The New Piper Aircraft, Inc.

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The New Piper Aircraft, Inc.

2926 Piper Drive
Vero Beach, Florida 32960
U.S.A.
Telephone: (561) 567-4361
Toll Free: 1-866-FLY-PIPER
Fax: (561) 778-2144
Web site: http://www.piperaircraft.com

Private Company
Incorporated: 1937
Employees: 1,550
Sales: $290 million (2001 est.)
NAIC: 54171 Research and Development in the Physical, Engineering, and Life Sciences; 336411 Aircraft
Manufacturing

The New Piper Aircraft, Inc. builds a wide range of propeller-driven aircraft. The company builds upon the legacy of the original Piper Aircraft, one of the best-known names in general aviation. Virtually no other Western aircraft manufacturer has produced a full range of piston engine planes for as long as Piper.

Birth of a “Cub”

William T. “Bill” Piper was one of the first to apply assembly line techniques to aircraft production, and is often referred to as the Henry Ford of aviation. As W.T. Piper, Jr., described him in a 1970 Newcomen Society address, W.T. Piper was a teetotaler of British stock. After graduating from Harvard with a degree in engineering in 1903, he went into construction and built the first reinforced concrete garage in New York City.

Eventually Piper returned to his native Bradford, Pennsylvania and joined an oil-related partnership. A number of his associates there invested in the Taylor Brothers Aircraft Corporation, which Bradford’s chamber of commerce had lured from Rochester, New York, and Piper joined Taylor’s board of directors in the early 1920s.

Taylor Brothers Aircraft had been formed to produce a small, two-place, 20-horsepower aircraft that sold for about $4,000. Steep competition and troubles associated with the Great Depression forced the Taylor Brothers into bankruptcy in 1931. By this time, Piper had become a believer in the future of aviation. Further, company founder C. Gilbert Taylor had already set about designing a low-cost airplane specifically for student instruction—the (E-2) “Cub.” The name may be a reference to Piper’s commitment to the business—”He had a bear by the tail. . . . He couldn’t afford to let go,“ notes his son. According to W.T. Piper, Jr., the first mock-up of the Cub was constructed of orange crates.

Piper bought the bankrupt company’s assets for $600 and arranged for additional financing. According to his son, he then generously gave Gilbert Taylor a half interest in a new entity, the Taylor Aircraft Corporation. After Gilbert Taylor left the company in 1935, he was replaced as chief engineer by Walter Jamouneau, who was responsible for the J-3 version of the famous Piper Cub, which by this time were usually painted their trademark bright yellow. In the years ahead, untold pilots would adore the Cub, an attractive little plane with forgiving flight characteristics. This small, simple, and undeniably cute airplane originally sold for just $999.

In spite of the charm and simplicity of the Cub, the 1930s were hard years for selling small planes. Taylor Aircraft’s difficulties were compounded by a fire that wiped out the Bradford plant in 1937. The company then decided to relocate to an abandoned silk mill in Lock Haven, Pennsylvania, renaming itself the Piper Aircraft Corporation in the process.

Piper developed two other models before WWII. The Coupe sat two persons side-by-side. The Cruiser was a three-seater. Production of the Coupe ceased when the war began, but a number of Cruisers were adapted for use as air ambulances.

The L-4 training aircraft was derived from the Cub; eighty percent of U.S. military pilots earned their wings in these planes during the war. Nearly 6,000 L-4s were delivered. Nicknamed “Grasshoppers,” L-4s were also used as tactical observation planes and as air taxis for leaders such as Winston Churchill, General George S. Patton, and General Dwight D. Eisenhower.

An erroneous but widely held belief was maintained that after the war Americans would buy up personal airplanes the same way they would buy new cars and houses in the suburbs. There were, after all, hundreds of thousands of new pilots returning home. Yet, planes required a specific form of infrastructure; they were not nearly as flexible as automobiles. Sales were indeed spectacular, noted Bill Piper, Jr., until 1947, when the market collapsed.

In the early 1950s, Piper adapted its 135-horsepower Pacer by adding a tricycle landing gear (with a steering nose wheel in the front). The resulting Tri-Pacer was easier to maneuver on the ground. Piper decided a market did exist for faster planes than this and the Cub (which some like to say takes off, lands, and cruises all at 65 m.p.h.) with a capacity of seating at least four people.

First Apache Built in 1954

In addition, businessmen needed the reliability and performance of a twin-engine plane in order to fly over weather. In answer to this requirement, Piper debuted its first all-metal plane, the twin-engine Apache, in February 1954. It was priced at nearly $34,000; in spite of the skepticism of its dealers, Piper sold 2,000 of the planes in nine years. The design formed the basis for another successful plane, the Aztec.

