I am close to a decision regarding the possible purchase of an SR20 or 22. One problem I have is with the non-refundable deposit money. The issue is - does Cirrus have the financial strength and staying power to perform on the contract over a period of two years? Can anyone help with with specific information about the company’s financial capabilities to carry them over this period of time, particularly considering the fact that they may not be making money until they have fully ramped up production. Thanks for your help. Pete
I am close to a decision regarding the possible purchase of an SR20 or 22. One problem I have is with the non-refundable deposit money. The issue is - does Cirrus have the financial strength and staying power to perform on the contract over a period of two years? Can anyone help with with specific information about the company’s financial capabilities to carry them over this period of time, particularly considering the fact that they may not be making money until they have fully ramped up production. Thanks for your help. Pete
They have raised something like $75M through at least 7 rounds of private placements, a feat that many tech companies can’t muster, and are now on the virge of turning the corner. Whether they will return 10x plus to their investors is a fair question, but the likelihood of their being gone in two plus years with an order backlog like they have is very high, in my opinion. I bet you take greater risks than that in your 401K. Absent the world economy going down the toilet they should be in good shape when your delivery position comes up. Good luck with your decision.
Darn good question. I got screwed out of 6K on Pipers bankruptcy on a Cadet position. I think that they are being very close mouthed about how many planes that they have delivered. It is a real crap shoot. It is a hell of a plane, but how much can you afford???
I am close to a decision regarding the possible purchase of an SR20 or 22. One problem I have is with the non-refundable deposit money. The issue is - does Cirrus have the financial strength and staying power to perform on the contract over a period of two years? Can anyone help with with specific information about the company’s financial capabilities to carry them over this period of time, particularly considering the fact that they may not be making money until they have fully ramped up production. Thanks for your help. Pete
I have their books for the past 3 years and they have raised plenty of money for each of those years…
would not be surprised to see IPO (just my opinion) in the months ahead…
they have done well so far and have plenty of orders on the books (over 650)…
I think they are in good shape…
IMO.
To our luck, Cirrus has priced the SR20 low. But that means it is making a HUGE bet on volume. The SR20 currently loses money. The breakeven is probably around 500 to 1000 per year. The higher margin SR22 should break even at lower volume.
So the bet on Cirrus is as much a bet on GA as it is on the company. This is why Alan Klapmeier is so evangelical about growing GA as opposed to slugging it out with Lancair or the incumbents over a puny fixed pie of 2,000 single-engine sales a year in America.
I am close to a decision regarding the possible purchase of an SR20 or 22. One problem I have is with the non-refundable deposit money. The issue is - does Cirrus have the financial strength and staying power to perform on the contract over a period of two years? Can anyone help with with specific information about the company’s financial capabilities to carry them over this period of time, particularly considering the fact that they may not be making money until they have fully ramped up production. Thanks for your help. Pete
Pete,
With 650+ backlog (@$200k+ ea) for a well received and certified airplane, the financial risk is finding funds to ramp up production on a sure way to profits. Cirrus have been succesful in raising tens of millions over the past years and in the unlikely event new private capital dries up, there’s an IPO opportunity and (last resort) another company may see this as an opportunity to step right into the new era of GA…
HK
I am close to a decision regarding the possible purchase of an SR20 or 22. One problem I have is with the non-refundable deposit money. The issue is - does Cirrus have the financial strength and staying power to perform on the contract over a period of two years? Can anyone help with with specific information about the company’s financial capabilities to carry them over this period of time, particularly considering the fact that they may not be making money until they have fully ramped up production. Thanks for your help. Pete
I am close to a decision regarding the possible purchase of an SR20 or 22. One problem I have is with the non-refundable deposit money. The issue is - does Cirrus have the financial strength and staying power to perform on the contract over a period of two years? Can anyone help with with specific information about the company’s financial capabilities to carry them over this period of time, particularly considering the fact that they may not be making money until they have fully ramped up production. Thanks for your help. Pete
They have raised something like $75M through at least 7 rounds of private placements, a feat that many tech companies can’t muster, and are now on the virge of turning the corner. Whether they will return 10x plus to their investors is a fair question, but the likelihood of their being gone in two plus years with an order backlog like they have is very high, in my opinion. I bet you take greater risks than that in your 401K. Absent the world economy going down the toilet they should be in good shape when your delivery position comes up. Good luck with your decision.
