Friday, 23 May 2008

Annual Meeting Hears More On Key Developments


AeroMechanical Services (TSX:V-AMA)
Basic Shares: 81 million
Fully Diluted: 93 million

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There are some turbulent skies to fly through, AMA Chairman and CEO Bill Tempany warned at the packed, May 22nd annual general meeting.
But thankfully that turbulence, caused by high fuel prices and uncertain survival strategies by some major airlines, is largely confined to the United States so AMA is venturing further a field to find other customers.
And in the meantime, developments in two major areas holds out the hope AMA can wing its way to loftier business plateaus in the very near term, Mr. Tempany said.
One of the two areas is a scheduled installation of AMA's technology in a Hawker Beechcraft business jet for a test flight in hopes that will open the door to factory installations for this largest manufacturer of business jets in the world.
The second is the surprise news that a Chinese airline is planning to install AMA's technology on board two of its large passenger jets early next month - in advance of a previously announced June 30th deadline.
In addition, other Chinese airlines have stated they will proceed with an additional five installations in July.
All of these installations came as a surprise because AMA was told several months ago that on June 30th, the Chinese regulator would decide whether AMA's technology could be installed on all the Chinese airlines it has signed up – not individual airlines making what appear to be separate decisions.
The news that several of the signed airlines were going ahead immediately first came out after Research Capital analyst Jacques Kafavian visited China and reported in a recent update to investors about the one Chinese airline's hopes to equip two jets next month.
In addition, Mr. Kafavian reported that other Chinese airlines were gearing up for installations in July.
Mr. Tempany told the annual meeting that AMA has had "verbal confirmation" about the installations.
In an interview following the meeting, Mr. Tempany said he is seeking clarification about the June 30th deadline but it appears that the Chinese regulator will be granting approvals on an airline-by-airline basis, rather than following the previous plan of issuing a blanket approval. "I'm optimistic China will happen this time," Mr. Tempany told the standing-room only crowd at the annual meeting.
Not only were there more people at this year's meeting than in the past, it was notable for the different faces in the crowd, among them an influential personality in Canadian financial markets - Hugh Cleland - sitting in the back row. Mr. Cleland, the Toronto-based founder and manager of the $100 million + Northern Rivers Innovation Fund LP, frequently appears on BNN and owns over 10% of AMA's shares.
Mr. Tempany said first quarter results this year were disappointing and that higher aviation fuel prices and instability with some large U.S. carriers had slowed contract signings in the first part of this year. But the second quarter, "will probably be the best quarter on record for deliveries," Mr. Tempany said, adding that he was also pleased with AMA's financial history for the past four fiscal years in that revenues had doubled every year.
During question period, Mr. Tempany said he remains absolutely confident the frivolous, irritating and expensive court actions launched by Star Navigation against AMA will eventually be defeated and that Star will be forced to cover AMA's litigation costs.
But he also cautioned that all the issues Star has raised could take years to resolve.
To read more about the annual meeting please click here for AMA's news release.