How is the A500 program progressing?
As of late last month, the A500 is certified to its full 5.5-psi pressurization, which provides a sea-level cabin to 12,500 feet. Additional certified upgrades include a fully coupled IFR autopilot, day/night VFR/IFR, single-pilot flight operation, leading-edge cuffs to improve low-speed handling characteristics and an expanded c.g. range. Maximum operating altitude expansion to 25,000 feet will occur this winter concurrent with flight-into-known-icing certification. Final performance numbers will include a 230-knot cruise speed and an NBAA IFR range of more than 1,100 nautical miles.
Now that most of the work is done on the A500, what’s the plan for the A700 AdamJet?
We’ve had some delays on the A700, but this stemmed mostly from setbacks on the A500. The A700 had to follow the A500–we couldn’t move people over from the A500 project to the A700 when the A500 wasn’t finished. We had to work our way through the FAA certification process, and there have been a lot of learning curves. In fact, the FAA requirements are so rigorous that it’s hard to pass some on the first try. But we’ve learned from the A500, and most of the A700 FAA tests are being passed on the first try. Further, many of the mechanical systems are identical on both airplanes, which makes the A700’s program schedule more predictable.
We now expect the A700 to get FAA approval early next year. A700 serial-numbers three and four are in production. Serial-number three is a fully conforming test airplane, while serial-number four is the first customer A700, which will be delivered to air-limo startup Magnum Jet. We have fleet orders for 276 A700s and additional orders for 65 airplanes from individual owners.
What’s your outlook forthe very light jet market?
New-generation aircraft are dominant in the marketplace. I envision that the business jet market will double, helped in large part by the introduction of new-generation VLJs and light jets. The market will simply get bigger due to the lower price points of these new aircraft. On the low end I see a market for 500 aircraft per year. On the high end I’d put that at about 1,000 VLJs annually.
Since the late 1990s, Cirrus has delivered 2,500 airplanes with an average price of $500,000. Last year alone Cirrus shipped 600 aircraft. Its products are creating new owner-pilots, many of whom are high-net-worth individuals. It’s only natural that some of these owners will move up to jets–most likely very light jets.
There’s also a huge market for people who want private air transportation but don’t want to hire pilots and set up a flight department. An example of this is the jet-card market, which has really taken off over the past few years. And since these new aircraft are half the cost of older ones and have lower direct operating costs, they’re great vehicles for charter and air-limo operators. I’ve seen 20 different business plans for air limos, and I’m confident that some will work. The market will sort things out in the air-limo realm. The fact is that there currently are hundreds of aircraft in fractional and charter use, so the demand for these newer aircraft is there.
Adam Aircraft recently received
$93 million in additional funding. How will this be used?
We’ve been very cost effective in our use of capital. In fact, the A500 certification program has come in under $100 million. This recent injection of funding will help ramp up production of the A500, capitalize the A700 program through certification and still provide working capital deep into next year. The total capital of the company is about $180 million to date. Any follow-on funding will be used for faster production ramp up or the introduction of a third or fourth product.