Cirrus Aircraft acquired by China

[Jim Logajan]

OK - the news reports say it was acquired by a Chinese company, not China. But the "company" is state owned:

http://en.wikipedia.org/wiki/Aviation_Industry_Corporation_of_China

So does this immediately make it an inferior product, or is there a grace period involved? :wink2:

(Link to press release: http://news.cirrusaircraft.com/files/press-release-2-28-11-1.pdf)

 

[NC Pilot]

OK - the news reports say it was acquired by a Chinese company, not China. But the "company" is state owned:

http://en.wikipedia.org/wiki/Aviation_Industry_Corporation_of_China

So does this immediately make it an inferior product, or is there a grace period involved? :wink2:

(Link to press release: http://news.cirrusaircraft.com/files/press-release-2-28-11-1.pdf)

Another one bites the dust...
AvWeb link:

http://www.avweb.com/avwebflash/news/Cirrus_Acquired_By_Chinese_Company_204192-1.html

At least the Chinese have money to keep Cirrus afloat for a while. They already own the engine supplier.

 

[olasek]

I have a hard time to decide whether it is a good or bad news.
I wonder if this jet project was such a great idea from the start.

 

[mikea]

Considering that you'd never be able to fly a Cirrus in China....

 

[zaitcev]

Considering that you'd never be able to fly a Cirrus in China....

Never say never. They created airspace class G in Russia last November, and in the same act permitted to fly GA airplanes in G airspace without a prior permission, which is frankly amazing. Their G rules are roughly congruent with ours except it's thicker by default (1000 m vs 1200 ft AGL). If things roll smoothly, China is going to come into the fold eventually.

P.S. Wait, I see what you mean. Indeed I am not likely to live long enough to fly my Cirrus across China.

P.P.S. This post is typed on a chinese computer of Lenovo brand, which is our corporate standard.

 

[Ted]

So does this immediately make it an inferior product, or is there a grace period involved? :wink2:

Depends on your opinion. Mine: Cirrus produced an inferior product the day it opened its doors, so this change of ownership is irrelevant.

Signed,
The guy who flies 40+ year old metal airplanes

 

[Gary F]

Depends on your opinion. Mine: Cirrus produced an inferior product the day it opened its doors, so this change of ownership is irrelevant.

Signed,
The guy who flies 40+ year old metal airplanes

So you don't like plastic airplanes or is it just Cirrus you have a problem with? Why?

 

[Everskyward]

Never say never. They created airspace class G in Russia last November, and in the same act permitted to fly GA airplanes in G airspace without a prior permission, which is frankly amazing. Their G rules are roughly congruent with ours except it's thicker by default (1000 m vs 1200 ft AGL). If things roll smoothly, China is going to come into the fold eventually.

I agree. One of the last places I ever thought I would land an airplane would be Russia, which I did last year, and I know people who have flown (larger) GA airplanes to China. I think one of the main issues, at least in eastern Russia, is that there doesn't seem to be 100LL available unless you cache some for yourself. There are also huge distances between airports.

 

[Ted]

So you don't like plastic airplanes or is it just Cirrus you have a problem with? Why?

I don't like plastic airplanes in general, but I particularly don't like the Cirrus. Call it a combination of my thoughts on how the plane handles, well, anything that I have to deal with in my flying, combined with their marketing.

 

[murphey]

"CAIGA is a world‐class provider of general aircraft products and related services"

Name one.

Actually, the purchase is really irrelevant. The brothers haven't controlled the company for years, they haven't owned a majority interest for years, and Alan was out a couple years ago.

All that's happened is one investment company sold one of its businesses to another.

 

[Gary F]

I don't like plastic airplanes in general, but I particularly don't like the Cirrus. Call it a combination of my thoughts on how the plane handles, well, anything that I have to deal with in my flying, combined with their marketing.

I flew a SR20 and did not enjoy it but I love my plastic Diamond DA40. It is exceptionally fun to fly and has a fantastic view. I wish it had a longer track record but so far so good.

 

[flyingcheesehead]

Actually, the purchase is really irrelevant. The brothers haven't controlled the company for years, they haven't owned a majority interest for years, and Alan was out a couple years ago.

