Is the market focus for Icon
still non-pilots who are motorsports
and extreme sports
enthusiasts or people already in
aviation?

WeÕre actually targeting both. But
the intent was to target both pilots
and non-aviation background enthusiasts.
And thatÕs still the plan.
To be honest with you, we actually
see more pilots going through the
training. WeÕre seeing that it really
takes time to create that new category.
WeÕre still confident that weÕre
getting more and more folks excited
about it. My background is automotive
and power sports and IÕm going
through the private pilot training
myself. This is really creating a new
market segment where one doesnÕt
exist now.

 How are you finding sales prospects?

The way the airplane was designed
was to allow É not moving from
point A to point B, but instead to
have a pusher configuration so no
prop is in front of you, so you have
that wide-open cockpit. So you basically
see 360 degrees out. You take
the windows out.
So the idea here is getting power
sports and outdoor enthusiasts into
the airplane and giving them the
opportunity to explore the planet
three dimensionally. And thatÕs
been successful.
WeÕre trying to have the airplane
speak for itself. WeÕre trying to have
as many demos as we can to see  you can do with it.

But how do you attract such buyers?

 Miami is a good example. WeÕre
partnering up with the biggest
Lamborghini dealer in the United
States. WeÕre displaying our aircraft
on his floor. So people come in and
look and shop cars say, wow, thereÕs
a plane here that has the same price
tag as a Lamborghini, why not try
this one? We had a sales event with
Tesla, for example. Or Porsche. So
weÕre trying to go a few different
routes so weÕre not only addressing
folks coming out of an aviation
background.
What weÕre looking for is surprise
interest, like Òwhoa, whatÕs the airplane
doing here? Pretty cool. And
I actually could afford it. Because I
can afford a Lamborghini, and IÕd
like an airplane as well.Ó So weÕre
able to get a foot in the door with
exciting sport aircraft. And thatÕs
what we want to do. And thatÕs
actually happening through these
events or partnerships.

What has the uptake been on
these efforts?

 My best guess at this point in time
is that weÕre getting 20, 30 or 40
demos out of that appearance on
the shop floor over the period of a
quarter, IÕd say. We have a sales representative
on the floor and ask if
the customers want to try it. ThatÕs
what weÕre trying to do and it works
fairly well.

WhatÕs the sales conversion rate
on these demo flights?

 ThatÕs hard to translate. We are
fully aware that creating that new
category and convincing someone
who has not thought about buying
an airplane to buy one, thatÕs a long
cycle.
Right now, what weÕre trying to
do is feed the funnel to create as
many hot leads as we possibly can.
ItÕs our task to convert these into
contracts. WeÕre aware you have to
be patient. YouÕre not selling big
numbers. YouÕre not converting in
a heartbeat big numbers of people
who werenÕt even thinking about
it. Our idea is that we let the plane
speak for itself.
We have regional sales directors.
TheyÕre all equipped with a plane,
with a trailer, with a towing vehicle
and meeting the prospect at his
FBO of choice. WeÕre trying to be as
flexible as we possibly can be.

By traditional aviation
standards, thatÕs
aggressive selling to
cold prospects.

 Yes, but we think itÕs
necessary. ItÕs also trying
to control costs.
You donÕt want to go
and have brick and mortar in too
many areas when youÕre not knowing
where youÕll find your prospects.
WeÕre trying to be in a few
locations very aggressively, but then
in parallel be flexible and say, look,
weÕre going to meet you wherever
you are.

Who have the buyers been so far?

 IÕd say itÕs still 70 percent-plus pilots
or people who have been flying
before and are renewing their license.
Or changing from one plane
to another. Around 30 percent are
novices and are new to the game  and starting to enjoy that exciting
adventure.

Do you have to reverse that ratio
or does it matter?

