Cirrus Aircraft News

In a communication to all employees, Cirrus Aircraft announced today it is increasing its production rate to six (6) aircraft per week starting immediately. The increased rate follows nearly six (6) months of significantly reduced production rates that averaged approximately two (2) to three (3) fewer units per week than the new 6X/week rate.

We continue to see very encouraging trends in sales activities and interest from sales prospects domestically and around the world. The introduction of the new model year lineup in early January - including FIKI; Cirrus Perspective by Garmin across the line; X-Edition and more - have us very well positioned in the market place. Clearly, this is an upward move and is indicative of a stronger bias toward growth in aircraft orders. At the same time, targeted production output will continue to be determined on a month-to-month basis as this flexibility allows us to favorably position the organization to meet market fluctuations.

At this time, the increased rate will result in minimal impact to direct labor headcount, due in large part to recent significant efficiency gains achieved as a result of ongoing lean production initiatives. Cirrus Aircraft employees, customers, shareholders and partners have worked closely together to manage our business in spite of some very stiff headwinds recently, and though we remain in a very challenging environment, our hope is that this new rate is the first step and initial indicator of what will become a more substantial trend into the second half of the year and beyond.

Today the Federal Aviation Administration's Chicago Aircraft Certification Office issued final approval for the newly designed Known Ice Protection system for Cirrus Aircraft SR22 and TURBO models*. Also approved was the Aircraft Flight Manual Supplement validating the company's Known Ice Protection training materials.  CLICK HERE to read the Press Release issued today.

* Project TD6406CH-A

We are very happy to have this new and dynamic forum to communicate with you regarding company news, general aviation industry issues and others topics that the Cirrus Aircraft family will find of interest.  In addition, this new format will give us an opportunity to communicate important trends in the business as well as quickly address topics on the minds of our customers and interested friends alike.  We will look forward to your feedback about the new “Cirrus Aircraft News.”

Let me take this first post to address a topic that has been on the minds of many.  We have had inquiries in the last few months about the strength and stability of Cirrus as well as questions of how Cirrus is managing the headwinds of the current economy.  These are important issues so let me give you some details and correct some misconceptions that we have heard.

We feel very positive about 2009 and beyond for three key reasons:

• Cirrus acted very aggressively and quickly to eliminate indirect expenses early in 2008 … well before the full force of the economic downturn was felt and acted on by others;
• Cirrus continues to enjoy great support from its private equity partner, Arcapita, and equally, its customer base, and;
• Sales and delivery activity has increased significantly and that’s a trend we see continuing throughout the year.

Looking at some of the numbers, in just the five month period from September 2008 through January 2009, we extracted over $52 million of annual indirect expenses and reduced our production breakeven point by over 50%!  Make no mistake: achieving this goal was not without substantial personal sacrifice on the part of so many in Duluth and Grand Forks, and the very strong support of all our service, training and vendor partners.  But we took these actions when we saw the market begin to deteriorate in the Fall and then continue much deeper than anyone expected. As a result, Cirrus Aircraft was able to cash flow the business despite the significant market decline. And while economic conditions are still challenging, these expense reductions have put the company in a very attractive position to improve cash flow when the market rebounds even modestly. That gives us confidence that we are well positioned for strong results in the near term.

Our private equity partner, Arcapita, and our customers have given us confidence and tremendous support in these challenging times.  Arcapita provided specific financial support when a third-party debt provider to Cirrus encountered difficulty and the debt markets were closed to almost all companies.  This support has proved invaluable.  Our supply chain partners and customers have also showed tremendous patience in working with us while we effectively manage periodic cash flow constraints, and we appreciate their continued partnership while we focus on selling airplanes.

Finally and best of all, we now are seeing very encouraging trends in sales activity.  We are enjoying a steady improvement in sales order trends starting in early March and continuing very favorably to date.  These good results have helped us sell out near term production and build a new backlog.  Along with other sizable sales opportunities entering their final stages, Cirrus Aircraft is positioned for a solid and profitable 2009.

Again, we hope you enjoy the new website.  It’s an exciting time at Cirrus Aircraft and we will look forward to being able to communicate with you more personally and more often in the weeks and months ahead.

Safe Flying!
Brent

At Cirrus, innovation is our very reason for being.  Our passion to recreate the personal aircraft from the ground up was our founding principle and it is still our daily mission.  We take deep satisfaction that we continue to widen the gap between the aircraft we produce and those of our competitors.

The result of this unique culture at Cirrus is a line of personal aircraft that allows you to explore new horizons and tap new opportunities with the highest levels of safety, control and performance available today.

We call it Cirrus Flying 2.0™

CLICK HERE to view our new brochure.

FLYING Magazine, April 2009, calls Cirrus "...the most technologically sophisticated production piston single-engine airplane in the world..."  CLICK HERE to read the full article.