In a milestone development, Cirrus Industries Inc. officials announced on Feb 28th that Cirrus Aircraft will be sold to China Aviation Industry General Aircraft Co. (CAIGA). The decision to merge with, and then be acquired by the Chinese aerospace firm is partially motivated by Cirrus’ need for more funding to further develop their single-engine personal “Vision” jet, a project that Cirrus CEO and President, Brent Wouters, says will cost a total of about $140 million dollars. Cirrus has spent about $60 million on the jet to this point.
Wouters said Cirrus and CAIGA began discussions in 2009, with Cirrus looking for another source of funding, and CAIGA looking to become a leader in the burgeoning Chinese aviation market. “They’re about a $2.9 billion company and they’re well capitalized and they want to grow general aviation and be a general leader in aviation worldwide,” Wouters explained. In addition to its acquisition of Cirrus, CAIGA last year acquired Epic Air, in Oregon, and is bidding on other American aerospace firms.
The deal will be finalized in mid-2011 once regulatory approvals have been secured. The acquisition deal is expected to help Cirrus expand into other markets despite the economic struggles the company has experienced. According to the General Aviation Manufacturers Association (GAMA), Cirrus’ single-engine aircraft shipments fell by 51% in 2009 and another 2% last year, following an overall drop in the industry of 55% in 2009 and another 8% in 2010.
Despite concerns about lost jobs and issues in quality control if the company were to move its manufacturing facilities out of their current location in Duluth, Minnesota, Wouters says Cirrus is committed to keeping everything status quo. “Jobs and job growth are going to be here. Secondly, it will expedite our product development efforts. Everybody knows we have a jet product underway,” Wouters assured. Founded by Alan and Dale Klapmeier, Cirrus’ majority stockholder since 2001 is Arcapita Inc., a Bahraini investment bank. Details about the merger were not disclosed.