Cirrus Aircraft News

June 2010
 
Cirrus Aircraft Community,
 
Recently there has been much industry discussion regarding the future of 100LL aviation gasoline, the likely transition to an unleaded aviation fuel in the future and the possible impacts to owners, operators and general aviation industry health of a future fuel. While this subject is by no means a new issue, the recent Environmental Protection Agency (EPA) issuance of an Advance Notice of Proposed Rulemaking (ANPR) regarding lead content in aviation fuel formally initiates a regulatory decision-making process and has increased awareness of this topic and its potential future impacts.  Cirrus has been actively working on this fuel issue for many years now and we are integrally involved in the industry leadership team working with the EPA, the FAA, and avgas producers. Simply, we are aggressively focused to achieve the very best path ahead and Cirrus will ensure that this path will keep your aircraft flying with the minimum possible transition and operating costs.
 
Many aircraft manufacturers - including Cirrus - and GA industry organizations agree that a transition to unleaded fuel is appropriate. Moreover we collectively agree that every effort should be made to find a transparent or near-transparent replacement fuel for 100LL.  However, a very significant amount of research completed over the last 10 years to identify a suitable 100 octane, or near 100 octane, unleaded fuel has not yet resulted in a clear solution for a replacement fuel.  There are several encouraging new high octane unleaded fuel formulations being evaluated, such as Swift fuel and GAMI’s G100UL, and Cirrus is supportive of all these efforts. However, the challenge with these and any new fuels is in having to address many issues beyond simply octane rating. Those other issues include operation at temperature extremes, fuel stability over time, health and safety aspect of the fuel and its combustion products, material compatibility, ‘producibility’, cost and so on. As a result and at present, the octane level of a future fuel is uncertain. We do know that the lowest octane level that we may have to contend with is 94, or 94UL as it is called. This is essentially what is left when the tetra-ethyl lead is removed from the 100LL. Cirrus is working on contingency plans in case we are stuck with a 94 octane fuel,  but let me be clear: Cirrus Aircraft does not believe that a 94UL solution is desirable for its owners or the health of the industry, and will strive for a better replacement fuel.
 
What is the industry plan?  The Aircraft Owners and Pilots Association (AOPA), Experimental Aircraft Association (EAA), General Aviation Manufacturers Association (GAMA), National Air Transportation Association (NATA), National Business Aviation Association (NBAA), American Petroleum Institute (API) and the National Petrochemical and Refiners Association (NPRA) are collectively committed to working with EPA and FAA toward the development of a Future Avgas Strategy & Transition Plan (FAST) to help achieve significant reductions in lead emissions from GA aircraft along a timeline which balances environmental benefit with aviation safety, technical feasibility and impact upon the GA industry.  It’s clear objectives are to:

• Identify the best possible unleaded avgas replacement fuel by working with the avgas producers, fuels research organizations, owners and operators, the Coordinating Research Council (CRC), ASTM groups, engine and airframe manufacturers, and FAA.
• Consider the impact, if any, on the existing fleet and fuel infrastructure and long term availability (including cost).
• Develop a transition plan to unleaded avgas that preserves the health of the industry and reduces impacts on owners and operators.

This avgas stakeholder group leadership team is also engaging in collaborative efforts with aircraft owners groups, such as COPA.  While research continues toward the best unleaded fuel solution, the stakeholder group is evaluating a two step transition process. First, provide near term reductions in lead emissions from GA by reducing the lead content of 100LL that would be completely transparent to existing aircraft.   Second, define a transition to a viable unleaded avgas along an approximate 10 year timeline depending upon the impact on aircraft and/or fuel production and distribution infrastructure. 
 
What is Cirrus Aircraft doing?  Our efforts are focused in three main directions.

• Leadership & Advocacy. Cirrus chairs the primary industry working group team which began as a GAMA-based committee and has expanded to collaborate with AOPA, EAA, and other key stakeholder groups. This provides Cirrus with the information and access to the key stakeholders, including oil companies, to help guide efforts that will promote the best solution, which, again, is preferably a 100 octane or near-100 octane transparent replacement avgas.
• Fuels Research Support. Cirrus has availed itself to support the needs of aviation fuels research entities. This support can range from on-aircraft testing, to chemical compatibility testing for airframe structures and system components, to feedback on operational and cost aspects. Cirrus also participates in the Coordinating Research Council (CRC) technical research group and the ASTM unleaded fuel group.
• Flexible Aircraft Solutions. Due to the uncertainty involved in this issue, Cirrus is developing solutions for both existing and new aircraft that address a wide range of possible fuel specification outcomes. This doesn’t change our commitment to finding a transparent solution. This week we are introducing a new aircraft model in the SR22 family which is flexible to a wide range of future fuel octane ratings. At the same time, we are working help ensure that all of our aircraft models, both new and in the field, will be compatible with a future unleaded fuel in either a transparent sense or with reasonable upgrade paths.

At Cirrus we are always thinking and planning ahead, and as in this case, sometimes years ahead. We understand the well-placed concern around the fuel issue as it affects the Cirrus Aircraft community. Your priorities are our priorities and we will help take care of our fleet and your well-being. 
 
Again, we plan to communicate regularly on this issue and encourage feedback to better tailor our efforts to your needs and address concerns.
 
Best regards,

Brent Wouters
President & CEO
Cirrus Aircraft
 

Brent Wouters, Cirrus President and CEO, appeared on Fox Business News on Tuesday, May 11th to discuss Cirrus Aircraft’s 2010 global partnership with RedBull Air Race and strong first quarter performance. SEE the video.

In this week's issue of Flight International, Cirrus President and CEO, Brent Wouters, describes his professional background, how it brought him to his position of leadership at Cirrus Aircraft and his strategy for Cirrus' future success.  

Read the article here:  Flight international article 2-10.pdf (1.82 mb)

See the entire issue here.

Cirrus CEO Brent Wouters talks to Wired.com about Cirrus' successes in the non-pilot marketplace.  Wouters explains, "...whether you're in business, or an individual, this [Cirrus airplane] changes your life.  It changes the way you live."  He goes on to say that some 30 percent of airplanes purchased in the last several years are by individuals with no previous aviation experience.  Read the full article.

Sunday, August 16, 2009, Cirrus CEO Brent Wouters took his two sons to the PGA Championship in Chaska, MN.  They arrived in time to watch Y.E. Yang and Tiger Woods finish their warm ups on the driving range and move to the practice tee just beside the first tee.  As it rained they watched the Yang/Woods pair tee off before proceeding to their bleacher seats on the 15th hole.

As you may know, Mr. Yang eagled hole #14, then hit his drive in the fairway on hole #15, and proceeded to par the hole.  After he holed out, he turned and threw his ball into the bleachers at #15.  “It went over my head - I never even stood up - but it bounced off of a couple people, over my shoulder and into my hands,” described Brent Wouters.  “The cameras were already there, and the camera man asked me to show him the ball.  My mug appeared on TV and then the phone started ringing.  I had 10 emails, 9 texts, and 5 voice mails before I got to the car, and since then I have had about 100 others contact me to let me know that they saw me.”

Congratulations Brent…for scoring such a cool souvenir!  WATCH the video here.

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

Alan Klapmeier, Chairman of Cirrus Design Corporation, today named Brent Wouters to the post of Chief Executive Officer effective February 1, 2009.  CLICK HERE to read the Press Release issued today.

Brent Wouters, CEO, Cirrus Aircraft