Cirrus Design Corp. launched a successful test flight of "the Jet" last week into cloudy economic skies.
But the short-term outlook doesn´t concern CEO Alan Klapmeier, who believes the single-engine personal jet, which probably won´t go into production for at least a couple of years, will be another long-term hit for the Duluth-based company that employs about 1,400 in Duluth and in Grand Forks, N.D.
"To the extent that we´ve got issues in our economy, it´s like a storm or a squall line ... and it´s always a factor,´´ Klapmeier said in an interview Monday. "But we´re focused on real, long-term market factors. We think this personal jet will expand the market. It will be the slowest, lowest jet. It will be an airplane that small to medium-sized businesses can afford. If everything works out, we think we will have a base price of around $ 1 million. And by business-aviation standards, it will be really cheap to fly."
Don´t bet against Klapmeier and Cirrus, which he started with his brother 25 years ago in a Wisconsin barn as a dream. About 400 customers have put down 0,000 deposits for the jets.
Cirrus reinvigorated the general aviation market with its decade-old SR20 and SR22 low-cost, next-generation piston engine aircraft. This year, the company will sell about 700 airplanes.
Klapmeier & Co. say that an economical "personal jet" will add sales of up to 500 jets a year within four or five years of production launch, which could be in 2011 or 2012.
Cirrus, the biggest manufacturer in Duluth, is expanding into hangar space vacated by shrinking Northwest Airlines. The small jet will seat up to five adults for flights of up to 1,000 miles.
The competition is not multimillion-dollar Gulfstream or Lear jets that require a corporate pilot and cost thousands of dollars per hour of flight. Rather, the Cirrus jet is designed to be flown by owner-operators at cruising speeds of around 300 miles per hour, and below 29,000 feet. That´s slower and lower than corporate or commercial jet aircraft.
However, the Jet will boast the Cirrus trademarks of ample interior space, single-engine fuel efficiency, flexible seating, sophisticated avionics on an easy-to-read display and an airframe parachute system that Cirrus pioneered in its piston aircraft.
"The Jet serves as a smarter, simpler and more efficient way to use transportation dollars," said Klapmeier. "It will improve management productivity. It´s going to be used for flights such as Duluth to Omaha or Minneapolis to suburban Chicago."
Here´s Klapmeier´s bet: The plane will be a hit for owners who´ve had it with the scheduled airlines and for whom time lost driving is money. It also may find a market with small air-taxi outfits.
Klapmeier said Cirrus may have to raise additional capital depending upon how quickly it tries to bring the plane through flight testing, government certification and into production. If that plays out, Cirrus could be a public company within several years.
Bahrain-based Arcapita, the private investor that acquired nearly 60 percent of Cirrus in 2001, is interested in cashing out at least some of its stake. But a recapitalization also could involve more private equity from other sources.
Cirrus, which delivered its first airplane in 1999, has become the second-largest manufacturer of general aviation aircraft in the country behind Cessna. Its sales market share has grown from about 5 percent in 2000 to about 30 percent in 2007, according to the General Aviation Manufacturers Association.
Revenue is expected to rise by about 10 percent this year to more than 0 million from sales and service.