The company built a research manufacturing facility at a naval airbase in Vero Beach, Florida, in 1957. One of the first planes developed here was a crop duster dubbed the PA-25 Pawnee. The PA-28 Cherokee, which went into production at the company’s expanded Vero Beach manufacturing facilities in January 1961, was to be one of the company’s most successful designs. The low-wing design was the basis for numerous models in the next thirty years, including the Warrior, Archer, Dakota, Arrow, Seneca, and Saratoga. The PA-32 Cherokee Six, introduced in 1965, was the earliest derivative and featured a stretched cabin with room for six people and an additional door in the rear. Eventually, the PA-32 was incorporated into the training fleets of several airlines, training schools, and other operators. Another twin-engine plane, the PA-31 Navajo, was introduced in 1967 specifically as a business aircraft. The Navajo family grew to include the Navajo Chieftain and Mojave, and the Cheyenne, which used turboprop engines. Several airlines used Cheyennes to train their pilots.

Piper’s annual revenues passed $100 million in 1969. By 1970, the company had produced 80,000 planes (24,000 of them Piper Cubs); one in every four general aviation planes was a Piper. Piper had added small parts plants near Lock Haven and built a new factory in Lakeland, Florida, bringing total manufacturing space to 1,000,000 square feet.

During most of the 1970s, two companies fought for control of Piper Aircraft Corp. In 1977, Bangor Punta Corp., a $500 million conglomerate, won out over Chris-Craft Industries Inc., known for making yachts. Bangor paid $110 million for Piper and endured years of litigation. Bangor’s other subsidiaries produced Smith & Wesson handguns and Starcraft and Jensen boats and campers; its largest unit processed cotton and saf-flower oil. Piper’s revenues were about $270 million in 1977; Business Week noted it trailed industry leader Cessna Aircraft Co., which had a 51 percent market share in the general aviation field to Piper’s 27 percent.

The PA-44 Seminole, introduced in 1978, was a stretched version of the twin-engine Arrow with a twin tail. Piper’s new owners steered the company into an emphasis on larger “cabin class” planes for the business market. Sixty percent of Piper’s planes were designed for the consumer market, noted Business Week.

At Its Peak in 1979

Piper had 8,800 employees at five plants in 1979. Annual sales were $495 million. Unfortunately, high interest rates, high taxes, and exorbitant product liability claims would decimate the piston engine aircraft industry in the 1980s. Shipments of small planes fell from 18,000 in 1979 to less than 10,000 in 1981, according to one estimate. Yet Piper plugged on, introducing its revolutionary PA-46 Malibu in 1983. This was a single engine aircraft featuring a pressurized cabin and other amenities usually found in corporate jets, which had much higher operating costs. A higher-performance version, the Malibu Mirage, was introduced in 1988. (The Malibu was involved a string of in-flight breakups between 1989 and 1992. The National Transportation Safety Board determined ice was forming on the pilot tube, leading to an understated airspeed reading. Blaming the pilots for not switching on the heater for this device, the NTSB urged the Federal Aviation Administration to require high-altitude training for pilots flying at altitudes of 18,000 feet or higher.)

Company Perspectives:

The New Piper Aircraft, Inc. became a reality in the summer of 1995 when President/CEO Charles Suma and a nucleus of employees took over the assets of the Piper Aircraft Corporation. There were fewer than 100 employees in that first year but they embarked on an exciting assignment. The task was not an enviable one: Take on all the competitors and bring the Piper name back to the forefront of General Aviation. But this cadre of dedicated people was up to the challenges. Engineers were challenged to create an aggressive research and development program to bring new, innovative aircraft to market. Customer service professionals from a variety of industries were tapped to create a system that provides the best service possible to every customer around the world. The organization embarked on a campaign to recruit the best distribution professionals around the globe. And the marketing and sales staff recommitted itself to making New Piper the leader not only in the owner-flown segment of the General Aviation market, but the leader when it comes to supplying the best training aircraft in the world, as well.

Lear Siegler Inc. bought Piper from Bangor Punta for $290 million in February 1984. Its new owners consolidated Piper’s manufacturing operations in a single Vero Beach plant. In 1987, New York buyout firm Forstmann Little & Company acquired Piper. Production had fallen to fewer than 300 planes a year and the company had only 750 employees.

Newport Beach entrepreneur Monroe Stuart Millar then bought Piper (through his Romeo Charlie, Inc. holding company) in May 1987 for a reported $6 million. A former World War II fighter pilot, Millar had taken his first flight in a Cub and reportedly felt it was his destiny to own the company. Millar made several unorthodox moves in attempting to right the troubled company. To stimulate demand, he cut prices 20 percent and introduced new models. He also brought the classic Piper Cub back into production, selling them for $50,000 a piece. The company’s Cheyenne 400LS turboprop sold for $3 million. Piper sold hundreds of a new no-frill trainer called the Cadet, designed to lure people into flying.

Most seriously, Millar decided to forgo liability insurance in a highly litigious environment. Under existing law, the company’s owner was potentially liable for every plane made by Piper since 1937—a total of 100,000 aircraft. To fend off nuisance suits, the company hired “the meanest bunch of junkyard-dog lawyers,” said one company executive. They succeeded in reducing awards against the company from $30 million in 1987 to $8 million in 1989. The company had been paying $25 million a year for product liability insurance with a $15 million deductible. However, few would loan the company money to buy supplies without this coverage.