All that's happened is one investment company sold one of its businesses to another.

Yup. Someone called it "sad" but Cirrus has been majority foreign-owned for a while now - Mostly Middle Easterners before IIRC. "Sad" was Alan being forced out.

What *is* sad is AvWeb, who states:

Cirrus was founded by Alan and Dale Klapmeier about 12 years ago

Ummm... 12 years ago, they started shipping the SR20. Prior to that, there was the whole development cycle for the SR20, and before that there was the VK30. Cirrus was actually founded in 1984. So apparently to AvWeb, 27 years is "about 12 years."

 

[denverpilot]

OK - the news reports say it was acquired by a Chinese company, not China. But the "company" is state owned:

http://en.wikipedia.org/wiki/Aviation_Industry_Corporation_of_China

So does this immediately make it an inferior product, or is there a grace period involved? :wink2:

(Link to press release: http://news.cirrusaircraft.com/files/press-release-2-28-11-1.pdf)

It isn't a matter of product quality, it's a matter of where the profit now goes for the hard working folks at Cirrus and dilution for other investors.

Same reason I'm distressed about the sale of Continental. I have to replace an O-470 someday. Would prefer that no money go to the Chinese government in that transaction, if I can avoid it.

Someone at Cirrus decided that sending the company profits to China was okay as long as they had a job working for the Chinese government here in the U.S., apparently.

 

[flyingcheesehead]

It isn't a matter of product quality, it's a matter of where the profit now goes for the hard working folks at Cirrus and dilution for other investors.

Well, you have nothing new to worry about. They bought it from Crescent Capital, AKA the First Islamic Investment Bank of Bahrain. The profits haven't been kept in the US for a LONG time.

 

[Gary F]

I doubt that Cirrus has been generating large profits. Just wait until the liability judgments start rolling in. Is it possible that China understands the benefits of GA as a means of transportation in an unusually large country and as a cost efficient way to train future airline pilots? It appears that China is establishing a GA infrastructure as well.



http://www.diamond-air.at/diamondchina+M52087573ab0.html

http://www.tcpalm.com/news/2010/feb/03/piper-aircraft-announces-new-brunei-based-plans/

http://www.cessna.com/NewReleases/New/NewReleaseNum-1192324660172.html

http://www.amtonline.com/article/article.jsp?id=12194&siteSection=1

 

[Anthony]

I agree. One of the last places I ever thought I would land an airplane would be Russia, which I did last year, and I know people who have flown (larger) GA airplanes to China. I think one of the main issues, at least in eastern Russia, is that there doesn't seem to be 100LL available unless you cache some for yourself. There are also huge distances between airports.

Yes, but that's commercial ops, not private. Vastly different.

 

[Ken Ibold]

Ummm... 12 years ago, they started shipping the SR20. Prior to that, there was the whole development cycle for the SR20, and before that there was the VK30. Cirrus was actually founded in 1984. So apparently to AvWeb, 27 years is "about 12 years."

Ouch! Oh the back room stories of that place ...

AvWeb is a miracle of the modern aviation economy -- worth exactly what you pay for it.

 

[Everskyward]

Yes, but that's commercial ops, not private. Vastly different.

We were Part 91 on that trip. In fact it's MUCH easier to do a trip like that Part 91 than 135.

 

[Ken Ibold]

IMO, the whole recent history of Cirrus has as much to do with sibling rivalry between the Klapmeier brothers as it does to the world of high finance.

 

[Everskyward]

I doubt that Cirrus has been generating large profits. Just wait until the liability judgments start rolling in. Is it possible that China understands the benefits of GA as a means of transportation in an unusually large country and as a cost efficient way to train future airline pilots? It appears that China is establishing a GA infrastructure as well.

I think you are on the right track here. I also think that the Chinese may be interested in learning about the technology and logistics of making small airplanes and this is a good way to do it.

 

[rpadula]

Well, you have nothing new to worry about. They bought it from Crescent Capital, AKA the First Islamic Investment Bank of Bahrain. The profits haven't been kept in the US for a LONG time.

