Sling Aircraft's Expansion Strategy

• In January 2021, the founder of Sling Aircraft, Mike Blyth, and his business partners met to discuss how to ensure the business's success amidst plans to introduce a five-seater aeroplane.
• Despite the COVID-19 pandemic, 2020 was a productive year for Sling Aircraft, a small-aircraft manufacturer in South Africa, with increased global sales and the completion of a high-wing four-seater prototype.

Sling Aircraft Background

• Founded in 2005 by Mike, who began developing a low-wing two-seater aeroplane.
• Sling Aircraft produces experimental low-wing aeroplanes in two-seater and four-seater configurations, as well as a four-seater high-wing model.

Experimental vs Type-Certified Aeroplanes

• Experimental aeroplanes, or "non-type certified aeroplanes", require approval from aviation authorities for their design but have less stringent manufacturing requirements.
• Type-certified aeroplanes undergo a complex certification process, indicating compliance with specifications and freezing the design and production methods.
• Certified aeroplanes must be manufactured in a certified facility, are expensive to build, and can be used for commercial and private purposes.
• Experimental aeroplanes are for private use only and are less expensive.
• Experimental Aircraft can be sold as ready-to-fly or in kit form for private individuals to construct.

Production and Design

• Mike designs all Sling's aeroplanes and produces them at its factory at the Tedderfield airstrip, south of Johannesburg.
• Most sales originate from the United States (US).
• The company had its best year ever, despite disruptions from lockdown.

Origins of Sling Aircraft

• Mike is characterized as a natural entrepreneur who had started several companies and finds the university environment restrictive.
• After dropping out of architecture studies at the University of Pretoria and becoming a mechanical engineer at Chrysler, Mike then worked for a company making truck bodies and trailers.
• After starting his truck business and going bankrupt after three years, Mike learned a valuable lesson about prioritizing money in business.
• He later transitioned to microlights in 1984, designing and manufacturing them before starting a microlight import business in 1993 that he sold in 2003.
• In 2005, a change in the market for Rotax aeroplane engines led to the creation of the Airplane Factory, now known as Sling Aircraft as Mike had the license to sell Rotax engines in South Africa.
• A light sport aircraft (LSA) experimental category opened up in the US because the South African market was too small for building such planes alone.
• His plan was to sell Rotax engines into this business.
• An engineer and draftsman were employed, the two-seater LSA design and development was funded by all of his available money, which ran out in 2007.
• The Industrial Development Corporation (IDC) later provided a grant after approaching them.
• He convinced his friend James Pitman to invest in the business as a 50% partner, due to their love for adventure.

An Unlikely Partnership

• James, a lawyer by profession, joined the business in 2006 after a company he worked for was sold for a large profit.
• Although unfamiliar with entrepreneurship and worked in a uranium exploration business listed on the London Stock Exchange and later on the Toronto Stock Exchange.
• With a loan and James' investment, they acquired machinery needed to construct the prototype.
• In October 2008, Mike and James built the aeroplane prototype with the help of a friend and two factory workers, then test-flew it.
• They built the production prototype, serial number 002, in a six-week period in February 2009 after flying the prototype for 42 hours.
• Mike and James continued a tradition of flying production prototypes around the world.
• After receiving two orders for a kit and ready-to-fly aeroplane, the company relocated from Springs to Tedderfield to have more space.
• Mike and James had a dynamic partnership with each having their own strengths with contrasting views that provided much needed balance.
• Mike knew what the industry entailed, James kept using the phrase “If we make it"

Andrew Joins the Business

• Andrew, James's younger brother, joined the business in 2011 after working in London for a design company.
• With no accounting systems in place, James assigned Andrew the task of creating an accounting system, to complete Sling’s first ever tax return.
• Andrew obtained a 10% share in Sling Aircraft and became the CEO soon after. However, Mike and James went to fly the prototype for Sling’s first four-seater aeroplane around the world after a few months.
• On their return, he wanted to be part of it and run marketing for them.

Sling's Philosophy

• Mike’s philosophy behind the plane design was that the aeroplanes should be extremely user-friendly
• Each of the three were very different and balanced each other well

Building New Models

• Usability and design strength led Sonaca, a Belgium-based aeroplane parts company, approached Sling in 2013 to use its two-seater as certification basis with the European Air Safety Association (EASA).
• The company then shipped the frames to Belgium, where Sonaca added the engine, instrument panel and the wheels before test-flying and selling the aeroplanes.

Building Certified v Experimental Aeroplanes

• The contrast between building certified and experimental aeroplanes was highlighted to Sling through participating in this opportunity
• It was found to be substantially less expensive for customer to build experimental two-seater than to purchase a certified one ($120,000 v $235,000).

Development Of A Four-Seater

• Development of the four-seater emerged on the round-the-world flight in the two-seater.
• The four-seater was achieved by extending the fuselage and each wing by 40cm
• In 2018, Rotax introduced a much more powerful engine that, fortuitously for Sling, was the perfect fit for its existing four-seat airframe.

Rotax Engine A Winner

• Rotax introduced a more powerful engine in 2018 which fit the four-seated airframe which game changed their business
• The new engine was 140-horsepower, 40% more powerful than the old one which meant the company was at zero competition throughout the whole world at that time.
• Because other manufacturers were still scrambling to come up with their own four-seater which could work with the Rotax engine

2021 - The High-Wing Appears

• By 2021, Sling launched a high-wing four-seater since rotax engine introduction which was a new opportunity to compete with Cessna which was the most successful aeroplane ever to hit the market.
• This time the design was to provide a great little modern aeroplane which James felt they were going to kill it with.
• The company finished the development prototype in December 2020 and wanted to start the view to go into full production by March 2021 given their view to receive between 30 and 40 orders between then.