In one unusual effort to retain loyal customers, Millar paid first-class airfare for 893 patrons while an engine problem with their new $350,000 planes was being fixed. It cost the company $2 million. Sales rose from $50.7 million in 1988 to $90.5 million in 1989, though losses mounted simultaneously. Most of the company’s 1,600 employees were furloughed in February 1990 as rumors of bankruptcy circulated. Industry-wide sales were just 1,143 planes in 1989, and Piper’s main competitors Cessna and Beech Aircraft had stopped making small piston engine planes.

C. Raymond Johnson was appointed president of Piper in early 1990. Millar ultimately resigned as chairman in May 1992 after selling his stock in the Romeo Charlie Inc. holding company that had owned Piper.

Bankrupt in 1991

The firm went bankrupt in July 1991. Interestingly, the company had a backlog worth $100 million; its assets were $75 million and its liabilities, $47 million. The company simply had no cash. Charles “Chuck” Suma, the company’s future president and COO told Florida Trend, ”We had $1,000 in the bank.” (Suma had begun working for Piper in 1976 as a riveter.) No one would lend the company money to operate without product liability insurance. Piper had just 45 employees at the time of its Chapter 11 filing.

While a court weighed Cleveland’s Cyrus Eaton Group purchase of its assets for about $46 million, Piper shopped around the U.S. and Canada for a new location in which to rebuild. Ultimately, Eaton did not buy the company. Aerospatiale, the French producer of light planes, also negotiated for its purchase in 1991 but was dissuaded by the product liability issue. Another suitor wanted to relocate manufacturing to a New Mexico Indian reservation to ameliorate this problem, wrote the Financial Times.

In 1992, Angus Stone Douglass, a businessman with ties to New Jersey criminal-politicians, bought all of Piper’s common stock from Millar for $500,000 cash through his Duck’s Nest Investment firm. In his first year in charge, the company shipped 90 planes and reported operating profits of $7 million on revenues of $47 million.

Pilatus then made a controversial bid for Piper. Pilatus was a Swiss company that made single-engine turboprop planes that wanted to emphasize the commercial market more. The problem with Pilatus was that even its civil planes tended to end up in military uses in such unsavory places as Iraq and Angola. Recent sales to Burma and South Africa were freshly controversial. In September 1993, a bankruptcy judge ruled that the Swiss company’s $45 million offer would not be enough to pay debts and set up a trust fund for Piper’s potential claimants.

The whole U.S. general aviation industry sold only 444 planes in 1994. Piper made 108 of them. However, that year, Congress enacted legislation limiting product liability for planes to 18 years after production. Chief competitor Cessna immediately announced plans to resume production of its small planes.

New Piper in 1995

Suma became CEO in early 1995 after Douglass was forced out of the position over a questionable stock transaction, reported Florida Trend. Teledyne (later named Allegheny) and Philly investment firm Dimeling Schreiber & Park bought Piper for $95 million in March 1995, renaming it The New Piper Aircraft, Inc. Piper had been able to pay off its largest secured creditor by selling its Lakeland plant.

In the fall of 1997, Piper announced it was developing a new single engine turboprop, the Malibu Meridian. The first prototype was rolled out in August 1998 and production deliveries began in 2000. New Piper sold 303 planes in 1998 and had revenues of $125 million that year. Revenues were $146 million in 1999 and $181 million in 2000, when Piper sold 395 planes. The industry as a whole sold 2,816 planes worth $8.6 billion in 2000.

Key Dates:

1947:: The aircraft market collapses after World War II.
1954:: Piper builds its first all-metal plane, the Apache.
1961:: First of the popular Cherokee family debuts.
1977:: Bangor Punta acquires Piper.
1983:: The Malibu is introduced.
1984:: Lear Siegler buys Piper.
1987:: Monroe Stuart Millar becomes new owner/CEO.
1991:: Unable to finance production, Piper files Chapter 11.
1995:: The New Piper Aircraft is launched.
1997:: Piper unveils its new flagship, the Malibu Meridian turboprop.

In March 2000, Interior Pacific Flight Sytems, based in British Columbia, announced it had bought rights to produce the Piper’s classic PA-12 Super Cruiser, a three-seat, fabric-winged plane that had not been built since 1948. Interior Pacific was not allowed to use Piper’s name; it would dub its version the Super 12. It would take advantage of the latest avionics and sell for about $113,000; Interior Pacific hoped to be building 36 of them a year within three years.

At the beginning of the millennium, there were rumors of an impending initial public offering. Piper remained a popular brand among pilots; the revived company brought in marketing personnel from Harley-Davidson to promote customer loyalty. The company also had a few enemies; it faced a new spate of litigation that alleged a melting rod bearing in the Mirage’s engine caused four crashes in four years.