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Cirrus Jet (combined thread)

Peter, as you know only too well, everything in aviation involves risk and this is no different. Look at Eclipse as a good example but we could go back over the past 50 years and find many others.

Positions are for sale in the secondary market for about $150 to $200k but these give you the right to take delivery for $1.55 million ($1.39 plus inflation) so your total cost is $1.75 plus options plus vat.

Personally, I feel that this will be a successful product and that the current pricing of delivery positions in the secondary market represents good value.

I believe that for groups of 4 to 6 pilots who are looking for a serious IFR airplane and who will be able to make the commitment to get the jet type rating, this will be a great option. And LOADS OF FUN!!!

Assuming 6 partners and an all in price of $1.9 million it works out to $316k each or in Sterling £204k. If you finance 50% then it is £100k each.

I am assuming you can organise things to get the VAT back.

If you are interested in a share, then lets discuss. Oh, by the way….it is a JET. (:

EGKB Biggin Hill London

Just been to the bank, got a loan for 10 options. That’s going to fund my retirement flying!

So that’s sorted.

The bank just wanted me to buy a small insurance policy, to cover

  • the project being scrapped
  • the project being delayed by say 10 years
  • Cirrus investors pulling the plug on Cirrus

so I am asking for quotes right now.

Administrator
Shoreham EGKA, United Kingdom

That’s the risk, or similar, you will have with every investment or new project … right?

A german banker would NEVER support such a project, and that’s why our airplane production in Germany is so impressive …

An American banker wouldn’t support it either, which is why these firms get potential customers to fund it, hopefully with enough momentum to keep the froth bubbling for long enough.

Take the Eclipse. The original price, or anywhere near it, required the air taxi model to take off big-time. But that never made sense. I had a discussion with one guy, very close to it at the time, who thought it was bollocks.

Administrator
Shoreham EGKA, United Kingdom

In the 1990’s US investors and bankers invested many millions into the certification of the SR2x series. It would not have happened without them.

Progress is always very exiting but on this one, I don’t have a clear view on the attempt yet. It might very well do 300 kts but there will a trade off somewhere.

If you have to buy an airplane today to upgrade from a high performance single piston, what are your options?

1. A Jetprop conversion which is now a mature product that gives you turbine reliability, lower acquisition and maintenance cost but falls short on many operational levels 2. M600 when it will be available from a historical manufacturer Piper who is a bit struggling at the time. I find it a risky proposal right now.
3. A TBM that is bullet proof, fast and sexy but will cost you more to buy. The higher residual value and inclusive maintenance program would make it a good choice for the ones who can afford a new one. A used one is certainly an option for the ones who can not go for new but operating costs will be a bit higher. Daher is a sound supplier.
4. A PC12 for the ones who need more space and have to trade on speed, pay close a $1M more and expect 20% operating costs over the previous one and deal with the Apex avionics. Pilatus is also a safe and sound supplier.
5. A Cessna Mustang for the ones who have jet fever but in my view, you get most inconvenience of a jet with no advantages over single engine turbine.
6. A Cessna M2 where you get more speed and is still a single pilot airplane if you can afford to pay twice as much as the TBM on operating costs and are ready to take on a serious depreciation. To me this is the perfect example of the “last plane” in a mature pilot’s career. If not, I find it harder to justify.

More airplane (Premier, Phenom 300) is not realistic for a single private pilot so the Cirrus jet is a new niche…too new for my taste right now. I guess the Eclipse experience left a few scars in my thought process: I would not buy one for the 2 first years and there are too many unknowns to consider it a contender…A parachute does not cut it for me and it looks like it will require to compromise on too many factors: Payload, range, altitude, etc…

Cutting through the marketing of each option, if this is to be operated by a private single pilot, you need an airplane that is easy to fly: Fuel up, load up, take off and land short, fly fast and far with intuitive avionics.

These are all in a significant expense bracket so the product needs to seriously deliver and be as much as a sound investment as possible (or the least ridiculous one). Now, this is a relative of course as some with larger means may find it entertaining or others be captured by the parachute pitch.

A proven model and great known performance looks like a better choice to me…I guess I am getting older… :)

EGKB LFQQ EBAW

US investors and bankers invested many millions into the certification of the SR2x

What did they take as security? Equity, or similar?

If you have to buy an airplane today to upgrade from a high performance single piston, what are your options?

Yes – a great Q to which there is no good answer. All the options are severe compromises IF your mission profile includes low level flying (below FL200 ), sightseeing and getting photos. In fact in that case there isn’t a solution with one plane. If there was, I would be flying one now.

