Questions about the letter.

Got my letter today. Will state upfront I’m a SR-22 position holder. I really don’t know what to make of it, nor do I feel I have any context in which to judge it. I’m appealing for some wise opinions. However, let me volunteer my impressions. First off, I’m not going to enter into the is it or is it not ethical debate. At least I’m going to try not to as I have no idea what went into this decision. What I’m most concerned with is that I cannot tell if the letter is a) a very forthcoming document OR b) has some underlying troubling signs OR c) both. So far, my limited experience with the company has been very positive, but it would be naive, I think, not to acknowledge that while this may seem like a decisive move towards profitability, it can also reasonabl be viewed as a rather desperate attempt at financial viability. I mean, is this a last resort move? Does it feel that way to anyone?

Listen, the end goal of two production lines humming along sounds great, and nobody wants that more than me, I’m near the back of the line. But I have to say that I’ve (perhaps naively) never been worried about getting a plane until today.

Respectfully,

Dean

Got my letter today. Will state upfront I’m a SR-22 position holder. I really don’t know what to make of it, nor do I feel I have any context in which to judge it. I’m appealing for some wise opinions. However, let me volunteer my impressions. First off, I’m not going to enter into the is it or is it not ethical debate. At least I’m going to try not to as I have no idea what went into this decision. What I’m most concerned with is that I cannot tell if the letter is a) a very forthcoming document OR b) has some underlying troubling signs OR c) both. So far, my limited experience with the company has been very positive, but it would be naive, I think, not to acknowledge that while this may seem like a decisive move towards profitability, it can also reasonabl be viewed as a rather desperate attempt at financial viability. I mean, is this a last resort move? Does it feel that way to anyone?

Listen, the end goal of two production lines humming along sounds great, and nobody wants that more than me, I’m near the back of the line. But I have to say that I’ve (perhaps naively) never been worried about getting a plane until today.

Respectfully,

Dean

Dean

I don’t know what was in the letter…

and I don’t know whether the vote on the 28th of March was approved…

If it was a HUGE amount of cash is on the way…

Far more than what was posted in a post some posts back…probably triple what was being spent in a given prior year …and in addition there was debt relief included to a fairly large extent…If this financing was voted through then the compy In my opinion is rock solid as long as they can stick to their plan and be profitable by the end of the year…

Dean: My reaction to the letter was not the same as yours.

First, as to whether the letter is forthcomming all I can say that as “Corporatespeak” goes, it’s not that bad. I don’t have the letter in front of me right now, but my memory is that is was specific as to the production plans of the 20/22 aircraft. I don’t have any more context available than you do in which to judge it. I too am a SR22 position holder.

Secondly, as far as indicating financial distress on the part of Cirrus, I didn’t see that in the letter. I’m not sure that the analogy is too accurate, but I wouldn’t think that Ford was in trouble for if it had a limited workforce and favored Expeditions over Escorts.

I’m not sure what to make about “from within” with the apparantly made up email address, any more than glue dude, Jeff, etc. etc. etc. Anonymous and unverifiable good news should not be treated any differently from bad. The letter itself does not raise any financial alarms with me.

Got my letter today. Will state upfront I’m a SR-22 position holder. I really don’t know what to make of it, nor do I feel I have any context in which to judge it. I’m appealing for some wise opinions. However, let me volunteer my impressions. First off, I’m not going to enter into the is it or is it not ethical debate. At least I’m going to try not to as I have no idea what went into this decision. What I’m most concerned with is that I cannot tell if the letter is a) a very forthcoming document OR b) has some underlying troubling signs OR c) both. So far, my limited experience with the company has been very positive, but it would be naive, I think, not to acknowledge that while this may seem like a decisive move towards profitability, it can also reasonabl be viewed as a rather desperate attempt at financial viability. I mean, is this a last resort move? Does it feel that way to anyone?

Listen, the end goal of two production lines humming along sounds great, and nobody wants that more than me, I’m near the back of the line. But I have to say that I’ve (perhaps naively) never been worried about getting a plane until today.

Respectfully,

Dean

Dean,

As one has has been down this road, having started (and sold) a pretty good sized manufacturing business, I believe that a prudent businessman must do what is necessary to maximize his most precious resource, CASH, especially as he begins to crank up a significant production effort. I know that many of the SR20 position holders will be disappointed, but I think that I would personally be more concerned to know that Cirrus was not making the prudent business decisions to insure the continued survivability of the company.

