Once On The Leading Edge Of A GA Renewal, Cirrus May Prove To Be A GA Embarrassment

News and Analysis By Jim Campbell, ANN E-I-C

Aviation has had a tough couple of years... as a combination of a poor economy, even poorer press, and some startling bad-mouthing from Washington has helped to keep a struggling industry from seeing much progress at a time when survival, without these problems, would have been troubling enough.

Still... there were some bright spots along the way...

Avionics manufacturers produced some very cost-effective and innovative new products, Cessna CEO Jack Pelton was uncommonly effective in communicating some counterpoints to the bad ink the industry had gotten from Washington and elsewhere... and pilots, embattled as they were, did their best to keep flying no matter what.

BUT -- In the last few years, industry giant Cessna has lost about half its workforce, Piper has drawn down significantly, Mooney has all but disappeared and even one of the few truly innovative companies remaining, Diamond Aircraft, had a heck of a time maintaining a development program for their single engine jet and had to put some other projects on the back burner -- until VERY recently.

Which leaves the issue of Cirrus Aircraft... a company that came on strong over decade ago with great promise and dynamic new leadership and should have been the bright shining star for the GA world to follow as the economy started to recover. Instead; the company has become a silent embarrassment as leadership changes and a myopic majority stockholder seemed willing to bleed a company dry as the rest of GA world stood idly by and hoped for the best. 

How did this happen? There was no company in GA that boasted the ability to focus excitement and attention on their activities as Cirrus did... at least until something of a palace coup occurred and booted the figurehead of that organization to the curb. As of now, the company stands ready to be sold to the Chinese/CAIGA within days (if the deal hasn't been inked already), and the future of US GA innovation remains in great doubt -- as do hundreds of American jobs and the fates of a number of suppliers, vendors, stockholders, customers and other interested parties -- many of whom are still owed great amounts of money to this day.

This mess did not happen overnight... and appears to be the result of more than a bad economy -- especially when one actually listens to the complaints of those who have attempted to do business with Cirrus in the past few years. A number of parties cite a repetitive litany of complaints and allegations... falsehoods, lack of timely (or in some cases, ANY) payment, misdirection, gross confusion, threats, improper business conduct, misappropriation/theft of intellectual property, and a number of other corporate sins. And while Cirrus has not been trouble or complaint-free throughout its corporate life, the escalation in such claims after the start of 2009 is startling... as it directly coincides with the downfall of Founder/CEO Alan Klapmeier and the installation of Brent Wouters, formerly the COO, whose enmity and lack of respect for Alan's prior leadership was expressed audibly, on many an occasion.

As noted, the long negative slide of Cirrus was not a sudden event... but seems to have been the result of a series of deliberate actions and aggressive changes in the overall manner/behavior of the company under Wouters. Where former CEO Klapmeier espoused a powerful vision for the company and its interest in being a solid citizen in the GA world... or putting forth a positive and ethical aura for the rest of the industry to follow; Wouters seemed to emphasized the opposite--concentrating on just the bottom line and doing whatever had to be done to further his aims and reputation.

As one laid-off Cirrus staffer put it... "With Alan, you always knew he was in it for the good of the industry... with Brent, well, Brent is in it for Brent."

Klapmeier's end was messy and painful... he was booted out of the CEO slot in early 2009 and within a year was not even able to keep a desk at the company. Alan's main enemy seemed to be his unwillingness to back down on a formula that had proven itself well during the good times and seemed like it might be able to (with modifications, of course) allow them to weather the storm of a severe economic downturn. Klapmeier's "No-BS" attitude was also said to conflict with Wouters on a number of occasions... some of which were witnessed by ANN. Wouters reportedly wanted Alan Klapmeier out as soon as possible and with majority stockholder Arcapita's cold-blooded support, eventually succeeded in ridding Cirrus of its founding leader and corporate conscience. This sent a chill through the Cirrus community... a sense of negativity that was reinforced in coming months with growing reports that all was not right in Duluth.

One of the early indicators of the drastic change in modus operandi revolved around the ultimate effect Wouters' leadership had on an aggressive program that Cirrus (under Klapmeier) had undertaken (in part) with avionics industry innovator, L3 Avionics Systems, several years before. The company had developed an exciting new electronic cockpit (ahead of the Garmin G1000 product and appearing to offer many of the same innovations as the Avidyne product then under development -- soon to be known as "R9") and Alan saw it and some other partners as the answer to, "what do we do next with the SR22?"

