Cirrus not yet ready to increase production

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Piper Aircraft is planning an increase in production for 2010, citing improved demand, but rival Cirrus Aircraft says the market is not yet ready to support an increase.

Piper chief executive Kevin Gould says the manufacturer is "starting to see an uptick in the marketplace" and, describing the company as "cautiously optimistic" is planning to increase piston and turbine production by 50% next year.

The increase at Piper, however, will only partially restore the cuts made over the last year to both production and headcount. Piper, which produced 268 aircraft last year, slashed production early this year and delivered just 45 aircraft in the first half; it has been turning out aircraft at a rate of less than two a week.

Gould says Piper could still make some "mid-course changes" to its new 2010 production plan but "we're cautiously optimistic about the year ahead for us".

cirrus
 © Cirrus

Cirrus chief executive Brent Wouters say demand for its piston line was at a "good level" in September and October, but the market has not yet recovered enough to warrant an increase in production. As a result he says Cirrus plans to maintain its current production rate of six aircraft a week for at least the first half of 2010.

Cirrus, which delivered only 39 aircraft in the first quarter but 82 in the second, briefly increased production this summer from six to eight aircraft a week. Wouters says demand has been up and down this year, making it difficult to predict a recovery. "Volatility from month to month is high. 2010 will be challenging," he says.

Wouters points out that Cirrus has been cashflow positive this year because it cut production and headcount in August 2008 and is using that extra cash to fund development of its first jet, the SF50 Vision. He adds that while Cirrus is looking for new investors to accelerate SF50 development to enter service in 2012, the company could bring the aircraft to market using internal resources if necessary and is no longer considering spinning off the project.

Wouters says he had regarded as a long shot a now-abandoned spin-off proposal by Cirrus co-founder and former chairman Alan Klapmeier. "I've always viewed this as a Cirrus programme. It is a key part of our future," he says, adding that other new aircraft projects are being looked at.

Piper, which was purchased in May by Brunei investment firm Imprimis, does not have to worry about securing new capital to fund development of its first jet. With Imprimis funds it has in recent months hired new engineers for the PiperJet programme and promises to reveal a development schedule shortly.