Thursday, 12 June 2008

AeroMechanical's Chinese Wall Tumbles Down

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

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AeroMechanical’s stock looked like a sleepy horse until the late morning release (June 12) that China finally opened the starter gate for AMA to use a critical satellite bandwidth. It was obviously the only news anxious shareholders were waiting for.

As the gate opened, that horse bolted out of the barn so fast anyone hanging onto it would have lost their arms. Before the release, AMA stock had drifted down to $0.67 on low volumes. But by early afternoon it galloped into the $0.90 range on over 1.4 million shares.

All anyone looking out the barn door could see then was a distant cloud of dust and a few strands of fast-fading horse tail. With approval of that bandwidth, AMA can now take the next steps to act on contracts it already has to install its breakthrough monitoring, tracking and communications technology, called afirs(TM) UpTime(TM) on over 500 Chinese passenger jets.

The first of those steps will be the installation on two Shanghai Airline jets. Those aircraft will be used to ferry Chinese soldiers around the country to guard the Olympic torch while it is relayed through China to the summer Olympic game site. Those first two installations were scheduled to start later this month, or early in July. Another five Shanghai jets were scheduled to undergo installations in July.

And as AMA CEO Bill Tempany said at the annual meeting last month, the Chinese were planning an aggressive installation ramp up. Another aspect of the China contract was that the Chinese airlines were planning to formally ask some of the major airliner manufacturers to consider installing AMA’s technology on the factory floor for any new jets Chinese airlines were ordering.

The hope is that formal Chinese request would give a major boost to AMA’s long-standing sales efforts to have its technology installed in factories at all the world’s aircraft manufacturers.

To read today’s full press release, please click here.