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Cirrus Works To Up Demand For Private Planes

BOSTON ( TheStreet) -- Cirrus Aircraft is known to many as making private airplanes equipped with a built-in parachute to guide the cabin down in the event of a mishap.

Unfortunately, that safety feature could do little for a freefalling economy.

"It has been a massive change for us as a company and for the industry as a whole," says Cirrus CEO Brent Wouters of current economic realities. "I see the lower unit volumes that we are all experiencing, the reticence of consumers or businesses to buy airplanes, and isn't about to switch back. This is a long-term problem. Even in my five-year projection, I don't see the business returning to the level that it was in 2007."

It won't be for lack of trying. The company's newest product, the SR22-T, is said to be its quietest, among the fastest and a leader in alternative fuel capabilities and GPS equipment that makes it easier and safer to fly.

Earlier this month, the General Aviation Manufacturers Association released the industry's second-quarter shipment and billings figures. In the first half of this year, total general aviation airplane shipments fell 9.8%, from 1,039 units last year. By comparison, during the first half of last year, shipments fell 45.9%.

Private Aircraft
As it recovers from the lessened demand for private aircraft, Cirrus Aircraft is looking to generate industry buzz with the recent debut of the Cirrus SR22-T.

In the first quarter of this year, Cirrus -- which has a 36% market share among single-engine, piston-powered aircraft -- shipped 53 planes, a 36% increase over the same period last year. Total billings for the first quarter were up by more than $6.7 million, a 22% increase.

Projections by Cessna Aircraft Co., a Cirrus competitor owned by Textron Inc. (TXT - Get Report), put it on pace to deliver 22% fewer jets this year, 225 units compared with 289 last year. Revenue projections call for a 10% drop this year, good news for a company that suffered nearly a 43% drop between 2008 and last year.

Piper Aircraft shipped 30 planes in the first quarter of this year, for total billings of about $18.5 million compared with 22 planes and $20.8 million in revenues for Q1 of 2009.

Although sales are slowly improving, Wouters says there is a long way to go to recapture the volume and revenues that existed before the recession. The downturn presented his company with the challenge of evaluating its practices -- running the full gamut of production, sales, marketing adverting, labor and R&D -- and addressing those that were inefficient.

"I don't care if I deliver three airplanes a week, or five or seven," he says. "I want to do it at a level that is sustainable and at good solid gross margins. It is about breaking down every process, so we know who is doing what every second of the day and taking out the garbage that doesn't add value to the product. That way you lower your labor costs, you lower your materials costs and you drive up your margins."
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