Cirrus started awarding contracts to key partners for an aircraft to replace the industry-leading SR22... Alan had pioneered a company philosophy that promoted aggressive upgrades in the product line that not only attracted customers in record numbers (at that time), but built such a rep that Cirrus accomplished something that no one had seen in GA for a LONG time... building a growing list of repeat customers, repeat-repeat customers and repeat-repeat-repeat customers (and even those who ultimately bought and replaced 4 or more airplanes as each new model and innovation was introduced). In concert with L3 Avionics, Alan's team devised a striking Next-Generation Cirrus in order to keep the company and its product line fresh and maintain as much of the sales momentum as they could.  

The new plane, nicknamed the "Paris" aircraft, was to be powered by a fairly radical new V-6 engine then under development by Bombardier, and could offer the owner his or her choice of three different flight decks... to be produced alternately by L3, Avidyne or Garmin. The Bombardier program was aggressive... it had FADEC, a geared drive, could burn alternative fuels and was the result of truly new engineering and material processes. L3's efforts to development a true next-gen flightdeck were extensive and aggressive... and expensive. L3, Cirrus and Bombardier worked together for a number of years on this program, and despite a number of R&D conflicts in how each company approached heavy development programs, each thought that the follow-on aircraft was to be a world-beater. L3 put up big dollars for this development program... first budgeting a significant amount of money to craft their "SmartDeck" for Cirrus... only to find that their original budgets would require a number of additional cash injections to meet Cirrus' evolving goals for the "Paris" airplane. L3 sources note that schedules were made but had to be adjusted numerous times (hence the need for more money) as Cirrus kept upping the ante for this new aircraft. Just as difficult, Bombardier's development schedules slipped as well and the project's complexities grew.

L3, seeing its investment escalate to worrisome proportions, reportedly negotiated a contract addition that basically said that if the Paris program were to fail, that L3's SmartDeck would go aboard Cirrus SR22s. The L3 investment was a ponderous one for the company and after watching some dysfunctional issues come and go between disagreements between Alan and his brother Dale (whose filial relationship would not survive the eventual Cirrus 'war'), as well as conflicting issues with Pat Waddick (then playing a heavy role in the Engineering dept), David Coleal, and Brent Wouters; L3 simply wanted to make sure that they weren't left out in the cold. Persons close to L3 expressed great frustration with the factionalism inherent in dealing with certain members of the Cirrus leadership and while they appreciated "Alan's desire to maintain a competitive environment," many expressed concerns about whether or not Cirrus would succeed with all the conflicts at the top (often pointing to issues with Wouters, Waddick and Dale Klapmeier).

And, then, Cirrus took the wraps off the "The Jet" program and further raised the stakes.

In the meantime; L3 continued to push hard to freeze the design of SmartDeck (after numerous design upgrade-related delays) and seek certification and approval for installation in the SR22. L3 got pretty nervous in all this... but when Alan offered them the carrot of involvement in the "The Jet" program and SmartDeck received a development contract for the prototype jet, L3 thought they were heading for better times -- especially as 2008 got underway. Some 300 SmartDeck systems were reportedly contracted for the piston line and the investment appeared to finally be heading for a payday. But this was not an easy task, as then L3 CEO Adrienne Stevens was reported to have to invest considerable personal time to maintaining the political aspects of the necessary relationships with various senior Cirrus officials and was ill-prepared for what became known as the "New Year's Slaughter."

As 2008 was winding to a close, L3 was juggling with the management shakeup rumors from Cirrus, where they understood that Wouters and Waddick were likely to wind up promoted as Klapmeier's role and influence was minimized. This did not bode well for L3... but since a contract was in place, there were some protections in force to deal with the potential fallout. And as Cirrus started to balk at the contract terms (calling for the delivery of many SmartDeck installations over its term), Stevens allegedly allowed for the delivery of two systems, in 2008, with some 73 more to head to Duluth in the first quarter of 2009.

SmartDeck

As 2008 closed, however, Cirrus' Pat Waddick sent a letter to L3's Larry Riddle... basically canceling the entire order after L3's estimated 150 million dollar investment. There was no phone call... no personal explanations... no warning... Just a short letter that terminated Cirrus's intent to honor its agreements with little or no explanation or legal defense. This was a process that other suppliers, vendors and partners would see repeated a number of times in later months.

One L-3 insider called the whole saga, "Cirrus throwing us (L3) under the bus."

