Monday, 11 July 2011

Breakthrough Contract for AeroMechanical

AeroMechanical Services Ltd. (TSX:V-AMA)
Basic Shares: 118.58 million
Fully Diluted: 134.33 million


The contract AeroMechancial Services announced July 11th with a French charter airline was a mouse that roared contract.

It was relatively small at $134 thousand.

But it was big in terms of breaking through a barrier that always kept AMA at bay from major airlines in the past.

That is convincing an airline that it is cheaper and better to use an AeroMechanical blue box to take the information off legacy technology (ACARS) on board most aircraft and transmit that data to the airline over a different satellite system.

Most airlines around the world use ACARS and most have that legacy technology connected to the Inmarsat satellite system, as opposed to an AFIRS blue box connected to the Iridium satellite system. The cost differences are significantly in favour of AeroMechanical's state-of-the-art technology and satellite provider.

Also, AeroMechanical can also provide a much lighter technology in today's high fuel price era, where any additional weight on an aircraft costs money. In this contract, AeroMechanical will install three of its latest blue boxes - the AFIRS 228 - on three Boeing 737 aircraft for the ACARS over Iridium service, plus the satellite phone system whereby pilots can contact the airline - or vice versa - anywhere over the world.

There is also something else in this contract that marks a different way forward for AeroMechanical. Once the blue box is aboard an aircraft, AeroMechanical can then use the technology to show the airlines how it can better monitor the aircraft:

  • for real-time maintenance;

  • for real-time tracking and scheduling the airline's entire fleet;

  • to monitor each aircraft's fuel usage in real time;

  • and provide emergency data streaming.

That's why AeroMechanical Chairman and CEO, Bill Tempany, was quoted in the news release saying,"We are in discussion with the client to provide additional services offered by the AFIRS equipment, which would see our revenue grow from this initial installation of AFIRS hardware." It also doesn't hurt that the Boeing 737 is the most popular aircraft in the world today, with over 6,000 in service and 2,000 on order.

To read the full news release, please click here.