Monday, February 15, 2016

Cirrus Aircraft revenues up, shipments down

Cirrus plane shipments were down slightly in 2015 as global economic uncertainty affected sales of its single-engine piston planes.

The Duluth-based aircraft manufacturer delivered 301 planes in 2015, a dip from 308 deliveries in 2014. The decline follows two years of gains after Cirrus hit a low of 253 shipments in 2012 in the aftermath of the economic recession that hit the general aviation industry hard.

Cirrus Aircraft had gotten off to a strong start in 2015 with a backlog of orders and an improving economy. But plane shipments — the preferred industry term for unit sales — in the last half of the year were hurt by stock market drops in North America and economic troubles in its overseas markets, according to Ben Kowalski, a Cirrus spokesman.

Cirrus' 2 percent decline in shipments, however, fared better than the 6.5 percent drop in single-engine piston plane shipments worldwide, according to the General Aviation Manufacturers Association 2015 shipment report released last week.

The industry is being affected by plummeting energy sector revenue, economic uncertainty and currency fluctuations in key general-aviation markets such as Brazil, Europe, Russia and China, GAMA President and CEO Pete Bunce said in a statement.

But over at Cirrus — which has been investing heavily in its jet program and is expanding its facilities for production of the new personal jet — the mood is upbeat.

"Cirrus had a remarkably strong year, despite those economic challenges," said Kowalski, the company's vice president of marketing.

For the second year in a row, the company delivered more than 300 of its SR-20, SR-22 and SR-22T piston planes with North America remaining its strongest market. Moreover, Cirrus' SR-22 series remains the world leader in its category of small personal aircraft for the 13th consecutive year.

"Overall, we're seeing a pretty solid mix of personal buyers," Kowalski said. "Often they buy for multi-use — for personal and business use."

Total revenues are up, from $217 million in 2014 to $221 million in 2015, according to GAMA data.

The boost in 2015 revenues is the result of higher prices and customers opting for more loaded planes, Kowalski said. The company's top seller is the turbocharged SR-22T, its highest performing plane, which starts at $619,900.

Cirrus' entry aircraft, the SR-20, remains the leading choice for its flight training fleet customers, though the plane now makes up only 10 percent of the company's shipments. Kowalski said they're seeing more and more training programs choosing the higher performing Cirrus SR-22. That includes the Dubai-based Emirates, one of the fastest growing airlines in the world, which has ordered 22 of the SR-22s for its pilot training program. Cost of the SR-22 starts at $519,900 while the SR-20 starts at $369,900.

In 2016, Cirrus will be included in a second category of planes — the business jet — which saw shipments worldwide increase nearly 2 percent in 2015, GAMA numbers show.

"What we're excited about at Cirrus is moving into a new product line," Kowalski said. "A lot of customers are stepping up to our Vision Jet. A lot of fleets are interested in our Vision Jet. We're very excited about bringing it to market this year."

The Cirrus SF-50 Vision jet is expected to receive Federal Aviation Administration certification in the next four months. Customer delivery of the first of 600 orders for the $1.96 million jet should soon follow. As with Cirrus' piston planes, the jet will be equipped with an airframe parachute system.

To create space for the jet's production, a new $12.6 million, 68,000-square-foot center for painting and other finishing work on the jets will be built this year adjacent to Cirrus' headquarters at the Duluth International Airport. A new $15 milion delivery and customer service center is under construction in Knoxville, Tenn., which will free up space in Duluth. And a year ago, space was created when Cirrus moved its machining, subassembly production and some research and development to an off-airport building.

The jet program, which has created hundreds of jobs, doesn't mean Cirrus' piston planes will be any less important, Kowalski said.

"For the past 16 years, we've been certifying and delivering our single-engine piston planes and that will continue," he said. "As we become a two-product line, a lot of our focus is on both of them."

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