Cirrus facing likely job cuts

Guest Discussion
1

From a news search on ‘Cirrus’ this morning:

Cirrus facing likely job cuts

Demand not being met

Mesabi Daily News

DULUTH – Cirrus Design of Duluth said Thursday the company may need to lay off workers while reorganizing.

The company is restructuring its finances. Cirrus Chief Executive Officer Alan Klap-Meier is expected to make an announcement on temporary layoffs next week, after the company has decided on how to reorganize their business.

Cirrus has a list of 700 customers waiting for their aircraft. However, the company said they haven’t been been delivering the planes quickly enough to meet expenses, KBJR News 6 reported Thursday.

While the company produced 97 SR-20 planes last year, about eight planes per month, Cirrus is estimating they need to make 20 planes per month to earn enough revenue and to pay bills.

Cirrus spokesman Chris Maddy told KBJR News 6 that some cutbacks will have to be made, and some employees will be laid off temporarily. The company employs more than 500 workers in the region.

Cirrus also announced Thursday the base price of the SR-20 will go up by 5 percent. The plane will now sell for $197,000.

2

From a news search on ‘Cirrus’ this morning:

Cirrus facing likely job cuts

Demand not being met

Mesabi Daily News

DULUTH – Cirrus Design of Duluth said Thursday the company may need to lay off workers while reorganizing.

The company is restructuring its finances. Cirrus Chief Executive Officer Alan Klap-Meier is expected to make an announcement on temporary layoffs next week, after the company has decided on how to reorganize their business.

Cirrus has a list of 700 customers waiting for their aircraft. However, the company said they haven’t been been delivering the planes quickly enough to meet expenses, KBJR News 6 reported Thursday.

While the company produced 97 SR-20 planes last year, about eight planes per month, Cirrus is estimating they need to make 20 planes per month to earn enough revenue and to pay bills.

Cirrus spokesman Chris Maddy told KBJR News 6 that some cutbacks will have to be made, and some employees will be laid off temporarily. The company employs more than 500 workers in the region.

Cirrus also announced Thursday the base price of the SR-20 will go up by 5 percent. The plane will now sell for $197,000.

Thats not very good news.I sure hope they hang in there for the long haul or least till everyone gets theere airplanes i sure hope it all works out ive got a lot of money riding on this and i dont think it will help sales i wonder why they cant get production up.The plant looked good when I was there 3 weeks ago from Don 215

3

Here’s the news from the “Duluth News Tribune”
I hope this temporary situation is very short for the sake of the workers losing their jobs.

Bernie

Duluth plane maker to trim staff
Cuts at Cirrus Design expected to be temporary
By Peter Passi
News Tribune staff writer

Workers at Duluth-based Cirrus Design Corp. got some unsettling news this week. The airplane maker plans to announce staffing cuts next week, as it strives to improve efficiency.

How deep those cuts will be remains a question, but company spokesman Chris Maddy expects they will be temporary.

Cirrus employs 644 people company-wide, including 471 people at its plant in Duluth, 18 people at a paint shop in Hibbing and 155 at a fuselage plant in Grand Forks, N.D.

Maddy explained that Cirrus needs to restructure its operations to boost production. It’s now evaluating exactly how to do that.

The company has continually fallen short of its production goals. By the end of 2000, Cirrus had expected to be shipping one airplane every business day. But in all of January, it delivered just 13 aircraft.

V0We’re producing a great airplane, and there’s plenty of interest in it,’’ Maddy said. V0But we’re not pumping them out the way we need to to be profitable.’’

Maddy said the company needs to step back and figure out how to make better use of its work force. V0We’re not achieving what we should with the people we have,’’ he said.

Cirrus manufactures two single-engine airplanes – the 200-horsepower SR20 and the 310-horsepower SR22.

Both airplanes are built on the same body. To date, Cirrus has orders for 458 SR20s and 204 SR22s.

Since Cirrus began production in 1999, it has shipped a grand total of 110 SR20s. The SR22 was introduced in October 2000, and none has yet been delivered.