If you just want to go A to B, high altitude IFR, it becomes simple: Money.

I would argue that for Europe the TBM (I have 1.5hrs in one ) is the best single pilot option if you don’t want to carry much weight (say, 4 big blokes plus golf clubs). Virtually all of Europe is within reach from anywhere else. The limit of range (not at 300kt ) is UK to Crete. 500m tarmac is fine too.

The Jetprop is a poor man’s TBM. But it is the first real step from a SEP, as you wind up the money counter.

Administrator
Shoreham EGKA, United Kingdom

@David

Very good analysis but the key factors in my mind is the price and the manufacturer. The high speed cruise, payload, baggage size, etc are all important but not major factors.

Cirrus is a very stable and profitable manufacturer and now owned by CAIGA who have invested $100 million to see the jet through to FAA certification. This company is not going to “go away in a puff of smoke”. Lots of service centers and maintanence organisations worldwide. 5,000 aircraft install base, a portion of whom are perfect step up customers for the Jet.

The price at $2 million for a Jet aircraft is a real game changer. I think that this will be raised after certification but even at $2.5 million it presents extremely good value when compared to the competition. With 550 positions sold, that is about $1 billion in revenue so I think the company is sustainable.

EGKB Biggin Hill London

Cirrus_Man wrote:

Cirrus is a very stable and profitable manufacturer

What do the profits look like? Is it published somewhere? What’s the balance sheet?

Cirrus_Man wrote:

With 550 positions sold, that is about $1 billion in revenue so I think the company is sustainable.

As you hold several positions yourself as you say, you should be aware that a position does not mean an actual order by an end user of the product. You are trying to sell on the positions and until 550 positions have been actually sold to end users who are then going to pay and accept the jet, this is nothing but a speculative financial trick to create hype and use customers to fund the company. A solid company does not use such means.

The profitability and balance sheet numbers are not made public but based on the increase in sales, decision to buy back the parts business and hire a lot more people, and expand factor space by 40,000 square feet, open Knoxville facility, contract CAE to build a $9 million full motion sim for Vision type training etc etc, I am assuming that there is good profitability.

See below (Peter, I have deleted the egregious marketing elements from the press release to focus on the facts)

Yes positions are being traded in the secondary market but each position was sold to someone who “at that time” wanted to take delivery. Maybe some positions will be cancelled but given that most of them allow a purchase at a discount, I suspect that the “market” will eventually allocate those positions to people who want delivery. It will take time but once the aircraft is certified, I think the positions will become much more attractive(and scarce).

Cirrus is a solid company but I agree that it is unfortunate that the Jet positions were sold over many years and 2008 did not help. I take your point that selling positions is a “low cost financing means” but this has worked for some companies like ICON who seem to also be on the path to profitability but time will tell.

Cirrus Aircraft Deliveries in 2014 Drive Strongest Performance in Six Years
Duluth, Minn. (11 February 2015) – Cirrus Aircraft today announced that new aircraft shipments in 2014 were the best company performance since 2008 as the Cirrus SR22 maintained its position as the best-selling airplane in its segment for the 12th year in a row. New unit deliveries for 2014 totaled 308, a 12 percent increase over 2013, securing the industry’s leading market share for the category. Cirrus Aircraft has now delivered over 5,800 new aircraft and the global Cirrus fleet has amassed over six million flight hours. In July 2014, Cirrus Aircraft made the strategic decision to return its parts and aftermarket logistics service to Duluth, recognizing that in-house capabilities are a key driver of the Cirrus ownership and operating experience. “Global parts availability and efficient distribution are a critical component of the ownership experience our customers have with Cirrus Aircraft and its Authorized Service Center network,” said Carrie Oakland, Executive Director of Service and Support for Cirrus Aircraft. “Our investment in Cirrus Direct is already providing increased inventory availability, smoother communication and greater convenience. It’s one more example of our commitment to a world-class ownership experience,” Oakland added.
Company Growth and Expansion in Duluth
Growth in programs across the organization resulted in a 10 percent increase in personnel in 2014. Cirrus currently has over 800 employees globally and plans to continue adding associates in 2015 in many areas, including production, quality, design and engineering.
To accommodate growth principally driven by the Vision Jet program, Cirrus has expanded its facilities in Duluth by adding approximately 40,000 square feet of off-airport space. Initial functions are mainly machining, sub-assembly production and select research and development activities. At full capacity, approximately 50 employees will occupy the new space.

EGKB Biggin Hill London
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