged an agreement with GE to fund the development of its engine, a reduced bypass CFM56 derivative, in exchange for exclusive rights to the engine, says Richard Aboulafia, Teal Group analyst.

“This greatly increased their nonrecurring bill, which probably helped kill Aerion,” Aboulafia said. “To the best of my knowledge, this combined engine-airframe development effort has only been done once. By Honda. And it succeeded, because Honda.”

GE declined to discuss its arrangement with Aerion. 

Until recently, it was thought that GE had been evaluating the exhaust configuration. Rising costs associated with the development of the engine are believed to have been part of Aerion's financial issues. Industry sources say that, despite the design complexity, it was financial rather than technical issues that slowed the engine program.

Aerion acknowledged on May 21 that it had ceased work on a program it had originally launched in 2003, citing its inability to close on a new round of capital needed to transition the AS2 into production. Plans had called for production of the $120 million, eight-10 passenger supersonic jet to begin in 2023, with first flight in 2024.

Aerion has not provided details of what specifically went wrong, but industry sources say discussions on another funding round were close to finalization. Negotiations are thought to have involved a new potential shareholder but were dependent on securing further matching commitments from at least one of the existing backers. 

One of these was Boeing, which had announced it was taking a stake in Aerion in early 2019 but had slowed down its investment as part of its financial restructuring to offset the effects of the COVID-19 pandemic and the grounding of the 737 MAX.

Aerion designated Spirit AeroSystems to provide AS2 forward fuselage components with plans to produce 36 assemblies a month at full rate. It also designated Honeywell Aerospace for the flight deck avionics and connectivity suite; BAE Systems for the fly-by-wire flight control system; Universal Avionics for the enhanced flight vision system with SkyLens head-wearable display; and Collins Aerospace for stabilizer and rudder actuation systems.

In April 2020, Florida Gov. Ron DeSantis announced that Reno, Nevada-based Aerion would build a new headquarters and production facility at Orlando Melbourne International Airport (MLB). The planned Aerion Park involved a $300 investment and would create at least 675 jobs on Florida’s recovering Space Coast by 2026.

In January this year, Aerion said it had concluded an agreement with design, engineering and construction firm Haskell to build Aerion Park on a 110-acre site at MLB from 2021-22.