In its 1997 business plan, Cirrus had set far loftier goals. Had those marks been reached, the company’s production would have hit 424 airplanes in 2000.

Cirrus has not managed to turn any profit, but it has met its bills with help from private investors, revenues from SR20 sales and down payments people have made to get in line for future airplanes.

Would-be owners of an SR20 have been required to put down $15,000 up front, and prospective SR22 pilots have been required to pony up $30,000.

Cirrus just announced that it is bumping up the price of its SR20 by 4.9 percent. It will now sell for a standard price of $197,600. The SR22 has a base price of $276,600.

Peter Passi covers business and development. He can be reached weekdays at (218) 279-5526 or by e-mail:

ppassi@duluthnews.com

4

From a news search on ‘Cirrus’ this morning:

Cirrus facing likely job cuts

Demand not being met

Mesabi Daily News

DULUTH – Cirrus Design of Duluth said Thursday the company may need to lay off workers while reorganizing.

The company is restructuring its finances. Cirrus Chief Executive Officer Alan Klap-Meier is expected to make an announcement on temporary layoffs next week, after the company has decided on how to reorganize their business.

Cirrus has a list of 700 customers waiting for their aircraft. However, the company said they haven’t been been delivering the planes quickly enough to meet expenses, KBJR News 6 reported Thursday.

While the company produced 97 SR-20 planes last year, about eight planes per month, Cirrus is estimating they need to make 20 planes per month to earn enough revenue and to pay bills.

Cirrus spokesman Chris Maddy told KBJR News 6 that some cutbacks will have to be made, and some employees will be laid off temporarily. The company employs more than 500 workers in the region.

Cirrus also announced Thursday the base price of the SR-20 will go up by 5 percent. The plane will now sell for $197,000.

5

Sorry for the blank post…

I hope everyone remains calm about this. I don’t think it is a huge deal at this point. Cirrus is a great company doing amazing things. The product is excellent.

Cirrus is going through some growing pains and are bit overzealous with production goals. It takes a lot of time to get to speed.

Their CFO has probably taken a good hard look at the number and determined that the price goals set by the borthers were too ambitious. A quick glance and demand shows that. I believe a healthy 20% price increase would put the SR20 where it needs to be to allow Cirrus to make money and remain strong.

Hindsight is 20/20 and Monday morning quarterbacking is unfair. However, I think they goofed getting the SR22 into production as soon as they did. It was probably done for monetary reasons but a year delay would have helped Cirrus get the production moving well. Variety is the curse of production.

Unlike Lancair (production aircraft side), I think Cirrus has the chance to be the light aircraft manufacturing company. Cessna is in it half heartedly and Piper doesn’t seem to want to do much new. Even with this unwlecome news, my money is still on Cirrus and the folks they have working for them.

Mark

From a news search on ‘Cirrus’ this morning:

Cirrus facing likely job cuts

Demand not being met

Mesabi Daily News

DULUTH – Cirrus Design of Duluth said Thursday the company may need to lay off workers while reorganizing.

The company is restructuring its finances. Cirrus Chief Executive Officer Alan Klap-Meier is expected to make an announcement on temporary layoffs next week, after the company has decided on how to reorganize their business.

Cirrus has a list of 700 customers waiting for their aircraft. However, the company said they haven’t been been delivering the planes quickly enough to meet expenses, KBJR News 6 reported Thursday.

While the company produced 97 SR-20 planes last year, about eight planes per month, Cirrus is estimating they need to make 20 planes per month to earn enough revenue and to pay bills.

Cirrus spokesman Chris Maddy told KBJR News 6 that some cutbacks will have to be made, and some employees will be laid off temporarily. The company employs more than 500 workers in the region.

Cirrus also announced Thursday the base price of the SR-20 will go up by 5 percent. The plane will now sell for $197,000.

6

:

Cirrus facing likely job cuts

Demand not being met

Mesabi Daily News

DULUTH – Cirrus Design of Duluth said Thursday the company may need to lay off workers while reorganizing.

