old article, worth reviewing
below for excerpts from Blumont Capital’s Hugh Cleland’s annual update. Click here for the complete update on FLY from Blumont Capital’s Fund Manager Hugh Cleland Here is an Excerpt from the Flyht ( FLY ) Summary : So why do I still believe that Flyht can be one of the big winners for the fund? The next 4 months promise to be the most exciting in the company’s history, with many of the long-term, game-changing initiatives beginning to bear fruit simultaneously. Perhaps the most significant from an industry standpoint is the beginning of assembly line installation at Airbus in Q3 (under the L-3 contract), with shipping from the Airbus factory to commence by the end of 2013. An equally significant opportunity is for the retrofit of existing Airbus fleets at major airlines: during the Q1 conference call on May 8, management was very specific that they expect to announce 2 fleet retrofits by the end of 2013; during the Q2 conference call, management stated that there are more than 2 such opportunities, and that, specifically, the 150+plane opportunity with a South American operator (discussed on the Q1 conference call) was “secured” with respect to the L3-to-end-customer side of the equation, and that the PO to Flyht would come “in due course”. As to what Airbus’s future plans might be for the AFIRS system on the Airbus assembly line, a November 14, 2012 speech by Mr Marc Ballion (International Safety Program Director at Airbus) gave a tantalizing hint. He was quoted by a Nigerian newspaper, as follows: “Mr Marc Ballion said AFIRS would automatically be fixed on all Airbus planes from 2015…He said…’We have to be predictive and pro-active in our approach to the safety of airplanes and passengers…We don’t have to wait for an accident to occur before we take steps.’ Another game-changing initiative of Flyht’s that is coming to fruition is in China. The developments in China have been dramatic, with the Civil Aviation Administration of China (CAAC) firming up the timelines for their satcom mandate first published in October 2012: https://usa.chinadaily.com.cn/china/2012-10/18/content_15828660.htm From the link above: “According to the plan, Chinese airline companies should install the [satcom] system on 20% of its fleet by the end of 2013. And by the end of 2016, all commercial aircraft should have such equipment.” We now know that the CAAC has reaffirmed the 2016 deadline for full-fleet installation, and has imposed a deadline of November 30 2013 for the airlines to have their roll-out plans submitted to CAAC, with installations mandated to begin in early 2014. One of many good things from a Flyht perspective is that for installations to begin in early 2014, a PO will have to be issued to Flyht well before the end of 2013. By the end of 2016, China’s commercial fleet will have over 1,900 aircraft that will be mandated to have satcom equipment on board. Encouragingly, six of the major Chinese airlines have already done initial installations, and are setting up procedures for pilot training and large scale installations in 2014. I am hoping to see the first large PO from China in late Q3 or Q4 of this year. Of course, one of the many positive knock-on effects of the China mandate is that many OEMs will likely be forced to accommodate installation of the Iridium/AFIRS system, both on the assembly line and in the after-market. Bombardier was forced into assembly line installations in 2012, as per the following press release: https://flyht.com/flyht-commences-line-installation-on-bombardier-crj900/ It would be reasonable to expect that other OEMs (such as Boeing, Embraer and Dassault) will be forced to likewise accommodate installations of the Iridium/AFIRS system for the Chinese market, and maybe—just maybe—this forced adoption will end up convincing them of the merits of the system so that they end up being proponents and willing adopters—like Airbus. On the NetJets front, Flyht management indicated at the May 7 AGM that the interruption caused by the bankruptcy of Hawker Beech is finally over: the first jet in the NetJets Europe fleet went live on May 6, and now all 10 of the installed units are live. Although the Hawker Beech bankruptcy has changed the trajectory of the adoption process, with many customers’ own evaluations showing that Flyht’s AFIRS system demonstrates savings of over $100,000/plane/year, I would expect to see this program gain momentum, both at NetJets Europe and NetJets USA, over the next two years. A smaller but still significant and very visible opportunity is in Nigeria: a mandate to have AFIRS installed on all planes operated by Nigerian airlines means that another 80 planes will have the AFIRS system installed and running by the end of 2014. Developments such as these above, as well as developments with operators of C-130 fleets have reinforced my confidence that we will see Flyht’s stock somewhere in the $1 $3 range within 3 years; shorter-term, I think we’ve got a good shot at the $0.40-$0.60 range by yearend.