Aviation manufacturing deal stalls again

Posted: Thursday, February 10, 2000

Kinetic Aviation Inc.'s attempt to open a manufacturing facility in Alaska has failed again.

After trying unsuccessfully to work a deal with Soldotna, the company set its sights on Wasilla. But months of negotiating ended Friday, when Kinetic president and founder Bill Montagne, unhappy with incentives offered by the city, pulled the plug on the deal.

Kinetic Aviation, a California-based company, has been looking for a place in Alaska to produce the Mountain Goat aircraft for nearly two years.

Soldotna Mayor Ken Lancaster said the Mountain Goat is a good fit for Alaska production because it is ideally suited for Bush flying, and the vast majority of approximately 1,000 early orders came from Alaska.

"It's a 21st century Super Cub," Lancaster said. "It can fly slower, it can fly faster, uses less fuel and carries twice as much weight as the Super Cub."

The problem with the deal, though, was two-fold, Lancaster said -- the Mountain Goat has not been certified for flight by the Federal Aviation Administration and the company is still short of investment capital to get production moving.

Although the wheels of certification have been in motion for more than six months, the FAA has yet to approve the plane for general use. Montagne, aircraft inventor and Kinetic Aviation's only employee, is the only person allowed to fly the plane. Until certification is complete, the plane can neither be manufactured nor sold.

FAA difficulties are tied up with the company's other major problem -- financing.

Kinetic needs to pay more than $700,000 in fees before certification can be completed. According to its business plan, the company also will need $5 million to establish a manufacturing facility.

Lancaster said Soldotna was prepared to work with the company by offering a shop at the Soldotna airport to use, as well as other incentives, but Montagne did not have enough capital to go forward.

"They still needed cash dollars," the mayor said.

The city council was unwilling to put forth an investment, though.

Montagne then focused on the deal with Wasilla. During several months working with economic developer/planner Ric Davidge, Wasilla was working under the impression an investor was found for the bulk of the cash outlay.

However, around the end of last year, Montagne said the capital fell through. Davidge worked to find other sources of funding and offered for the city to build a $2.2 million facility for production.

Wasilla Mayor Sarah Palin said Kinetic expected too much from the city. At the Jan. 24 meeting, the Wasilla City Council took up the matter.

"The city council liked everything, except the building," Palin said.

The mayor said Wasilla has an annual budget of roughly $7 million, $1.5 million of which goes into capital projects.

"The council didn't look favorably on spending more than we had on a speculative project," she said.

Palin said she believed Montagne was not ready to work with the realities of the Alaska economy.

"Bill told me the last couple of weeks (before the council meeting) there were cities across the U.S. ready to write him a check," she said. "Alaska evidently isn't like other, more established economies in the Lower 48."

"I don't know any city in Alaska that would have been able to provide for Kinetic what (Montagne) expected."

Montagne has not gotten in touch with the city of Wasilla since the council's vote, but Palin said she is sure the company will not settle there or any place else in the state.

"My impression is that they are not going to be in Alaska," she said. "He used the word 'incompetent' when he talked about the people in Alaska."



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