And IIRC, the previous Commander incarnation (circa late '90s, early 2000's) was owned by a Kuwati company. I'm having a hard time remembering the name right now. It was traded on the pink sheets, I think. Bill, do I have that right?

P.S. Kent, you're assuming there are any Cirrus profits at all. :wink2:

 

[Fearless Tower]

So does this immediately make it an inferior product, or is there a grace period involved? :wink2:

The quality won't change - it may be Chinese owned, but they will continue to produce the aircraft here. Now the Chinese may try to learn something about airplane construction in the process that may later translate to production in China, but that is a long way away.

 

[Fearless Tower]

Chinese may be interested in learning about the technology and logistics of making small airplanes and this is a good way to do it.

That is very true and something that the Chinese have had a tough time doing. As good as the Chinese are at reverse engineering technology, they have been completely unsuccessful in manufacturing their own reliable jet engine.....I wouldn't be suprised if they are trying to buy up P&W right now.

 

[flyingcheesehead]

AvWeb is a miracle of the modern aviation economy -- worth exactly what you pay for it.

There is good stuff there, but IMO it's all in the columns - John Deakin, Don Brown, Rick Durden, etc. Clearly the "about 12 years ago" was pulled straight from someone's ass.

 

[denverpilot]

There is good stuff there, but IMO it's all in the columns - John Deakin, Don Brown, Rick Durden, etc. Clearly the "about 12 years ago" was pulled straight from someone's ass.

The regular articles from the well-known names all stopped getting updated with any regularity in 2009. Don't know what happened there, but it's been a long time since I was excited to see a weekly AvWeb email knowing that there'd be great new articles from Garrison, Brown, Deakin, etc.

Last year AvWeb seemed to switch over to the same snarky commentary available from the podcasts (mine included) with Paul Bertorelli as Chief Agitator. It's not the same.

So far this year, EAA's online and print content have outshined everyone. They're investing in their online future heavily, it seems. AOPA is always late and doesn't really seem to have made the inevitable transition from print-backed-by-Web to Web-backed-by-Print.

Flying seems to be having some unknown internal turmoil with the big announcement that they landed Michael Maya Charles, and then him immediately leaving. Still curious about that.

And way down the list below all of that is ANN. They're still a legend in their own minds... Not even keeping up with the quality level of the better (not mine!) podcasts.

 

[Ken Ibold]

Flying seems to be having some unknown internal turmoil with the big announcement that they landed Michael Maya Charles, and then him immediately leaving. Still curious about that.

Like the manufacture of sausage and law, there are some things you don't WANT to know!

 

[flyingcheesehead]

The regular articles from the well-known names all stopped getting updated with any regularity in 2009. Don't know what happened there, but it's been a long time since I was excited to see a weekly AvWeb email knowing that there'd be great new articles from Garrison, Brown, Deakin, etc.

Yeah... I just looked. Last column was Rick's Nov 9 2009 one. And the previous two were his as well.

Last year AvWeb seemed to switch over to the same snarky commentary available from the podcasts (mine included) with Paul Bertorelli as Chief Agitator. It's not the same.

It seems that AvWeb has moved from columns to video. Everyone seems to want to move to video.

Granted, some of the videos have been funny - In particular, I liked the one with Bertorelli flying his cub around wearing a full airline pilot uniform with an ever-growing number of "dork bars" (I think there were 12 at the end? ) but a lot of it is pretty dry.

And way down the list below all of that is ANN. They're still a legend in their own minds... Not even keeping up with the quality level of the better (not mine!) podcasts.

No comment.

 

[JesseD]

That is very true and something that the Chinese have had a tough time doing. As good as the Chinese are at reverse engineering technology, they have been completely unsuccessful in manufacturing their own reliable jet engine.....I wouldn't be suprised if they are trying to buy up P&W right now.

Well they've gotten to the point now that it's easier to buy a company and get production access.

 

[denverpilot]

Well they've gotten to the point now that it's easier to buy a company and get production access.

First and foremost, they get all of Cirrus' technology for making aircraft. As some have pointed out, they'll probably do it poorly -- but who knows?