 Bottom line, it doesnÕt matter.
WeÕre trying to interest both. We
believe we can do better on the
non-pilot side, but weÕre aware that
it will take longer.
When Icon first came out of the
ground, the volume expectations
were not just high by LSA standards,
but by any standards. Was
that unreasonable?
 I call it extremely visionary and
ambitious. What youÕre seeing
is that weÕre correcting this with
the reality that has kicked in. ItÕs
totally OK that the vision was
assuming this. This allowed us to
come up with the product as it is in
the end.
But I think itÕs now our responsibility
to adjust. And thatÕs what
weÕve been doing, right sizing the
organization that was laid out
specÕd for high volume to what is
and [will be] smart and healthy
growth from that base.
If you look ahead two to three
years, what kind of volume do
think is realistic?
 So a very healthy volume for us
is 250-plus. That would be the
starting point. I actually hope and
think it can be higher. Will it be
thousands? I donÕt think so. I certainly
think it could be in the 250
to 500-plus level.
Obviously, the initial investment
was scaled to much larger numbers.
Can you now downshift it?
 I think we can and thatÕs the reorganization
we have just been initiating.
Both of our facilities have a
capacity of around 1000 aircraft a
year. Now this is space and space
translates into rent. WeÕre considering
subleasing space and weÕre considering
taking on other projects
that require space and would pay
for themselves.
ThatÕs a fairly easy exercise, IÕd  say. The other one is equipment and
tooling. It's highly capital intensive.
We have tooling to support 250
units a year. The good news is we
have the ability to scale up to 250
without needing more cash. At the
same time, this is capital that has
been invested, but is not fully utilized
right now.
Are you capable of running the
factories without additional capital
input? And does this suggest
youÕre at the break-even point?
 Yes we are. No, weÕre not at the
break-even point financially. Agreeing
to the reorganization, youÕll
understand, has been a painful
decision for us. We had been hoping
for higher volumes coming in
quicker. But with the reorganization,
we have set ourselves up for
funding that has come in that will
support us to execute this plan. It
will attract future funding that will
ideally take us to healthy volumes.

Are the investors OK with this?
What are investor expectations?

 These are long-term investors. The
money thatÕs in is highly strategic
investment for long-term return. If
this was a quick investment for a
quick return, we would not likely
have the support weÕre having.
With the investment thatÕs already
in, the investors have a lot of skin
in the game and are highly committed.
When the aircraft first emerged,
the price was estimated at
$139,000, but now itÕs $389,000.
How has this impacted deposit
conversions?
 Obviously, it has been hurting.
And this was the risk that the
company took when it came out
early with price tags at $139,000,
$189,000, $259,000. At that point,
the data was extremely weak about
what it would cost to produce the
aircraft. What will it take to bring
it into serial production.
The company has been very optimistic
and bullish that this could
be done cheaper. Unfortunately,
the airplane was not necessarily designed
for manufacturability. The
focus was on the flight characteristics
and aesthetics of the airplane.
So now, the deposit holder list is
looking substantially different than
it did before.
I would put this under the envelope
of a reality check right now.
ItÕs not so much about deposits.
Likewise, is the importance of new
customers to us, who are sometimes
even quicker in making decisions
because theyÕre not É saying
even if I had the money, I was told
years ago that it was cheaper and
now it is so expensive, I donÕt want
to pay this anymore.
While there are other folks we
put in the airplane [who are asked]
how much would you pay for this?
And there are people who actually
donÕt know. Some might say, IÕd
pay $500,000 for that thing.
So the deposit holders list that
we have referenced in the past are
not actually that relevant to me
today.
If IÕm hearing you right, youÕre
saying that pump-starter initial
price wasnÕt a good idea.

 I would say thatÕs a correct statement.
There are a lot of things we
would do differently with what we
know today. YouÕre going out aggressively
with what you hope and
think the price could look like. But
there are 373 individually laid up
carbon-fiber parts. This is complex.
This is, unfortunately, costing more
than we ever wanted it to cost, but
it needs to be done right. Quality
and safety are playing a very big
role in our manufacturing process
and the product is delivering and
we're not having any quality flaws.
It comes with a certain price tag
and this is more than we wanted it
to be. But thatÕs what it is.

Can the manufacturing process
be significantly leaned to increase
margins?

 Yes, it can, and thatÕs obviously
one of our top priorities, and for
potential new products as well.
Conceptually, weÕre having a lot of
new ideas and there are a lot of lessons
learned that can go into new
products. But in the existing A5,
weÕre trying to do a lot of reverse
engineering to make the product
more manufacturable without compromising
quality.
ItÕs really highly volume dependent.
So cutting down volume
is putting on the brakes a little
because thereÕs a scaling effect.
But thereÕs a lot of low-hanging
fruit that weÕll be able to cut down
in the next year and half, IÕd say.
IÕm sure this will be helping us to
improve significantly.