If they were a publicly-traded company, I think the stock would have just gone up. This streamlining is a positive sign. I always thought that now is the tough part – building a profitable business. It won’t be easy, but I think they can do it!

7

I really hope Cirrus get over this

problem. Its unclear if the production

problems are a bottle neck in one area or

just the time/people it takes to make a

composite plane. I hope they can solve

this.

Without wanting to create alarm - my

groups delivery is scheduled Sep, do

our further downpayments go into escrow

or into the general funds.

I’m sure Cirrus will continue longterm but
lay offs may cause a temporary slow down in deliveries

Dave

8

For those not on Cirrus’ customer email list, here’s a message they delivered this afternoon. Willingness to communicate the bad as well as the good is a mark of maturity. Good work.

Dear Cirrus Customer:

You may have noted in the media that Cirrus is undergoing a significant

internal restructuring to overcome some “growing pains.” I have attached a

copy of a release made to the media tonight just to keep you up to date.

The objective of this effort at is to reshape Cirrus into a strong,

self-sustaining production company and build the airplanes that we want to

deliver and, we hope, you want to fly.

Please feel free, as always, to call us at any time.

Sincerely,

Ian Bentley.

CIRRUS DESIGN RESTRUCTURING FOR GROWTH

DULUTH, MN, February 2nd, 2001 – Cirrus Design

Cirrus Design Corporation today notified employees of a short-term reduction in its workforce. The reduction is part of a plan to streamline production and improve process flow while integrating the newly FAA-certified SR22 into its production line. In the last 18 months, Cirrus has delivered 111 SR20 aircraft, with a backlog of 639 orders. Rapid growth over the past year-and-a-half increased production capacity, but continued growth will require process refinement and cost reduction.

Management’s goal is to stabilize production by the end of the first quarter at one-aircraft-per-day. “Over the last 18 months, we have grown tremendously and have accomplished a great deal. It is now time for us to capture the gains we have made in production and focus on improving efficiency,” stated Alan Klapmeier, Cirrus president and CEO.

The staffing changes affect 127 employees across the whole company. After the reduction employment will stand at 512. Cirrus officials anticipate a recall as production rates increase.

Cirrus Design produces the SR20 composite aircraft and its derivative model, the SR22. Cirrus Design Corporation is based in Duluth, Minnesota, with additional facilities in Grand Forks, ND, and Hibbing, MN. The company designs, manufactures and markets general aviation composite aircraft, incorporating advanced technologies that result in high levels of performance, safety and comfort.

9

From a news search on ‘Cirrus’ this morning:

Cirrus facing likely job cuts

Demand not being met

Mesabi Daily News

DULUTH – Cirrus Design of Duluth said Thursday the company may need to lay off workers while reorganizing.

The company is restructuring its finances. Cirrus Chief Executive Officer Alan Klap-Meier is expected to make an announcement on temporary layoffs next week, after the company has decided on how to reorganize their business.

Cirrus has a list of 700 customers waiting for their aircraft. However, the company said they haven’t been been delivering the planes quickly enough to meet expenses, KBJR News 6 reported Thursday.

While the company produced 97 SR-20 planes last year, about eight planes per month, Cirrus is estimating they need to make 20 planes per month to earn enough revenue and to pay bills.

Cirrus spokesman Chris Maddy told KBJR News 6 that some cutbacks will have to be made, and some employees will be laid off temporarily. The company employs more than 500 workers in the region.

Cirrus also announced Thursday the base price of the SR-20 will go up by 5 percent. The plane will now sell for $197,000.

