Brent Wouters, president and CEO of Cirrus Aircraft, offered assurances Wednesday night that his company's debts to the Duluth Economic Development Authority will be repaid.
"If there's one message I want to deliver, it's that Cirrus is in a position today to work out any obligations we have with DEDA and the city," he told commissioners of the authority. "We appreciate the support we've received from the city and Duluth, and we're ready to resolve any issues we have that are outstanding."
The largest of those obligations involves payments for the former Northwest Airlines aircraft maintenance facility, which Cirrus had been leasing at a cost of $25,000 per month. The company fell $225,000 behind on those payments before exiting the base at the end of September.
That pales compared to the $800,000 in rent Cirrus owes to the city of Grand Forks for a facility that produces composite parts for its aircraft.
Wouters painted a picture of an industry in distress due to the recent recession. He pointed out that overall demand for general aviation aircraft, such as those Cirrus produces, has fallen by about 60 percent.
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While Cirrus has been able to increase its market share, Wouters said its production has fallen from a high of 721 airplanes in 2007 to an estimated 280 this year. That's a decline of more than 60 percent in the past three years.
Wouters anticipates 2010 will bring stronger sales, including the delivery of
300 airplanes to conventional individual customers and up to another 150 more to institutional clients that Cirrus has been courting. That kind of sales would put Cirrus' bottom line solidly back in the black.
In response to depressed demand, Cirrus has cut its operating expenses by
52 percent in the past
15 months, according to Wouters. This has included deep cuts in staffing with the company's work force shrinking by 850 positions.
Duluth Mayor Don Ness said his administration is engaged in constructive negotiations with Cirrus and is optimistic a prospective repayment plan will be ready for DEDA's review by early next year.
"Clearly, the city and DEDA have been committed to the long-term success of Cirrus for many years. We've made significant investments in the company, and it would be shortsighted to discount those previous efforts, because Cirrus has been a success story," said Ness.
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The mayor said both DEDA and the city have a duty to protect the public interests of taxpayers, the health of local businesses and the future employment of many workers.