Alan’s letter did NOT cause me anxiety regarding the financial health of the business. It just highlighted the fact that he continues to make the tough business decisions to insure the financial well being of Cirrus, especially as the cash markets tighten in a soft economy.

FWIW, my response would be no different if I was still holding my SR20 position!

Paul

Got my letter today. Will state upfront I’m a SR-22 position holder. I really don’t know what to make of it, nor do I feel I have any context in which to judge it. I’m appealing for some wise opinions. However, let me volunteer my impressions. First off, I’m not going to enter into the is it or is it not ethical debate. At least I’m going to try not to as I have no idea what went into this decision. What I’m most concerned with is that I cannot tell if the letter is a) a very forthcoming document OR b) has some underlying troubling signs OR c) both. So far, my limited experience with the company has been very positive, but it would be naive, I think, not to acknowledge that while this may seem like a decisive move towards profitability, it can also reasonabl be viewed as a rather desperate attempt at financial viability. I mean, is this a last resort move? Does it feel that way to anyone?

Listen, the end goal of two production lines humming along sounds great, and nobody wants that more than me, I’m near the back of the line. But I have to say that I’ve (perhaps naively) never been worried about getting a plane until today.

Respectfully,

Dean

Got my letter today. Will state upfront I’m a SR-22 position holder. I really don’t know what to make of it, nor do I feel I have any context in which to judge it. I’m appealing for some wise opinions. However, let me volunteer my impressions. First off, I’m not going to enter into the is it or is it not ethical debate. At least I’m going to try not to as I have no idea what went into this decision. What I’m most concerned with is that I cannot tell if the letter is a) a very forthcoming document OR b) has some underlying troubling signs OR c) both. So far, my limited experience with the company has been very positive, but it would be naive, I think, not to acknowledge that while this may seem like a decisive move towards profitability, it can also reasonabl be viewed as a rather desperate attempt at financial viability. I mean, is this a last resort move? Does it feel that way to anyone?

Listen, the end goal of two production lines humming along sounds great, and nobody wants that more than me, I’m near the back of the line. But I have to say that I’ve (perhaps naively) never been worried about getting a plane until today.

Respectfully,

Dean

I spoke to the factory today and here is what I was told:

(I will not divulge my source, but it was not Jeff or Glue Guy)

Exclusive SR22 production through July, in addition to improving cash flow will get the early SR22 converters back in line with the non-converters. Since a number of SR20’s were delivered ahead of contracts that converted, this will bring the converters back to approximately their rightful place in line.

After July, SR20’s and 22’s will be made in equal numbers on essentially two lines as long as there remains a backlog of orders for either plane, regardless of how long that backlog is. This is paraphrased but I believe represents an accurate recollection of the conversation.

mdz

I would expect this to run into late summer early fall.Big fat money crunch.-20’s silent for a long while.Just break even with that bird.Don’t you hate it when you order a single topping pizza and they say 15 mins? You go to get it and your pizza is not close to finished.The costomers that called after you called ordered combo pizzas.They claim they make more money and they need to keep the till fat for bills.So I had to wait till next tuesday for my pizza.But they did fill the till as they were low on cash.so next time i will order the more expensive pizza . gluemiesterjeff

Got my letter today. Will state upfront I’m a SR-22 position holder. I really don’t know what to make of it, nor do I feel I have any context in which to judge it. I’m appealing for some wise opinions. However, let me volunteer my impressions. First off, I’m not going to enter into the is it or is it not ethical debate. At least I’m going to try not to as I have no idea what went into this decision. What I’m most concerned with is that I cannot tell if the letter is a) a very forthcoming document OR b) has some underlying troubling signs OR c) both. So far, my limited experience with the company has been very positive, but it would be naive, I think, not to acknowledge that while this may seem like a decisive move towards profitability, it can also reasonabl be viewed as a rather desperate attempt at financial viability. I mean, is this a last resort move? Does it feel that way to anyone?

Listen, the end goal of two production lines humming along sounds great, and nobody wants that more than me, I’m near the back of the line. But I have to say that I’ve (perhaps naively) never been worried about getting a plane until today.

Respectfully,

Dean

Wow,

I thought I was the only one! That letter scared the shi* out of me. As the owner of a large company myself (and an SR22 contract holder) I get very nervous when a letter gets sent from the CEO saying things like, “restructuring” and attempts at making Cirrus a “profitable and sustainable enterprise” that can “offer ongoing service and support.”

This letter implies that Cirrus is none of these things right now. I’m not sure whether I am more scared of losing my $30k, or never getting my plane.

