And Current Depositors May Get Stuck Paying It All!

Things are not all well with the LSA movement... especially if you are one of the 1000 or so long-suffering folks awaiting the delivery of a Skycatcher that is years overdue. Late Wednesday evening, ANN received copies of a letter allegedly sent (via FedEx, according to one depositor) in the last 48 hours to a number (if not all) of the current list of Skycatcher depositors in which Cessna has raised the price, effective as of January 1, 2012 to a whopping $149,900... well over $40K above the price first quoted when the aircraft was introduced in 2006 -- $109,500.

A letter sent November 14th, by Jodi Noah, Cessna's VP of Single Engine Propeller Aircraft, starts out with some glowing self-congratulatory back-patting over the success of the initial introduction of the Skycatcher program but quickly cuts to the bad news...

"Starting with aircraft delivered in 2012, we are introducing a new purchase price that will package together seven popular options and a new, longer warranty. At the new price of $149,900, the Skycatcher will come standard with the following features:"

• GDU-375 multi-function display
• PM3000 intercom
• Oil quick drain
• EGT sensor
• Tail tie-down guard
• Sun visor
• Ground service receptacle
• Two-year warranty on airframe and avionics

  

The letter continues... "This all-inclusive price reflects a well-equipped Skycatcher with all the options and features that owners have told us they want Because this new price is still very competitive in the LSA marketplace, we believe the Skycatcher's unique set of capabilities will continue to make it attractive to owners and flight schools around the world."

Then... Ms. Noah drops the bomb, to wit, "There is a limited number of 2011 Skycatchers available for delivery this year, giving you the opportunity to move up your delivery date before the new price takes effect After January 1, 2012, all delivered - regardless of the original order date - will be subject to the new price."

In other words, if you can't get in line right away and pay for your bird right now (as in 2011) AND before all the available slots are filled, you could get stuck for over $40K in additional costs -- JUST the news that you want to hear in the middle of a long, drawn-out, recession.

ANN started receiving calls about this in the last few hours... and the folks reporting in are NOT happy. The Cessna letter gives the current Cessna 162 Skycatcher deposit/position holder 4 choices (please note that certain details of the choices mentioned below have been emphasized in bold text by ANN)...

The First Choice: Purchaser agrees to take delivery of a Cessna Model 162 in calendar year 2011, at the current contracted base price. Purchaser understands that a limited number of 2011 units is available for immediate delivery to owners operating with approved country certification. Units will be assigned in the order that letter Amendments selecting this option are received. Purchaser will be notified within one (1) business day of Seller's receipt of this Letter Amendment whether the 2011 delivery option is still available (the option is available only as long as there are available aircraft). Where units are available, Seller will sign this Letter Amendment, deliver a copy to Purchaser, and schedule aircraft delivery. If your response is received after all of the 2011 units are taken, then Seller will provide you with prompt notice and ask that you choose one of the remaining options.

The Second Choice: Purchaser wants to take delivery of a Cessna Model 162 in calendar year 2012 at a base price of $149,900. Purchaser understands a limited number of 2012 units is available. Units will be assigned in the order that Letter Amendments selecting this option are received. Once the sequence of orders has been determined, Seller will notify Purchaser of the Delivery Quarter.

The Third Choice: Purchaser wants to take delivery of a Cessna Model 162 in calendar year 2013 or later at a not to exceed base price that Seller will supply in 2013. Units will be assigned in the order that letter Amendments selecting this option are received.

The Final Choice: Purchaser wants to cancel his/her/its contract. Seller will refund Purchasers $5,000 initial deposit within thirty (30) days of the receipt by both parties of this fully executed Letter Amendment.

The situation represents a staggering blow to the LSA movement and could levy some heavy disappointments to Cessna's plans for revitalizing its flight training programs with the Skycatcher filling in as the entry-level trainer of choice. One depositor has already told ANN that, "While the price increase and the revised configurations are newsworthy in and of themselves I think the real story is how Cessna is 'sticking it' to (their) deposit holders. Just like me, many potential Skycatcher customers put down $5000 in (date deleted) of 2007. It appears that this investment has not resulted in any benefit as our price is no different than a customer who buys in January of 2012."

Big questions remain... if Cessna sticks to its guns and only holds the price for the few remaining weeks left in 2011, what will happen to an order book that once topped over 1000 airplanes? Further; what does this say for Cessna's decision to build in China and its ability to control costs for this airplane (which one is forced to assume that they're losing their shirts on)? What is REALLY going on at Cessna and would this have happened on Jack Pelton's watch? Finally; will people actually pay nearly $150K for a conventional LSA (even with a few extra options thrown in)?

ANN is trying to get a hold of the appropriate folks at Cessna (many of whom are new and fairly low-time in their new positions) and expects to have more data shortly. We'll keep you updated...

FMI: www.cessna.com