Cirrus Aircraft led market again last year

DULUTH, Minn. -- Cirrus Aircraft led its market again last year, even though its plane shipments remained flat and its biggest competitors showed gains.

The Duluth-based airplane manufacturer shipped 253 of its SR-20s, SR-22s and SR-22Ts in 2012, two fewer than 2011. It was the lowest number of planes delivered since 2001, according to industry numbers released recently.

Although Cirrus’ share of the single-engine piston market slipped from 35 percent to 32 percent, it still out-sold its competitors and continued to be the world leader in its category of small personal aircraft. Its SR-22/SR-22T continued to be the top-selling, high-performance plane in that category.

Its closest competitor, Cessna Aircraft Co., shipped a total of 207 of its comparable propeller planes in 2012, up from 181 in 2011. Diamond Aircraft Industries followed with 93 planes, up from 72 in 2011, the General Aviation Manufacturers Association annual shipment reports show.

Faced with declining retail sales, Cirrus would have had substantially fewer shipments if not for its successful entry into the international training fleet market.

Cirrus has sold 25 SR-20s to the U.S. Air Force Academy’s Powered Flight Program, 23 SR-20s to the French Air Force and Navy and 20 SR-20s to the Civil Aviation Flight University of China. Many of those sales showed up in last year’s numbers.

“We are seeing a shift in the mix,” said Todd Simmons, Cirrus’ executive vice president of sales and marketing. “To Cirrus’ credit, they do other markets to offset the changes in retail.”

And more fleet sales are coming, which should improve the company’s prospects for 2013.

“Other fleet delivers will be announced,” Simmons said. “The good news is that’s a growing part of our business. That is part of our business that will continue to grow.”

Down market

Still, Cirrus, along with the industry in general, continues to feel the effects of the economic recession that sent the industry into a tailspin.

The 2012 industry shipment summaries released by GAMA were a mixed bag. Worldwide, piston-powered airplane shipments were down nearly 2 percent, turboprops up 10 percent and business jets down 3.4 percent. Industry-wide, shipments were slightly up and billings slightly down.

Richard Aboulafia, an aviation analyst for the Teal Group outside Washington, D.C., believes the industry has not only hit bottom but has been stuck there quite a while.

“What you have is a delay in recovery rather than signs of future trouble,” he said. “It’s just taking so long for people to feel less nervous about making big investments or lending people money.”

But if the economic recovery is sustaining, he believes general aviation will turn a corner.

“When the economy finally recovers … this industry will take off,” said GAMA president and CEO Pete Bunce during a webcast.

But more economic bumps could be near.

If sequestration — blanket cuts to federal programs — happens next month, the impact on the general aviation industry will be severe, Bunce said.

Maintaining the lead
 
With the economic recession, Cirrus’ annual shipments dramatically declined from a 2006 high of 721 during the industry’s heyday. Cirrus has weathered the downturn by cost cutting, selling more fully loaded planes, reaching out to international markets and becoming more efficient.

“The difference today is Cirrus is a far more efficient business at lower numbers, because we made changes in the business,” Simmons said. “We’re being more profitable at lower volume levels.”

In 2012, Cirrus’ quarterly deliveries steadily increased, ending with its strongest quarter in four years.

“We’re off to the best start since 2008,” Simmons said. “So we’re optimist about 2013.”

That optimism is partly due to Generation Five, Cirrus’ redesigned SR-22 and turbocharged SR-22T models, which can now accommodate a fifth person. Its parts and systems were re-engineered and redesigned, along with use of stronger construction materials, aerodynamic improvements, improved flight performance and an improved airframe parachute system, a hallmark of Cirrus planes.

Aboulafia said continuing upgrades and innovations are important.

“New product development and resources are always crucial,” he said.

Cirrus officials expect Generation 5 introduced in January will cause a rebound in retail sales.

“The reason we are enthusiastic for 2013, we are bringing something new to the market, and the market is reacting very favorably,” Simmons said.

Such investment in its piston-powered planes, as well as its Vision light jet under development, he said, will help Cirrus maintain its market lead.

Source:   http://www.prairiebizmag.com