After getting my letter I immediately emailed my sales rep. He replied with a quick, but thoroughly predictable, company line.

The world is full of too many stories like this. Ever heard of DeLorean?

As an outsider, it seems something must be done -quickly- or we may all be out of luck. With 700+ planes backordered, sales is not the problem. Profitablity and cash flow is. The SR22 performs like the competitors $500-$700k planes. The SR20 compares to everyone elses $350-400k planes. With better technology, better quality, better safety, etc.

What Cirrus may need, right now, is a massive price increase going forward. The SR20/22 could easily see a $50-$100k price increase -and still be the best value in GA, period. Why sell a superior product for half the competitors price when you are struggling to stay afloat? A real price increase going forward, plus an increase of new customer deposits to $50k, may not only help the company out of its financial difficulties, it would also keep the resale value high for current owners and contract holders. All good things.

The Cirrus is an amazing product. Hopefully the company will still be here next year.

Secondly, as far as indicating financial distress on the part of Cirrus, I didn’t see that in the letter. I’m not sure that the analogy is too accurate, but I wouldn’t think that Ford was in trouble for if it had a limited workforce and favored Expeditions over Escorts.

I have feeling a if Ford said “in order to move this Company aggressively, positively and directly towards being a profitable and sustainable enterprise…” we are completely shutting down production of our landmark product, for which people know our company, and imposing a delay on many who have deposited funds with us, in order to make instead a more profitable product, that people would react.

I guess what I would ask then, Stephen (or anyone else please), is if you are correct and it’s not an issue of viability - what is it an issue of? To me, this is a bold move, which will clearly anger some loyal customers. To what do you attribute this boldness?

Secondly, as far as indicating financial distress on the part of Cirrus, I didn’t see that in the letter. I’m not sure that the analogy is too accurate, but I wouldn’t think that Ford was in trouble for if it had a limited workforce and favored Expeditions over Escorts.

I have feeling a if Ford said “in order to move this Company aggressively, positively and directly towards being a profitable and sustainable enterprise…” we are completely shutting down production of our landmark product, for which people know our company, and imposing a delay on many who have deposited funds with us, in order to make instead a more profitable product, that people would react.

I guess what I would ask then, Stephen (or anyone else please), is if you are correct and it’s not an issue of viability - what is it an issue of? To me, this is a bold move, which will clearly anger some loyal customers. To what do you attribute this boldness?

I have a theory, not at all based on solid facts but here goes:

I figure the reason for those who have invested big bucks in the past and to a greater extent the current “institutionalized investor” is that they want to see a return on their money. They are looking for more than they could get in a more conservative investment (like tech stocks, if you catch my drift). One way to do this is to position the company to go public, i.e. sell stocks.

I would look for as many profitable quarters as possible and then a public offering whereby the current investors could, if desired, bail-out turning a good profit if Cirrus’ numbers were good enough to attract high stock prices.

The bad side of this would be if Cirrus, being a new company, became tempted to produce for good numbers and let other aspects slide. Namely quality,(good to date), customer support,(also good to date) et al. The current production change could also be a sign of this producing for the numbers philosophy.

They have just started plans for a new 65,000 sq. ft. building in that unknown town of theirs. SOMEBODY is expecting a return on their money other than way down the road from the sale of airplanes at even 30 a month. They were 85M in debt as of last month. Simple math would tell you it would take a long time to just get even.

Us airplane buyers can leave our deposits in @ no interest because we expect to get a new, high bang-for-the-buck airplane, at some point before senile dementia sets in and we just sit in the thing making vrum/vrum sounds. The investors want dollars for the risk they have taken and deservedly so.

This is just a guess but I would expect a public offering before the end of 2002.

If this does happen lets hope the great airplane we have come to know doesn’t turn into the aviation equivalent of what Detroit was producing in the early 70’s.

I have my Nomex suit on so flame away.

Mike Myers

Hey, want to make a little fortune ?
This is the 1000% sure way:

Take a big fortune,
set up a company building aircraft,
and very soon…
you’ll have a little fortune! :-)))

What I want to say: it takes big courage and big bucks to set up and run an operation like this. We should do everything to encourage CD and not just complain on whatever (deliveries, ARNAV, …).

Cheers
Wilfried

I have my Nomex suit on so flame away.

Mike Myers

I am in agreement with Mr. Mike “Nomex” Meyers.

