Brian Sponcil wrote:

"Matt Whiting" wrote in message
...

I don't think Cirrus has come even close to making money yet, on a total
investment basis. I haven't keep track of the total amount of venture
capital they've secured, but I think it was north of $200MM. That will
take a long time to recoup. They may well be profitable at the operations
level, but that isn't the same thing as "making money" overall.


I'm sure you're right but a quick look at the numbers makes me wonder how
they AREN'T going to recoup that $$. Cirrus is selling something like 50
planes a month. You'd think their profit margin on a 300k airplane would be
at least 20k. If so, that's roughly 10Mil in profit every year and a 20
year break even on the initial 200Mil investment.

Well, most new airplanes have a large initial sales rate and then it
tapers off. I'd be VERY surprised if Cirrus can maintain this rate for
20 years. That would be 12,000 airplanes of one basic model and that is
very rare in the GA world. Add in the need to invest in new designs
over the years, and it can be very hard to make money in GA.


Diamond's numbers are roughly the same. Supposedly the Austrian factory
pumps out 400 planes/year and another 100 come out of Ontario. Unless these
guys are operating on Dell like profit margins it's hard to see how they
won't make their investments back.

They may well make them back, I just don't know. Obviously, they think
they will or they wouldn't be building airplanes! :-)


I suspect that Cessna has run the numbers and realizes that the cost of a
"clean sheet" light airplane would simply never be recovered in today's
market.


Agreed, but Diamond nonetheless managed to come up with 4 "clean sheet"
designs in less than 10 years - including a light jet. Why can't Cessna and
Piper do it? Is the FAA THAT much worse than the JAA (or whatever the
european equivalent is)? You also have to wonder how much longer Cessna and
Piper can afford to NOT bring out a new design.

Are all of these designs currently certificated? Cessna brings out new
designs all of the time, it is just that they are all bizjets as that is
where the real money in GA lies currently.


Matt