Thats not very good news.I sure hope they hang in there for the long haul or least till everyone gets theere airplanes i sure hope it all works out ive got a lot of money riding on this and i dont think it will help sales i wonder why they cant get production up.The plant looked good when I was there 3 weeks ago from Don 215

I’m an investor…

these guys have worked out every major problem in their way…If it can be done they will do it…

Hope they let us know what they have done and when it will occur to get 1 a day output…

10

Hello Don,

Cirrus is doing the right thing. The construction of a complete airplane is an immense project, the flow control is the biggest problem, getting the parts in on time, so you don’t have to tied up $'s in inventory, (read JF input) and you have to have the cooperation of over 600 people to be at work in a good mood and everything else has to fall in place. Not an easy task. The good thing that we have going for us are the people at the controls of the operation, let’s give then support and the outcome will be great. This is a necessary step, and the growth of the company, if things go right, they will be calling back the employs within a month or two. Keeping in mind suppliers are probably having problems too. Think of it as a highway with traffic moving at 80 MPH, if someone pulls over to talk on the phone, the traffic will slow prior to the person on the phone and after that individual the highway wont have as many cars because of the bottle neck that he created. This is another way to think of the production line. Everyone must be doing 80 MPH for it to flow well (parts/componets on hand when needed) Cirrus will do fine, and hopefully get everyone back working soon.

Don’t worry be happy, you have a Cirrus on the way…

Cheers,

Woor

From a news search on ‘Cirrus’ this morning:

Cirrus facing likely job cuts

Demand not being met

Mesabi Daily News

DULUTH – Cirrus Design of Duluth said Thursday the company may need to lay off workers while reorganizing.

The company is restructuring its finances. Cirrus Chief Executive Officer Alan Klap-Meier is expected to make an announcement on temporary layoffs next week, after the company has decided on how to reorganize their business.

Cirrus has a list of 700 customers waiting for their aircraft. However, the company said they haven’t been been delivering the planes quickly enough to meet expenses, KBJR News 6 reported Thursday.

While the company produced 97 SR-20 planes last year, about eight planes per month, Cirrus is estimating they need to make 20 planes per month to earn enough revenue and to pay bills.

Cirrus spokesman Chris Maddy told KBJR News 6 that some cutbacks will have to be made, and some employees will be laid off temporarily. The company employs more than 500 workers in the region.

Cirrus also announced Thursday the base price of the SR-20 will go up by 5 percent. The plane will now sell for $197,000.

Thats not very good news.I sure hope they hang in there for the long haul or least till everyone gets theere airplanes i sure hope it all works out ive got a lot of money riding on this and i dont think it will help sales i wonder why they cant get production up.The plant looked good when I was there 3 weeks ago from Don 215

11

This is a classic and deja-vu for those who have witnessed or participated in the Silicon Valley experience over the past 15 years or so.
If sales gets ahead of itself, it’s manufacturing and parts that’s challenged; if manufacturing gets ahead of sales, inventories build. If sales AND manufacturing get ahead of plan, it’s customer service that’s shortchanged and so on.

The basic laws says:

“In fastgrowing companies there’s something out of sync all the time, so make sure you know what it is this time and correct it within the quarter”

Cirrus hits a speedbump, addresses it quickly and is honest about it. Quality at Cirrus doesn’t stop at manufacturing airplanes so it seems.

HK (N144CD and SR22 positionholder)

From a news search on ‘Cirrus’ this morning:

Cirrus facing likely job cuts

Demand not being met

Mesabi Daily News

DULUTH – Cirrus Design of Duluth said Thursday the company may need to lay off workers while reorganizing.

The company is restructuring its finances. Cirrus Chief Executive Officer Alan Klap-Meier is expected to make an announcement on temporary layoffs next week, after the company has decided on how to reorganize their business.

Cirrus has a list of 700 customers waiting for their aircraft. However, the company said they haven’t been been delivering the planes quickly enough to meet expenses, KBJR News 6 reported Thursday.

While the company produced 97 SR-20 planes last year, about eight planes per month, Cirrus is estimating they need to make 20 planes per month to earn enough revenue and to pay bills.

Cirrus spokesman Chris Maddy told KBJR News 6 that some cutbacks will have to be made, and some employees will be laid off temporarily. The company employs more than 500 workers in the region.

Cirrus also announced Thursday the base price of the SR-20 will go up by 5 percent. The plane will now sell for $197,000.