A large infusion of cash would indicate that some heavy hitters are looking for a semi-quick return on a sizable contribution/loan/investment. If CD is 85M in debt (I do not doubt this), then producing the 22 is a good move for the company. Personally, I could not sleep if something I owned or had a big part of had a 85M (M of course representing MILLIONS…ouch) debt.

I hope everyone can hang in there and come out on top with a great plane. If we work with CD on this now the benefits will be ours in the not so distant future.

Good luck with your decesion making and have a good weekend.

Bob #509

They were 85M in debt as of last month.

Correct me if I’m wrong, but I believe the lion’s share of that $85M is equity, not debt. Big difference in how it gets “paid back.”

Hello Wilfried,

You have my vote.

Cheers,

Woor

PS Hope all is well…

Hey, want to make a little fortune ?
This is the 1000% sure way:

Take a big fortune,
set up a company building aircraft,
and very soon…
you’ll have a little fortune! :-)))

What I want to say: it takes big courage and big bucks to set up and run an operation like this. We should do everything to encourage CD and not just complain on whatever (deliveries, ARNAV, …).

Cheers
Wilfried

Didn’t realize or mean this thread to be conisdered a complaint, merely a question.

PS Hope all is well…

Yes Woor, almost.

Hope to meet some of you guys in Friedrichshafen.

Didn’t realize or mean this thread to be conisdered a complaint, merely a question.

I’m sorry, this was not meant personal to you Dean.

Excuse me,

Wilfried

No worries at all. Are we all invited to meet Friedrichshafen? :slight_smile:

Cheers,

Dean

PS – seems like with ARNAV engine monitoring here, and posts above about FADEC by late fall, things are looking up for all the complaints anyway!)

Of course, it’s all more money to spend…

No worries at all. Are we all invited to meet Friedrichshafen? :slight_smile:

Of course, I’ll be there on Friday, April 27th.

Cheers,

Dean

PS – seems like with ARNAV engine monitoring here, and posts above about FADEC by late fall, things are looking up for all the complaints anyway!)

Wondering what will come up then.

Wilfried

They were 85M in debt as of last month.

Correct me if I’m wrong, but I believe the lion’s share of that $85M is equity, not debt. Big difference in how it gets “paid back.”

Debt may not be the best term for what the have gotten from their investors. Equity shares or whatever term is used, to me its still funds that the investors are not going to leave in the “kitty” interest free forever. They deserve to see a return, most likely sooner rather than later.

Its not like you or I having equity in our homes.

Mike Myers

Good points, Paul.

I think it’s also possible that there is a linkage to the newly stated production (ie, build SR22’s now) with the cash infusion that has been discussed for several months. If I were an investor in a company of this type, I would insist that profitability is achieved as quickly as possible. This may not make all customers happy but it does add to the health of the company.

We all need Cirrus to do well. While getting our aircraft delivered is a major point currently, many years from now you will be much more concerned about getting service and parts. Cirrus needs to do well now to insure that the future is solid.

Chris SR22 #95

Dean,

As one has has been down this road, having started (and sold) a pretty good sized manufacturing business, I believe that a prudent businessman must do what is necessary to maximize his most precious resource, CASH, especially as he begins to crank up a significant production effort. I know that many of the SR20 position holders will be disappointed, but I think that I would personally be more concerned to know that Cirrus was not making the prudent business decisions to insure the continued survivability of the company.

Alan’s letter did NOT cause me anxiety regarding the financial health of the business. It just highlighted the fact that he continues to make the tough business decisions to insure the financial well being of Cirrus, especially as the cash markets tighten in a soft economy.

FWIW, my response would be no different if I was still holding my SR20 position!

Paul

Got my letter today. Will state upfront I’m a SR-22 position holder. I really don’t know what to make of it, nor do I feel I have any context in which to judge it. I’m appealing for some wise opinions. However, let me volunteer my impressions. First off, I’m not going to enter into the is it or is it not ethical debate. At least I’m going to try not to as I have no idea what went into this decision. What I’m most concerned with is that I cannot tell if the letter is a) a very forthcoming document OR b) has some underlying troubling signs OR c) both. So far, my limited experience with the company has been very positive, but it would be naive, I think, not to acknowledge that while this may seem like a decisive move towards profitability, it can also reasonabl be viewed as a rather desperate attempt at financial viability. I mean, is this a last resort move? Does it feel that way to anyone?

Listen, the end goal of two production lines humming along sounds great, and nobody wants that more than me, I’m near the back of the line. But I have to say that I’ve (perhaps naively) never been worried about getting a plane until today.

Respectfully,

Dean