Should proof the post first! The likelihood of their being AROUND in two plus years is very high. Sorry…
To our luck, Cirrus has priced the SR20 low. But that means it is making a HUGE bet on volume. The SR20 currently loses money. The breakeven is probably around 500 to 1000 per year. The higher margin SR22 should break even at lower volume.
So the bet on Cirrus is as much a bet on GA as it is on the company. This is why Alan Klapmeier is so evangelical about growing GA as opposed to slugging it out with Lancair or the incumbents over a puny fixed pie of 2,000 single-engine sales a year in America.
I am close to a decision regarding the possible purchase of an SR20 or 22. One problem I have is with the non-refundable deposit money. The issue is - does Cirrus have the financial strength and staying power to perform on the contract over a period of two years? Can anyone help with with specific information about the company’s financial capabilities to carry them over this period of time, particularly considering the fact that they may not be making money until they have fully ramped up production. Thanks for your help. Pete
Rick,
Thanks for your thoughts. I would expect breakeven to be at a volume lower than 500 units annually. While I have no idea about these things, let’s make a few assumptions (right or wrong). First. labor: I’d expect the labor component to assemble an SR20 on an efficient basis to be at or below 1200 hours. At a fully loaded cost per hour of $25, that puts the labor cost per unit at around $30,000. The engine and accessories will run an additional $30,000. As for materials, the aircraft body should not exceed $20,000, avionics $30,000, interior finishing $5,000, and miscellaneous elements another $10,000 for a subtotal before overhead burden of $125,000. Overhead burden is the big question mark, but if we add 25% to the subtotal, we have a grand total cost per unit of roundly $160,000 for the “A” model. Of course, increased annual volume will probably have its greatest impact on the amount of overhead burden applied to each unit, although materials costs should be favorably impacted to a minor extent given greater volume buying power. With an annual turn of 300 units and assuming the $45,000 is an reasonable number, that allows for gross annual overhead costs of $13.5 million, which amount is not necessarily pout of line for a company of this size. Pete
Note: Correction to my 9/30/00 post. The final sentence should read … “With an annual turn of 300 units and assuming the $35,000 overhead is a reasonable number, that allows for gross annual overhead costs of $10.5 million, which amount is not necessarily out of line for a company of this size.” My apologies for any confusion this may have caused. Pete
To our luck, Cirrus has priced the SR20 low. But that means it is making a HUGE bet on volume. The SR20 currently loses money. The breakeven is probably around 500 to 1000 per year. The higher margin SR22 should break even at lower volume.
So the bet on Cirrus is as much a bet on GA as it is on the company. This is why Alan Klapmeier is so evangelical about growing GA as opposed to slugging it out with Lancair or the incumbents over a puny fixed pie of 2,000 single-engine sales a year in America.
I am close to a decision regarding the possible purchase of an SR20 or 22. One problem I have is with the non-refundable deposit money. The issue is - does Cirrus have the financial strength and staying power to perform on the contract over a period of two years? Can anyone help with with specific information about the company’s financial capabilities to carry them over this period of time, particularly considering the fact that they may not be making money until they have fully ramped up production. Thanks for your help. Pete
Rick,
Thanks for your thoughts. I would expect breakeven to be at a volume lower than 500 units annually. While I have no idea about these things, let’s make a few assumptions (right or wrong). First. labor: I’d expect the labor component to assemble an SR20 on an efficient basis to be at or below 1200 hours. At a fully loaded cost per hour of $25, that puts the labor cost per unit at around $30,000. The engine and accessories will run an additional $30,000. As for materials, the aircraft body should not exceed $20,000, avionics $30,000, interior finishing $5,000, and miscellaneous elements another $10,000 for a subtotal before overhead burden of $125,000. Overhead burden is the big question mark, but if we add 25% to the subtotal, we have a grand total cost per unit of roundly $160,000 for the “A” model. Of course, increased annual volume will probably have its greatest impact on the amount of overhead burden applied to each unit, although materials costs should be favorably impacted to a minor extent given greater volume buying power. With an annual turn of 300 units and assuming the $45,000 is an reasonable number, that allows for gross annual overhead costs of $13.5 million, which amount is not necessarily pout of line for a company of this size. Pete