By Nathan A. Ferguson
The fate of Columbia Aircraft remains in the hands of the bankruptcy court as other companies are positioning themselves for a potential acquisition.A hearing has been scheduled for Oct. 22 to formalize the bidding process. Four companies have surfaced as potential bidders: Cirrus Design, Cessna Aircraft, investment firm Versa Capital Management Inc., and Park Electrochemical Corp., a general aviation supplier with expertise in composites.
Columbia announced on Sept. 24 that it had filed for Chapter 11 so that it could continue operating. Although it received $3 million in additional financing to keep it afloat during the court proceedings, time isn't on its side.
Once the bidding process is finalized, potential suitors will be able to valuate the company, said Cirrus President and CEO Alan Klapmeier. Only then will they know whether Columbia can be salvaged and how it would fit into a business plan.
Klapmeier said he doesn't know why Columbia went bankrupt because it's "always been a pretty good airplane." He suspects that it suffered from a volume problem — the same thing Cirrus went through — the difficulty of producing enough product to grow itself out of the red and into the black. Cirrus would need to show itself that a Columbia acquisition would improve its ability to get things done. "This is an industry that ought to be much larger," Klapmeier said.
One crucial difference between Columbia and Cirrus is the fact that Columbia airplanes don't have emergency parachutes. Cirrus spent some $10 million alone developing and certifying its system. Klapmeier said he presumes the Columbia 350 and 400 models could be retrofitted, but he wouldn't totally commit to it at this point. He said that he still feels strongly about the safety benefits.
Park Electrochemical President and CEO Brian Shore couldn't say much because his company is publicly traded and is under shareholder obligations. He did confirm that company representatives have made court appearances. Shore said Park Electrochemical has no connection to Columbia as a supplier.
Cessna, meanwhile, has been trying to hold the upper hand since it announced, also on Sept. 24, that it had signed a letter of intent with Columbia to "acquire selected assets and certain liabilities." Cirrus later filed a motion in federal bankruptcy court in Portland, Ore., saying that the proposed bidding process was unfairly favoring Cessna.
Whatever happens, Klapmeier said Cirrus' focus will remain on its single-engine jet program.
October 18, 2007