Safire restructures, will fly jet by October

 - October 2, 2007, 11:09 AM

“There is no option. There will be no delays–it’s definite. We will fly the prototype of the Safire Jet before the end of September.” This is the promise made by Miguel Correa, chairman of Miami-based Safire Aircraft. With full assembly of the prototype of the very light twinjet scheduled to have started last month, Correa told AIN that the company has now shifted its attention to manufacturing.

That shift is port and parcel to a “restructuring” of the company announced in late April by Safire president and CEO Camilo Salomon. The purpose of the reorganization is to “focus on the completion and development of the Safire Jet prototype and to resume aircraft sales,” said Salomon.

The restructuring coincides with an expected new influx of financing. “We are in the final stage of negotiations with an undisclosed investor group in Europe that is putting a considerable amount of money as straight equity into the company,” Salomon told AIN. “The amount of money is enough to result in the investors’ gradually taking financial control of the company,” he said.

“We have agreed on a dollar amount and an investment schedule according to our cash-flow needs,” Salomon explained. Safire is a privately held company, and Salomon declined to disclose dollar amounts other than to say “it’s enough to take us through first flight. We do have some funds to go through certification, but we will need to do one more round of financing to get the airplane into production.”

Salomon said the funding deal also involves a “slightly different strategy” as to how Safire will be run. That and the restructuring has resulted in changes to the management team. For example, at least three staff functions were eliminated: those of director of marketing and public affairs Robert Stangarone, director of communications Clayton Callihan and v-p of finance Leonard Maniscalco. “But I don’t anticipate any more changes in the management team,” Salomon said. “We [the company and the investor group] will jointly decide on a new CFO shortly.” In the interim Salomon is serving as CFO.

Shortly after being dismissed, both Stangarone and Callihan disseminated e-mails saying that several other positions had been eliminated in addition to theirs.
Salomon reacted swiftly by sending a follow-up e-mail. “We were quite disturbed to have been made aware of the e-mail Robert Stangarone has sent to all of you. It could well be misleading on the objectives our company is pursuing. There must be no misunderstanding between us. Safire Aircraft is gearing to become a major producer of light jets in this country.” To do so, he said, “we have decided to concentrate our efforts on completing the development and manufacture of
the first prototype for flight testing later this summer, as well as enhancing the existing and new sales opportunities while keeping our marketing efforts to a lower level.”

Safire Aircraft is not downsizing or in any way “undergoing a layoff,” Salomon claimed. “To the contrary, we are building the company through a very active recruitment program. In fact, we are averaging more than five new hires per month.” Chairman Correa explained that the new-hires are destined for manufacturing jobs. At press time, he told AIN there were 120 employees, and he took pride in saying that “we have always been a very lean company.”

Additional functions include a new sales organization, under the leadership of Correa. Michael Margaritoff, Safire’s founder, has been appointed v-p of sales.

In addition to the investor funding, Safire expects to start generating cash after the first flight. “Our position holders will have to make up their minds within 30 to 60 days after the aircraft has flown a minimum of 10 hours to convert their non-binding purchase order [secured with an $8,000 non-refundable deposit] by making a 15-percent down payment.” The company expects to complete the first 10 flight hours by the end of October.

Safire claims non-binding orders for about 400 aircraft, 31 of which are already firm sales. The company said it is also talking with an additional 100 buyers of the original all-composite S-26 design “who haven’t decided which way to go.” Last year Safire announced it would scuttle the S-26 in favor of the all-metal, more powerful Safire Jet that would go faster, higher and farther.

The price of the six-place twin turbofan will increase to $1.495 million for new orders placed after the prototype flies. The current price is $1.395 million. The company said it would reveal a training partner, an insurance program, a financing program and a customer-support program later this year. Deliveries are scheduled to start in 2006, pending Safire’s receiving its final round of fundi