Thats not very good news.I sure hope they hang in there for the long haul or least till everyone gets theere airplanes i sure hope it all works out ive got a lot of money riding on this and i dont think it will help sales i wonder why they cant get production up.The plant looked good when I was there 3 weeks ago from Don 215

12

as a cirrus position holder, i am, needless to say, very interested in this news. if i were to venture a guess (perhaps the investor above could weigh in on this), i would surmise that the cutbacks are related to lack of money from success, and not failure.

ramp ups of this size take considerable capital in both personnel and equipment. any of a number of companies with great products and vision have failed due to rapid growth. any cfo worth his salt would slow things down if the liquidity were not there to support that growth.

it is not unlikely that the flow of private investment funds has slowed in our current economic environment, and this could be impacting cd’s growth strategey. if true, cd probably acted in a manner that protected both itself and (acknowledging the potential for delivery delays!) its customers.

of course, i could be wrong…

From a news search on ‘Cirrus’ this morning:

Cirrus facing likely job cuts

Demand not being met

Mesabi Daily News

DULUTH – Cirrus Design of Duluth said Thursday the company may need to lay off workers while reorganizing.

The company is restructuring its finances. Cirrus Chief Executive Officer Alan Klap-Meier is expected to make an announcement on temporary layoffs next week, after the company has decided on how to reorganize their business.

Cirrus has a list of 700 customers waiting for their aircraft. However, the company said they haven’t been been delivering the planes quickly enough to meet expenses, KBJR News 6 reported Thursday.

While the company produced 97 SR-20 planes last year, about eight planes per month, Cirrus is estimating they need to make 20 planes per month to earn enough revenue and to pay bills.

Cirrus spokesman Chris Maddy told KBJR News 6 that some cutbacks will have to be made, and some employees will be laid off temporarily. The company employs more than 500 workers in the region.

Cirrus also announced Thursday the base price of the SR-20 will go up by 5 percent. The plane will now sell for $197,000.

Thats not very good news.I sure hope they hang in there for the long haul or least till everyone gets theere airplanes i sure hope it all works out ive got a lot of money riding on this and i dont think it will help sales i wonder why they cant get production up.The plant looked good when I was there 3 weeks ago from Don 215

I’m an investor…

these guys have worked out every major problem in their way…If it can be done they will do it…

Hope they let us know what they have done and when it will occur to get 1 a day output…

13

Hello Don,

Cirrus is doing the right thing. The construction of a complete airplane is an immense project, the flow control is the biggest problem, getting the parts in on time, so you don’t have to tied up $'s in inventory, (read JF input) and you have to have the cooperation of over 600 people to be at work in a good mood and everything else has to fall in place. Not an easy task. The good thing that we have going for us are the people at the controls of the operation, let’s give then support and the outcome will be great. This is a necessary step, and the growth of the company, if things go right, they will be calling back the employs within a month or two. Keeping in mind suppliers are probably having problems too. Think of it as a highway with traffic moving at 80 MPH, if someone pulls over to talk on the phone, the traffic will slow prior to the person on the phone and after that individual the highway wont have as many cars because of the bottle neck that he created. This is another way to think of the production line. Everyone must be doing 80 MPH for it to flow well (parts/componets on hand when needed) Cirrus will do fine, and hopefully get everyone back working soon.

Don’t worry be happy, you have a Cirrus on the way…

Cheers,

Woor

The employee layoffs, while disconcerting, is understandable given the current production rate. I am not an accountant but am a employer. If they truly have 644 people on a fulltime payroll using simple math reveals the following:

644 x minimum $200.00/day cost to employer(wages, benefits. FICA tax, unemployment, etc.) gives payroll of $128,800.00 per day. Even if they move 1 airplane a day this doesn’t leave much for overhead and parts, not to mention debt service.

It seems the employee segment just got ahead of the other parts of production.

They have $30,000.00 of my money. I slept well last night. If my delivery date slips in order to do it right then so be it.
I think it is in everyone's best interest, even those who have already taken delivery to look at the current situation rationally and not make a "mountain out of a molehill".

