Cirrus sold to China
Cirrus Aircraft will be sold to China Aviation Industry General Aircraft Co. (CAIGA), Cirrus officials announced Feb. 28.
The 500-employee firm based in Duluth, Minn., will merge with the Chinese firm and then be acquired once the regulatory approvals are met. Cirrus officials didn’t disclose the terms of the deal between CAIGA and majority owner Arcapita, but said the pioneering aircraft manufacturing firm will continue building airplanes in the United States and have the necessary capital to expand its product line.
“Duluth and Grand Forks (N.D.) are our home,” said Cirrus CEO Brent Wouters. “This is where we do business. This is where we’re staying. And this is where we’ll add jobs when our industry rebounds.” Wouters said the sale to CAIGA is sure to boost Cirrus’ Vision single-engine jet program. The V-tail jet first flew in 2007 but the company pulled back on development when the economy fell into recession. Cirrus has said it will take about three years and more than $100 million to certify the five-seat, 300-knot airplane once it resumes full-scale development.
Cirrus dramatically reduced its workforce in 2009 and 2010, and Wouters said the company is poised for growth and sustained profitability now that new aircraft sales are improving. The company also has expanded its sales and marketing staffs and has delivered aircraft to 60 countries.
The deal with CAIGA took 20 months to negotiate, and Wouters said it will allow Cirrus to expand its product line and grow throughout what he expects to be a period of consolidation within the aviation industry. “We have the best sales and marketing of any general aviation firm in the world,” he said. “Right now, we need more products to sell, and this deal is going to be a catalyst for our expansion. Now we can start talking about our vision for the future—not just our own survival.”
Wouters said he and his management team will remain in place at Cirrus, and he insists aircraft production will stay in the United States.
“The quality and efficiency that we produce here in the upper Midwest is outstanding—and the work ethic of our people is second to none,” he said. “What we do is complex. It requires a great deal of skill, and it would take many years to replicate and recertify our production capabilities anywhere else. It just doesn’t make economic sense.”
Another China aviation firm recently announced its intention to purchase Teledyne-Continental Motors, the supplier of engines for the Cirrus SR20 and SR22. But Wouters said the transactions and the companies making them aren’t related.
The CAIGA deal is scheduled to be finalized in mid-2011. It must be approved by the federal Committee on Foreign Investment in the United States.
The sale of Cirrus marks a major milestone for the pioneering aircraft manufacturer that introduced airframe parachutes, glass cockpits, and composite materials to general aviation. Cirrus was founded by brothers Alan and Dale Klapmeier, and Arcapita—a venture capital firm based in Bahrain—bought a majority stake in 2001.
Arcapita replaced then-CEO Alan Klapmeier in 2009 while Dale Klapmeier stayed at Cirrus and serves as the company’s chairman.“With this transaction, Cirrus will continue to develop and build the best, most exciting aircraft in the world,” he said. “The original dream remains alive and well at Cirrus. We are just embarking on the next chapter on a global stage.”
February 28, 2011