Net sales of SEK 3.8 million were somewhat lower than expected (estimate SEK 4.4 million). Costs were in general higher than usual. Capitalized development was SEK 2.2 million higher than normal. And “other OPEX” was SEK 1.6 million higher than estimated. The cash position according to the report is SEK 13.3 million (SEK 15.7 million). AVTECH has made several market efforts during the quarter, increased its efforts in developing its product portfolio and started negotiations with several interesting customers.
Many catalysts for the stock in 2020
The test period with a medium-sized European operator, according to the previously communicated Letter of Intent (LOI), is proceeding according to plan and is expected to enter into a commercial contract during the first quarter of 2020.
Eurowings is in full operation with Aventus Full-flight Winds of about 100 aircraft. In spring 2020 analysis and evaluation of the result are carried out. This analysis then forms the basis for other companies within the Lufthansa Group to decide whether to join the service as well.
In January 2020, another European airline has started a test period for Aventus full-flight and SIGMA, which is expected to be completed during the second quarter of 2020.
Major catalysts with current customers in 2020
The dialogue with easyJet has taken a positive direction in January and it seems that a solution to the current communication limitation may be close. This would enable a complete roll-out of climb and cruise winds as well as a deeper cooperation on cruise optimization and turbulence warnings.
The dialogue with Southwest continues and has been intensified regarding cruise wind projects and cruise optimization.
Proflight is now used by over 1000 pilots from more than 100 different airlines. During Q1, work continues to roll out a payment solution that makes the app available to individual professional pilot users. In parallel with this, marketing continues to make as many pilots as aware of the benefits of Proflight and to dramatically increase the number of users.
A decision has been made to postpone EASA (European Union Aviation Safety Agency) approval of Proflight in favor of rolling out the planned payment version in Q1. In the first phase AVTECH plan to launch Proflight directly to all the pilots who are already testing the service.
With Proflight, pilots can get a complete graphical solution containing AVTECH's Aventus Full Flight, cruise optimization and the weather warning system SIGMA. This means that aircraft equipped with WiFi, or satellite communications, can receive real-time information either through this form of communication or via ACARS.
AVTECH’s expected timelines for the ongoing customer processes has evolved faster than expected. However, the short-term financial impact has several times been somewhat below our estimates historically. In our last research update we estimated net sales of SEK 20.1 million in 2020 (YoY growth of 27%) and EBIT of SEK 2.4 million. With this potential pipeline of new contracts, it is likely we are too conservative. At this point however, we will likely only do minor positive adjustments during 2020 in our upcoming research update.
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