2009 New Business Jets: Recession raises the jet singles bar

 - October 1, 2009, 11:22 AM

Citing a combination of specific business challenges, market conditions and capital scarcity, the three leading single-engine VLJ contenders–Cirrus, Diamond and Piper–have either implicitly or explicitly moved their development and delivery schedules decidedly to the right. Almost 27 years after bizjet legend Allen Paulson announced the single-engine jet Gulfstream Peregrine and after the $120 million failure of VisionAire in 2002, the single-engine bizjet remains a market illusion. Here is what is going on with the top three single-engine VLJ programs:

Cirrus SJ50
Despite assurances this summer from CEO Brent Wouters that the Cirrus SJ50 “personal jet” program “is moving forward and we are making very good progress,” public cracks began to emerge earlier this year and even Wouters conceded, “The schedule today brings the product to market in 2012. Without external capital that is going to be extremely difficult to do.” And it appears, at least for now, that Cirrus’s parent, Arcapita, is done pumping money into the program.

Meanwhile, cash from Cirrus’s current ongoing operations, badly hit by a dramatic drop in sales of its piston aircraft, will be insufficient to finish development and begin production on the $150 million program. Cirrus cofounder Dale Klapmeier acknowledged, “We are taking the approach that we have to do it ourselves.” Without a dramatic uptick in the company’s piston aircraft sales, that could be a task with an extremely long timeline.

Indeed, until the financial collapse of last year, Arcapita was actively shopping the company, although Klapmeier insists that the investment firm, funded largely by Middle Eastern oil money, “is under no pressure to sell.”

Demonstrable signs of strain appeared earlier this year when the Duluth (Minn.) Economic Development Corp. acknowledged that Cirrus was more than $200,000 in arrears for rent on the hangar where the jet is being developed and where the 125 people assigned to the program work. Cirrus’s first avionics supplier for the SJ50, L3, then sued the airplane maker for $21 million for breach of contract after Cirrus opted to use Garmin as the avionics supplier.

Then Cirrus went public with a plan by company cofounder Alan Klapmeier to independently raise the development budget for the jet and perhaps develop it under a separate corporate umbrella. That effort failed late this summer when Alan Klapmeier and Cirrus could not come to terms on price. Cirrus’s board subsequently declined to renew Alan Klapmeier’s contract as co-chairman, and he left the company.

For now, Cirrus intends to continue with the program and hold onto it. “We’re not going to let it go to Wichita,” said Dale Klapmeier.

The program’s single non-conforming prototype has accumulated more than 200 hours in the air since its first flight on July 3, 2008. Numerous and significant changes have been made to the aircraft. They include lighter and simpler flaps, changing the V tail’s sweep and mounting enlarged dorsal fins beneath it to create an “X” tail. The thrust vector of the engine nozzle has also been changed “to make it feel more like a piston airplane,” Dale Klapmeier said. Several other initiatives to reduce weight and cost are also under way.

Cirrus has not released an estimate of when a conforming prototype is likely to fly, but Wouters said the company is preparing to start the program’s “detailed design phase” and that most of the jet’s 400 depositors have stayed loyal to the program. “We are absolutely executing the jet program,” said Wouters. “We have to get it done.”

Diamond D-Jet
The five-seat Diamond D-Jet is now in its seventh year of development and has
an order book hovering around 300. Price for the aircraft recently increased by
25 percent, to $1.89 million. A company spokesman told AIN that certification and initial deliveries will occur in the second half of next year. That might be overly ambitious as only one of the company’s three test aircraft is conforming and two more, scheduled to join the test program, have yet to fly but are expected to do so by year-end. Only S/N 3 is fitted with a production Williams International FJ33-5A engine (1,900 pounds of thrust). More than 200 people are working on the $95 million program, which has been almost one-third funded by the Canadian and Ontario governments. Another $100 million will be required to place the aircraft into production.

Diamond’s Mark Lee, director of sales and marketing for the D-Jet, said the aircraft will be the first single-engine VLJ to reach the market. Performance is “right where we want it to be,” he said. Flight testing to date has shown a ceiling of 25,000 feet, a fuel burn of 66 gallons per hour at 315 knots and 50 gph at 270 knots, and a range of 1,350 nm.

Lee said that the program’s schedule has moved “a bit to the right,” in large part because of the insolvency of diesel aircraft engine maker Thielert. That crippled the production line for Diamond’s DA42 twin-engine trainer and forced the company to expend resources developing its own proprietary replacement Austro diesel engines. Larger economic factors also retarded the D-Jet’s progress.

Lee said that several large fleet orders have bolstered the program. Flight school ATP has ordered 20 airplanes; European fractional provider Smart Air, eight; and Canada’s Chartright Air Group, 10. ATP is Diamond’s designated training provider for the D-Jet and will offer a nine-day transition course in the D-Jet for piston-rated pilots and a six-day course for those who are already qualified in turbine aircraft.

Piper is expected to announce a new development schedule for the seven-seat PiperJet this month. The $2.2 million (2006 $) jet was announced in 2006 and was originally scheduled to enter into service next year. However, that fell into abeyance as Piper’s then-parent American Capital shopped the company and piston aircraft sales dropped dramatically.

The new schedule is widely expected to be revised by at least two and possibly three years. This summer Piper’s new CEO, Kevin Gould, announced that the program would be hiring 50 new engineers over the next nine months and key design and vendor decisions remain to be made.

Piper was acquired in May by Imprimis, a Singapore-based investment company backed by the Brunei Ministry of Finance. The Imprimis investment is widely seen as recharging the PiperJet program. Piper had previously received $32 million in guarantees from state and local governments to keep the PiperJet program in Florida.

A non-conforming prototype of the PiperJet first flew in July 2008 and has accumulated more than 200 hours at speeds up to 250 knots. Based on preliminary data, Piper is confident that the Williams FJ44-3AP-powered (derated to 2,450 pounds of thrust) PiperJet will achieve its goals of 360-knot cruise at 35,000 and a range of 1,300 nm. Climb time to 35,000 feet is 22 minutes. Concerns about unusual pitch changes due to the tail-mounted engine’s high centerline appear to have been ameliorated thanks to a new variable thrust nozzle Williams developed for Piper’s application. Using the Coanda effect, the nozzle automatically changes direction of thrust with engine power setting, preventing the nose from significantly pitching down during high power settings. The nozzle is expected to allow the PiperJet to have a fixed horizontal tail and no yaw damper.

Piper currently holds orders for 200 PiperJets, most of them from dealers.