The longer-term reason they're buying these companies is more subtle, I believe. And the Chinese tend to think in very long terms. Way longer than our idiotic "must have quarterly growth" system here...

They know we can't put import restrictions on Cirrus, so when they start making new aircraft in China in the future, they "own" a U.S. company to sell under that name. Import restrictions won't EVER count against any product the parent makes and dumps here.

Great business chess move. Their government's manipulation of their currency value makes it all possible.

 

[zaitcev]

Import restrictions won't EVER count against any product the parent makes and dumps here.

I do not think this is true. Case in point is Ford. They make Ford Transit Connect in Turkey and "dump" it here. In order to bypass the 25% "chicken tax", TC arrives as a passenger van. Then, Ford's contractors rip out the seats and install a rather crudely made cargo floor before the van is sold. Seems like the import restrictions matter a lot.

 

[denverpilot]

Hard to say. But it doesn't make any sense to buy a U.S. Aviation company that's not turning a profit in a downward aviation market unless all they wanted was the tech and pre-announcing "no layoffs". Hmm.

 

[Jim Logajan]

First and foremost, they get all of Cirrus' technology for making aircraft. As some have pointed out, they'll probably do it poorly -- but who knows?

The longer-term reason they're buying these companies is more subtle, I believe. And the Chinese tend to think in very long terms. Way longer than our idiotic "must have quarterly growth" system here...

They know we can't put import restrictions on Cirrus, so when they start making new aircraft in China in the future, they "own" a U.S. company to sell under that name. Import restrictions won't EVER count against any product the parent makes and dumps here.

Great business chess move. Their government's manipulation of their currency value makes it all possible.

Chinese companies already make parts for Boeing and Airbus (the latter has an assembly plant there for A320s.) They are hot to compete head on with them in the big jet market, too. So I don't think Cirrus has anything useful to provide them, manufacturing-wise.

But by buying Cirrus they get something that they can't get quickly other way: a quality brand name. Here's a 5 year old article that claims to explain why China purchases struggling American companies:

http://www.slate.com/id/2121095/

"But for a Chinese firm like Haier, even Maytag's tarnished good name is a vast improvement over what it has. It can take decades and tons of money to build name recognition among U.S. consumers. Now Haier can buy it in a matter of weeks"

 

[wabower]

What about that subject do you think they don't already know?

The quality won't change - it may be Chinese owned, but they will continue to produce the aircraft here. Now the Chinese may try to learn something about airplane construction in the process that may later translate to production in China, but that is a long way away.

 

[Ted]

They know we can't put import restrictions on Cirrus, so when they start making new aircraft in China in the future, they "own" a U.S. company to sell under that name. Import restrictions won't EVER count against any product the parent makes and dumps here.

That is not true. Even an American company has a tremendous number of hoops to jump through in order to sell a certified aircraft. China cannot simply start producing Cirrus aircraft in China without jumping through the appropriate hoops, which are in large part at the whim of whichever ACO they're working with.

That doesn't mean they won't do it, but from an FAA perspective at least, it will require a lot of work.

 

[denverpilot]

That is not true. Even an American company has a tremendous number of hoops to jump through in order to sell a certified aircraft. China cannot simply start producing Cirrus aircraft in China without jumping through the appropriate hoops, which are in large part at the whim of whichever ACO they're working with.

That doesn't mean they won't do it, but from an FAA perspective at least, it will require a lot of work.

Fair 'nuff. Airplane co-owner had some interesting comments last night along the lines of, "All of the promising up-and-comers over the last decade making certified aircraft were well-funded, and seemed to be doing well, but all have failed. It appears from the outside that certification costs are so high that the only new aircraft designs that succeed are Experimental." I brought up LSA and he agreed that some of those are also working out.

That led to, "If LSA type certification rules could be expanded to cover 4-place 200 MPH aircraft..." which we both felt won't happen... "that could change aviation history and bring back a robust U.S. Aviation market."