Growing Globally

• The US market was Sling Aircraft's appeal to Mike
• The international market only began substantially growing after the company introduced the Sling TSi.
• Although overall 40% of Sling’s aeroplanes had been sold in South Africa since the company started, in 2020, 52% of sales were in the US and only 15% were in South Africa.
• Facilitated by a distributor who had emigrated there from South Africa, sales in Australia were growing.
• Other markets included France, Germany and the Netherlands

Manufacturing and Development

• Johannesburg hosted 99% of the assembly of ready-to-fly aeroplane in and all of Sling’s manufacturing
• Although China looked like a great option, it was still cheaper to build small aeroplanes like them, if not more so.
• All components are built, sprayed and tested then transported to a distributor who reassembles them to full functionality

Regulatory Hurdles

• The role of engaging with the relevant aviation authorities fell to James due to lack of Type Certification
• However, James had found dealing with the SACAA difficult because the SACAA didn’t give approval so they had to retrench and lay into the SACAA.

FAA Compliance

• Most countries followed FAA standards
• FAA says that only factories that make two-seater aeroplanes can be built
• To overcome this, he sends a quick build to the local distributor who are able to use facilities to assist with the building

Growth Patterns

• Due to regulatory issues, the US took 70% kit form of Sling’s sales

"A Little Bit of Chaos": Leadership Team Changes

• The roles in the Sling Aircraft leadership team were not structured to have clear who does and who is accountable
• Initially Mike took Engineering and production on James, regulatory issues with the SACAA
• In contrast, Andrew sold and marketed
• Eventually, James was in charge of finances then Andrew employed a financial manager to discuss finances on a monthly basis

Restructure

• The company developed its first organogram in 2014 only to meet the SACAA requirement to prevent role confusion
• It was revealed with Mike asking why Andrew wanted four aeroplanes a month
• SLiung adopted a relatively reactive approach to managing and scaling its production capabilities to see how many people can manufacture

The Alrode Example

• As an example, the composite section wasn’t going well since it was past the due date leading to issues and the need to sort that section out
• A new factory was placed in Alrode where a million was spent on renting space and readying equipment

Inconsistent Approach

• The advantages that their approach have meant that cost has been kept under control by Mike since there was adequate building and staffing
• This had a major disadvantage, and as a result, the company was operating in complete chaos

Seeking The Solution

• After a 2018 board meeting, the board of directors decided that Mike should be the production charge.
• Mike could not have succeeded due to sling’s lack of a functioning ERP system and that caused staff to increase 30% and overtime bills to add up and in stock value a five million

The Costly Engineer

• The company then employed an “expensive process engineer" who made things worse and whom they fired to return responsibilities internally to those who know how to build the aeroplanes

Teamwork Revalued

• There was a change in two phase strategy where members documented everything
• That meant that the the roles of everyone is clear with certain responsibilities
• Mike starts working from home to focus on his engineering role and James takes over the chairman role since everyone else asks to solve his/ her problems.

Materials

• Materials were a difficult area to manage
• After spending close to a decade, it was discovered that engineering never completed a bill of materials thereby hindering manufacturing processes

Stock Levels

• A solution to this discovery had been discovered since people involved were giving better stock levels with timely deliveries
• Without an ERP system, he reverted to spreadsheets to get a bill of materials with the system working by introducing new ERP and getting ready to start and the process
• There is also the potential for a merger to increase expertise and setup systems
• However that would be less desirable than being their own boss and that could lead to them having to produce information

Achieving Stability

• It is very difficult for there to be a sizeble profit if debts are high

Customer Satisfaction

• Customer satisfaction was at the heart of the business model which meant a solid cash flow
• This led to making a way for marketing strategies to have a website to be more targeted at people

Social Strategy

• The company had the aid of youtube influencers which in turn has a big positive difference by 2021.
• One youtuber in particular, JB Schultz (youtube alias the candourist) set to construct an aeroplane

Growth Contemplations

• There were potential deals to explore if they became fruitful by 2021 which would have resulted new aeroplane sales such as
• A build of an electric four seater using a Sling kit (ETH Zurich), a project of building a hydrogen fuel which a the company has interest
• Mike, James and Andrew who had been keen to grow the company had planned ahead but had not settled about becoming a five sector

Alternatives

• To find the competitive advantage which they didn’t see working without a plan for which product would work due to financial reasons
• Considered “2 reasonably obvious niches which weren’t just small add sons and could generate orders of magnitude more revenue
• They finally decided they didn't wish to run a billion multi-million dollar company with 250 people
• Case studies often say bust companies start with one or two seaers and have tried to tackle

Perspective

• It is therefore important for them to maintain their business perspective
• It was important to make a business decision about a certain decision.
• There was less certainty than bigger market areas. They could look to fill the vacuum for a high wing five sector

How To Maximise Success

• Having settled on a 5 seaer they needed to set up the business
• One of the questions is what and when
• Also whether and when in a position ti certify because the experimental models would only be sold where available
• That would mean certified had greater reach in other countries and greater margins
• “We’d probably sell more kits as far as numbers are concerned, but the profit margin is much smaller

Certification Risks

• There would also be the potential diluting the business since if it was expensive that would influence sales

Decision Points

• Building aeroplanes was in the three partner's blood.
• There was no question they could innovate
• They could be successful with the five seaer
• It could take them into a entirely. new or better the status to guarantee success

Meeting discussion

• As the business grew, the partners had to determine its direction.
• Here is the Agenda for the upcoming board meeting details key, discussion and decision areas required to set Sling up for success:
• Strategy
• Manufacturing Operations
• Financing Investigation
• Organisation
• Human Resource.