GRAHAM WARWICK / WASHINGTON DC
Light-aircraft manufacturer aims to resume production and ramp up deliveries with backing from new investor
Lancair hopes to resume aircraft deliveries by year-end, with the backing of a new investor. The company halted production of its Columbia 300 light aircraft in July after two previous attempts to arrange new financing fell through. Lancair International, a separate company, has continued to produce kitplanes.
Lancair president Bing Lantis says the company has selected an offer of financing from a private investor group and hopes to have an agreement in place by the beginning of November. The funds will be used to restart production and ramp up deliveries to the one-a-day rate required for sustained profitability, he says.
The Bend, Oregon-based company's search for financing began last year when it became clear the existing investors could not put in the money to ramp up production, Lantis says. "We wanted to go to Wall Street, we had an investment bank lined up, and then 11 September happened," he says.
By December, when the new financing was due to be in place, "we had not even talked to anybody - we had to get new equity", Lantis says. Lancair worked with a venture capital firm to put together a syndicate of investors, but the effort stalled in late May when the US stock market began to slide.
After halting production to stem its losses, Lancair began looking for investors "off Wall Street", says Lantis. More than $25 million is required to cover the company's losses, recall and expand its workforce and acquire additional tooling to support the higher production rate. The offer selected will "more than adequately cover" Lancair's needs, he says.
Before closing the line, Lancair built six Columbias a month and could have built 10 a month with the existing workforce, "but we didn't have the cashflow [to buy the parts]", says Lantis. He expects production to "blast through" six a month within three to four months of a financing agreement. Lancair has delivered 60 Columbias and has another 180 on backlog.
Rival startup Cirrus Design also turned to outside investors when it sought to increase production to achieve profitability, with a Bahrain-backed investment firm agreeing last year to provide a $100 million financing package in return for a 58% interest in the company. Since then, Cirrus has pushed production of its SR20 and SR22 light aircraft up to two a month and says it is "on the verge of sustained profitability".
Source: Flight International