But I brought up that it'd be VFR only, and that even an LSA is typically a $100K aircraft, new... And we both ran out of ideas at that point. Sure you can get really long loans on aircraft, but a country wallowing in consumer/personal debt already won't be buying many of those at that price. Some, yes. But not anywhere close enough to replace the trainer fleet, etc.

It sure feels like we'll be flying the 1960s-70s aircraft until someone wrecks them (with proper maintenance) for the majority of my lifetime for 4-place and up. If we apply that to the marketing problem of what people's perceptions are of GA... When a "luxury" car is half the price and loaded with leather, features, etc. We have a serious problem.

Playing devil's advocate to myself here for a minute... Maybe we do need cheap Chinese airplanes if we want GA to grow in my lifetime. But how to keep ourselves safe from shoddy workmanship and parts? Sigh. That leads to big product liability lawsuits and the 80s all over again...

 

[Ted]

LSAs are not VFR-only. The Sport Pilot rule only allows for VFR flight, but there are LSAs out there that are IFR certified. Jay Maynard's Tron-Zodiac had a very nice IFR-certified panel.

The problem LSAs have is that, for the price of a new LSA, you can buy a lot of used planes that will cost a bit more to operate, but still be pretty reasonable. I have a hard time making the argument that anyone should buy a $100,000 LSA when, for half the cost, I can buy a nice Mooney M20F that's faster, holds more, etc. The only disadvantage is that you're looking at used vs. new, if you consider used to be a disadvantage (I don't).

For $100k you need to get at least a new 182 to bring aviation back to the people. At that point, many of the people who are currently priced out of aviation would be able to return to it. It would also help the rest of us because that would drive down the costs of current equivalent airplanes.

 

[tonycondon]

Maybe we do need cheap Chinese airplanes if we want GA to grow in my lifetime. But how to keep ourselves safe from shoddy workmanship and parts? Sigh. That leads to big product liability lawsuits and the 80s all over again...

This. Hopefully FAA Certification rules will protect us a little from shoddy workmanship and parts. I hope the Chinese decide they need to start flying gliders too. Fiberglass and Carbon fiber aircraft are really labor intensive to build.

 

[steingar]

My real worry in seeing an aircraft manufacturer change hands repeatedly is eventually the company will carry so much debt that it will be insolvent despite making a nice profit. Happened to my local grocer.

I am not in the least worried about the Chinese snapping up cutting edge 1970s technology.

 

[PittsDriver]

Playing devil's advocate to myself here for a minute... Maybe we do need cheap Chinese airplanes if we want GA to grow in my lifetime. But how to keep ourselves safe from shoddy workmanship and parts? Sigh. That leads to big product liability lawsuits and the 80s all over again...

I don't think the Chinese are investing in US based GA companies because of anything to do with our market here. The future of GA is in China. I don't see any significant R&D dollars being spent here on Cirrus or Continental despite the press reports to the contrary. I see a bunch of Chinese aerospace people running around in these companies for a few years and then building their own products for their market in China. Money will be spent here to the extent that it helps them with their massive opportunity there. We may see a Cirrus Jet but I don't think any of this is good for piston GA here. For some reason I can't quite put my finger on , I think there's little chance they'll want to build aircraft here to satisfy that demand. :yinyang:

 

[denverpilot]

For $100k you need to get at least a new 182 to bring aviation back to the people. At that point, many of the people who are currently priced out of aviation would be able to return to it. It would also help the rest of us because that would drive down the costs of current equivalent airplanes.

I'd have mixed feelings about that... my 35 year old 182 would be pretty worthless overnight if Cessna figured out how to do that. They won't so I'm pretty safe.

Sadly, the best thing that can happen for me personally is Cessna keeps making $350K 182s and limping the production line along, so mine is still supported by an "alive" manufacturer of parts. If they were to go under, organic growth would help the value of my airframe for a short time, but parts availability would become a problem like the Commanders, and then prices would fall dramatically.

I'd like to root for scenario #1... affordable Cessnas... but it'd be bad for me. And Cessna going out of biz would also be bad.

The middle of the road where they're making overpriced 182s is the best place for me, and probably the worst place for GA as a whole.

Sick and twisted Catch-22.