Klapmeier Team Vying To Buy Cirrus Jet Program

 - June 26, 2009, 9:21 AM
Alan Klapmeier, chairman of Cirrus Aircraft, has formed a team to raise funds to try to buy the Vision SF50 single-engine jet program from majority Cirrus owner Arcapita Bank. “I feel comfortable that we can do this,” said Klapmeier. “Obviously it’s a difficult time to be raising capital, but that means more focus on funding better projects. This is a good project to fund.” Although Cirrus has refunded about 8 percent of Vision deposits, according to president and CEO Brent Wouters, the jet program “is absolutely still under way.” There are deposits for more than 400 Visions, he told AIN

While the news about Klapmeier’s plan to buy the jet program was released today, he plans to update attendees during a speech tomorrow morning at the annual Cirrus Migration in Duluth, Minn. He admitted, “We’ve been exploring this possibility for a while. The conclusion we’ve reached with Arcapita is that this was going to become more widespread, and rather than rumors, it was time to talk more publicly about this process.”

Klapmeier’s effort is currently operating under the name Aegis, but that may change. The only other team member he would name at this point is Ed Underwood, one of the cofounders of Arcapita and a former Cirrus board member. Until Klapmeier raises the necessary funds and completes a transaction with Arcapita, the jet, he said, “is still a Cirrus program and Cirrus continues to fund it and make progress.”

If his bid is successful, Klapmeier and his team will need to build a new facility to house the Vision jet program or possibly negotiate a manufacturing agreement with Cirrus, which is highly experienced in building composite airframes. “Addressing that question will be part of a final deal,” Klapmeier said. “There are a lot of advantages to staying connected. It’s not a requirement, but it’s a benefit that needs to be considered. We’ll be able to build it without them, and they’ll be able to finish without us. This is about looking for the mutually most beneficial path, and that’s what we’re exploring.”

The fundamental issue that prompted Klapmeier to pursue taking over the Vision program is that if the program remains with Cirrus, further delays will be inevitable. The original funding plan was to rely on a combination of internal Cirrus money and external capital, he explained. “As situations change, the market for new aircraft [has deteriorated] and Cirrus has had to make lots of tough choices recently. The board obviously has to look at what our other options are for getting the jet done. I think all parties would agree–Cirrus, Arcapita, certainly our team–that this is really about getting the jet done. For me it would be a tragedy if customers who are excited about this airplane were not able to get it. In these capital-constrained times, this seems like a good way to get the airplane done. Certainly the customers want the airplane finished sooner rather than later, and that’s clearly going to require additional capital, and so now it’s a question of where that capital is going to come from. But without additional capital, the program will take longer.”

Commenting on Klapmeier’s announcement, Wouters reaffirmed Cirrus’s commitment to the Vision jet program. There are 120 people focused on the program, he said, now working on detail design of structure, systems and tooling. “Today we’re cash-flowing it and devoting every bit of our R&D resources, both cash and otherwise, to the jet,” he said. “We’re making good progress. But we’ve always thought the program might need some outside capital, [which] would allow us to do things a little more efficiently, a little faster. Our expectation is that we will continue to do it internally and that we’ll move forward accordingly. It’s a strategic initiative for us and will continue to be a strategic initiative for us.”

Wouters acknowledged that Klapmeier “did approach the Cirrus board and express a desire to maybe acquire the program, and in an effort to make sure we were looking at every dark corner of the world for capital, we said, sure, we don’t know what will come of it, we’ll see what he can come up with. Alan has a unique capability to get people interested in this, and he’s got a proposal; we’re happy to hear it.”

On the eve of the annual Cirrus owner migration event in Duluth, Minn., Cirrus chairman Alan Klapmeier announced today that he has assembled a team to acquire the aircraft manufacturer’s Vision SF50 single-engine jet program from majority owner Arcapita Bank. We talked with Klapmeier to get more details and find out why he’s pursuing this course.