Regards, M. Myers

From a news search on ‘Cirrus’ this morning:

Cirrus facing likely job cuts

Demand not being met

Mesabi Daily News

DULUTH – Cirrus Design of Duluth said Thursday the company may need to lay off workers while reorganizing.

The company is restructuring its finances. Cirrus Chief Executive Officer Alan Klap-Meier is expected to make an announcement on temporary layoffs next week, after the company has decided on how to reorganize their business.

Cirrus has a list of 700 customers waiting for their aircraft. However, the company said they haven’t been been delivering the planes quickly enough to meet expenses, KBJR News 6 reported Thursday.

While the company produced 97 SR-20 planes last year, about eight planes per month, Cirrus is estimating they need to make 20 planes per month to earn enough revenue and to pay bills.

Cirrus spokesman Chris Maddy told KBJR News 6 that some cutbacks will have to be made, and some employees will be laid off temporarily. The company employs more than 500 workers in the region.

Cirrus also announced Thursday the base price of the SR-20 will go up by 5 percent. The plane will now sell for $197,000.

Thats not very good news.I sure hope they hang in there for the long haul or least till everyone gets theere airplanes i sure hope it all works out ive got a lot of money riding on this and i dont think it will help sales i wonder why they cant get production up.The plant looked good when I was there 3 weeks ago from Don 215

14

Sorry for the blank post…

I hope everyone remains calm about this. I don’t think it is a huge deal at this point. Cirrus is a great company doing amazing things. The product is excellent.

Cirrus is going through some growing pains and are bit overzealous with production goals. It takes a lot of time to get to speed.

Their CFO has probably taken a good hard look at the number and determined that the price goals set by the borthers were too ambitious. A quick glance and demand shows that. I believe a healthy 20% price increase would put the SR20 where it needs to be to allow Cirrus to make money and remain strong.

Hindsight is 20/20 and Monday morning quarterbacking is unfair. However, I think they goofed getting the SR22 into production as soon as they did. It was probably done for monetary reasons but a year delay would have helped Cirrus get the production moving well. Variety is the curse of production.

Unlike Lancair (production aircraft side), I think Cirrus has the chance to be the light aircraft manufacturing company. Cessna is in it half heartedly and Piper doesn’t seem to want to do much new. Even with this unwlecome news, my money is still on Cirrus and the folks they have working for them.

Mark

Mark, hope your right, especially for the folks in Duluth. I also hope Cirrus takes the high road and keeps its customers informed. We all have a lot invested.CD would go a long way with communication to their position holders about what is really going on and when and if we can expect deliverys. MIKE #396

15

I think this was virtually inevitable, given the pace at which the company has been trying to ramp up production. I’ve been at the factory half a dozen times now over a nearly two-year period. The population of employees’ cars in the parking lot seemed to double between each visit and the next.

Obviously it would be ideal to expand each part of the production system exactly in pace with all the others:

  • employee headcount – plus training of the employees

  • capital goods for producing the planes

  • components from suppliers, including very costly components like engines and avionics, so there’s never a shortage (which would slow production) and never a surplus (which means wasteful financing costs),

  • and of course deliveries, to keep the planes moving off the lot and the completion payments moving into the bank.

The easiest one of these to ramp up in a hurry is the headcount, and just by observation it looks as if this got ahead of the other parts of the production chain. I would assume this is an attempt to bring the different parts of the production system into the right balance for a more sustainable increase in output rates.

Agree that it would be good for CD to be forthcoming with its customers, existing and potential, about the real situation and rationale for decisions like this. The event itself is not necessarily shocking but it would be good to explain clearly what it means and what's ahead.
16

Mike:

I agree entirely! I beleive that there are at least a few readers at Cirrus of this site, and hopefully the message will be passed on to them.
With the story out there in the local press, and then to all interested parties here, it would seem that some response is due.

Sorry for the blank post…

I hope everyone remains calm about this. I don’t think it is a huge deal at this point. Cirrus is a great company doing amazing things. The product is excellent.

Cirrus is going through some growing pains and are bit overzealous with production goals. It takes a lot of time to get to speed.