L3 reportedly attempted contact with Wouters and senior Cirrus personnel to try and resolve the problem -- and were rebuffed, often quite rudely... and realizing that Cirrus' lack of intent to honor the SmartDeck/SR22 contract was a make or break decision (and that, once again, Wouters' crew appeared to have had no intention of fulfilling their obligations), L3's CEO apparently pulled the plug on their SmartDeck development efforts for "The Jet" and had staff journey to Duluth to literally pull it out of the prototype -- to the consternation and displeasure of the Cirrus Jet development team that reportedly grew concerned, right then and there, that the future for the "The Jet" was in peril. 

SmartDeck

Within weeks of that event, and with nowhere else to go (and having already damaged their once positive relationships with L3 and Avidyne -- and God only knows who else), Cirrus announced that Garmin would be supplying the flightdeck for the "The Jet"/SF50 program. In ANN's reporting on the events of the time, Cirrus Marketing flak, Todd Simmons, told our editorial department that the Garmin effort had been in the works for quite a while, that the decision was Cirrus' and Cirrus alone, and was based on the 'fact' that they felt that Garmin would provide a better product... while failing to note that the SmartDeck program had been continuing unabated, within weeks of this recitation of Cirrus-revisionist history, and without any hint of the issues that had occurred within the preceding weeks. It was not the first time that ANN found Simmons to be less than factual and to leave out substantial details from a Cirrus announcement. Despite specific questions, Simmons did not disclose L3's pull-out and the intention of the company to break their contract with same.

The effect on L3 Avionics Systems was horrendous.

Shortly thereafter, CEO Adrienne Stevens left her post as the head of that organization and the ripple effect of Cirrus' failure to purchase the systems it allegedly ordered (and pay outstanding bills for this and other products) had a crushing result on the L3 organization... to the point where some 100 people ultimately lost their jobs, L3 sued Cirrus for tens of millions of dollars (and Cirrus counter-sued) and the SmartDeck program was eventually sold off and has yet to see the prominence it might have had.

That's pretty sad -- as one of the pilots who flew a number of approaches via SmartDeck, in the busy airspace surrounding Atlanta, I thought the system was damned impressive.

Worse... L3 was a company that was poised to be the first in many a year to give industry heavy-weight Garmin, a solid competitive run for their money... and such competition is ALWAYS good for GA in that it results in more aggressive pricing, greater innovation, and better values for the end-user (Look at what Aspen and Avidyne have done in the last few years, for example -- amazing, no?). If Cirrus had kept its word and contracts... and if a new generation of Cirrus (and associated products) were produced just as the economy was tanking, one wonders how that all might have worked out -- and if another stronger, more competitive company, in the form of L3 Avionics Systems, might have given us all a little more of a boost when this industry needed ALL the help if could get. 

Finally... the L3 debacle was only one of a number of questionable scenarios foisted upon GA by the current leadership at Cirrus... and in each case, a number of fine companies, persons and entities claim to have been damaged by the way that Cirrus has been doing business since the start of 2009. The cumulative damage that has allegedly been wrought upon us all appears to be staggering... and a truly unfortunate and unwarranted black mark that NO ONE in GA needs right now.

By the way... the Cirrus counter-claim against L3 was dropped and Cirrus reportedly settled with L3... paying an amount that remains cloaked in confidentiality. Either way... not a great way to do business...and hardly a ringing endorsement for the business ethics of the GA world.

Coming Up: The L3 mess is but the worst of a pattern of behavior alleged by a number of Cirrus suppliers and vendors... and with each iteration, there is a bizarre and repetitive pattern of misdirection, broken promises/contracts, allegations of fraud, threatening behavior (by Cirrus/Wouters/et al), and questionable conduct... these and other complaints are borne out by the stories we've heard involving Avidyne, Tornado Alley Turbo, BRS, the city of Duluth, the city of Grand Forks and even airshow luminary Patty Wagstaff.

In addition; there are serious questions raised by Cirrus' claims over their Jet development program, their behavior in regards to depositors for the SF50, their treatment of minority shareholders, dealers, customers, and others... and God only knows what story CAIGA and the Chinese have gotten from Wouters and his crew.

As GA struggles for survival in the midst of the economic chaos that has befallen the world, the alleged unconscionable behavior of what was once the brightest star in the GA universe creates a crisis of confidence for an industry that needs role models and examples to follow... not more reasons to be ashamed of what has been foisted upon us all.

More info to follow... much more.

FMI: www.as.l-3com.com, www.cirrusaircraft.com