He must mean insurance. It is not the actual payouts it is the risk that a family of 4 with two very high earning parents die because of a design fault with the Cirrus (say the parachute not working). They can be hit for a huge bill in the US courts.
I would guess the gross profit would be c. 100M. Have there been payouts worth 30M? That would be a lot of crashes with big injuries or fatalities, for a start.
Yes, but presumably he’s talking about net profit (after all overheads, marketing, dealer margins and salaries etc). That could easily be 1% of T/o, which would be $1.8M.
An insurance premium of $500k wouldn’t surprise me in the slightest.
Yes, but presumably he’s talking about net profit (after all overheads, marketing, dealer margins and salaries etc). That could easily be 1% of T/o, which would be $1.8M.
Sure, but such a statement would be totally disingenuous.
It’s a bit like me saying I trebled my profits, when running a 1M t/o business with a 500k gross profit, where I normally draw out 499k in salary and have reduced my salary to 497k 
The reason I am interested in why these firms bang on about product liability is that the settlements that one actually hears about are few and far between, get watered down massively (from the original headline-reported figures) in appeals, and anyway Cirrus should not have many big ones because of the BRS option and the standard advice to use it in most emergency situations.
I disagree Peter. If he is spending 1/3 of his profit on liability protection then that is fair and represents 1/3 of his production
Jason – if you think my 499k example is not utterly disingenuous then you better tell me when you start a bank, so I can avoid it 
Do you know the difference between fixed costs and variable costs, for example? Net profit is a hugely nebulous figure, easily manipulated.
(having just kicked off a formal complaint against one utterly crap and full of idiots UK institution, this morning)
Please stick to proper informative posts ;-)
It’s a bit like me saying I trebled my profits, when running a 1M t/o business with a 500k gross profit, where I normally draw out 499k in salary and have reduced my salary to 497k
Absolutely. That’s exactly what I said in my first post on this thread!
But if they are now owned by some Chinese company, the Klapmeier might not have so much scope for manipulating the profits by adjusting his own salary. It my be fixed by his Chinese overlords.
Do they publish accounts in the American equiliviant of Companies House?
Jason – if you think my 499k example is not utterly disingenuous then you better tell me when you start a bank, so I can avoid it
Do you know the difference between fixed costs and variable costs, for example? Net profit is a hugely nebulous figure, easily manipulated.
(having just kicked off a formal complaint against one utterly crap and full of idiots UK institution, this morning)
Peter, I do run the equivalent of a bank. Trust me, I spend every waking hour looking at small and medium size corporate creditworthiness. No one in finance with a brain would be fooled by your example. That does not mean that you cannot fool the typical UK High Street bank of course.
I can’t recall any wide scale liability claims against Cirrus, quite the opposite, they usually bang on about how many lives they have saved.
One example Dale gave, was Cirrus versus Prokop, where Cirrus spent way more than the initial $10 million penalty to defend themselves all the way up to the Minnesota Supreme Court, where they won.
http://caselaw.findlaw.com/mn-supreme-court/1606504.html
I have read through most of that judgement (thanks for posting it, Lucius) and it’s interesting in the angle on the legal position of flight training.
One would think that once you have collected a piece of paper saying you can fly a particular plane (the PPL plus differences training, etc) then you are by definition good to fly it, and if you kill yourself, tough luck.
That is how it works here in Europe; I have never heard of any school or instructor being pursued for poor training. In the USA, Prokop’s (and others’) estate seemingly tried to overturn that by claiming that Cirrus’ extra training course was deficient (which it looks like it was, with a “crucial” lesson missed out) and thankfully failed. Had they succeeded, every flying school in the USA would be vulnerable because loads of people who have valid papers do kill themselves.
But also I note the case is almost 10 years old and I wonder if it was given as an example because they can’t find any “bigger” or more recent ones! I can’t square up this old case (paid for with the gross profit from approx 50-100 SR22s, minus any product liability insurance payout Cirrus later got) with the current “1/3 of production” claim. Also, in the 2005 era, Cirrus were making loads of money.