Their CFO has probably taken a good hard look at the number and determined that the price goals set by the borthers were too ambitious. A quick glance and demand shows that. I believe a healthy 20% price increase would put the SR20 where it needs to be to allow Cirrus to make money and remain strong.

Hindsight is 20/20 and Monday morning quarterbacking is unfair. However, I think they goofed getting the SR22 into production as soon as they did. It was probably done for monetary reasons but a year delay would have helped Cirrus get the production moving well. Variety is the curse of production.

Unlike Lancair (production aircraft side), I think Cirrus has the chance to be the light aircraft manufacturing company. Cessna is in it half heartedly and Piper doesn’t seem to want to do much new. Even with this unwlecome news, my money is still on Cirrus and the folks they have working for them.

Mark

Mark, hope your right, especially for the folks in Duluth. I also hope Cirrus takes the high road and keeps its customers informed. We all have a lot invested.CD would go a long way with communication to their position holders about what is really going on and when and if we can expect deliverys. MIKE #396

17

Without wanting to create alarm - my

groups delivery is scheduled Sep, do

our further downpayments go into escrow

or into the general funds.

Deposits go into general funds. This announcement may have a ripple effect, since if people are nervous and the number of new contracts slows down, it crimps the incoming flow of $15K checks.

As for the SR22 introduction, that was a calculated risk. The margins are a whole lot better on them, and the contract conversions also allowed the CPI clock to be restarted (it stopped 2 1/2 years before the delivery of my SR20, and it seems likely that the planes being delivered today are in a similar situation.) The delivery delays are hurting (though a little bird tells me that the first 22 delivery will be Real Soon Now, for small values of Real Soon) but once they start the deliveries moving they’ll be in a better cash flow position, IMHO.

As someone else noted, the layoffs are probably healthy for everyone except the workers (and possibly even them, in the long run.) The rather belated hiring of a CFO hopefully indicates that they are trying to put their financial house in order.

The SR20 and SR22 are in no danger of going out of production, no matter how things fare for CD. I’m sure that there are a number of companies, from Cessna to Toyota, that would buy up the TC and facilities in a heartbeat if it ultimately came to that. How existing contracts would fare in such a scenario is less clear, depending on the magnanimity of the acquirer.

18

The delivery delays are hurting (though a little bird tells me that the first 22 delivery will be Real Soon Now, for small values of Real Soon) but once they start the deliveries moving they’ll be in a better cash flow position, IMHO.

If rumors are to be believed, they have close to a million dollars of potential cash flow in the SR22s almost ready for delivery. I’m old enough to remember when that was a lot of money :slight_smile:

Despite their temporary problem, Cirrus is in a position many manufacturers would envy: in a growth market, with a fantastic product, and a very solid backlog. Production problems aren’t easy to fix, but there are much worse problems to have.

-Mike

19

As for the SR22 introduction, that was a calculated risk. The margins are a whole lot better on them, and the contract conversions also allowed the CPI clock to be restarted (it stopped 2 1/2 years before the delivery of my SR20, and it seems likely that the planes being delivered today are in a similar situation.) The delivery delays are hurting (though a little bird tells me that the first 22 delivery will be Real Soon Now, for small values of Real Soon) but once they start the deliveries moving they’ll be in a better cash flow position, IMHO.

I also heard from a little birdy today that the first SR22 is to be delivered this Tuesday.

20

The Cirrus pioneers could lose a lot in a bailout takeover. I hope they make it on their own, and that no dilutive vulture financing is necessary. FWIW, on the day that I visited Duluth last June, a Starship full of Ratheyon execs dropped in. Contacts like that are a dime a dozen in the business world, but Dave’s right, there’s got to be a lot of interest, and the product is too solid to fail.

The SR20 and SR22 are in no danger of going out of production, no matter how things fare for CD. I’m sure that there are a number of companies, from Cessna to Toyota, that would buy up the TC and facilities in a heartbeat if it ultimately came to that. How existing contracts would fare in such a scenario is less clear, depending on the magnanimity of the acquirer.