AVTECH Sweden AB (publ) INTERIM REPORT January - June 2019
- AVTECH Group's turnover for the second quarter of 2019 amounted to MSEK 4.0 (3.3).
- Operating profit before depreciation for the second quarter of 2019 was SEK +1.4 (+0.2).
- Net result for the second quarter of 2019 was SEK +0.5 (-0.9) or SEK 0.09 (0.03) per share.
- Cash flow from operating activities for the second quarter of 2019 amounted to MSEK -0.2 (-0.2). The Group's cash and cash equivalents at the end of the period amounted to SEK 13.3 million (15.7 at the previous year-end). Increased market and development efforts of approximately SEK 1.3 million have affected liquidity during January - June.
- Shareholders’ equity at the end of the period amounted to SEK 28.6 million (28.1 at the previous year-end) or SEK 0.51 (0.50) per share. The Group's equity / assets ratio was 98.0 (93.0) percent.
- During the period January - June, operations began to show a stabilizing profitability. This development is expected to continue during the remainder of 2019. A tax-exempt profit margin exceeding MSEK 65.0 is in the form of previously generated activity deficits.
- The second quarter of the fiscal year has meant continued investments in sales and marketing. During the summer period, the airlines' focus is mainly on delivering effectively during increased seasonal demand. Despite a certain degree of uncertainty in the aviation industry, caused by, among other things, 737 MAX flight stoppages, we can see a continued growing interest in our products, not least thanks to increased fuel prices and environmental focus. The continued pressing cost situation within the airlines means that you do not buy anything other than those that have a significantly short payback period. It also means that you want to test all products in-house before making decisions. The result will be long times from shown customer interest to any contract. Two major European airlines have started testing Aventus NowCast full-flight. Negotiations continue with an increasing number of airlines.
Events after the end of the period
- In early July, an extension of the current agreement with Southwest Airlines was signed. The customer has expressed an interest in expanding the collaboration to include more of AVTECH's services such as proFLIGHT, full-flight optimization and turbulence alerts. Based on the continued flight stop of the 737MAX, we expect delays in this process.
- Development projects in the area of climb and cruise optimization are proceeding according to plan. These projects will lead to new products within the Aventus product family that further increase the effect of using 10K weather. In addition to Norwegian, another major airline has shown a great interest to participate as an evaluation company.
With the above supplementary products we can offer the airlines an optimization solution of the flightpath in order to significantly optimize fuel savings and flight time. The savings potential varies depending on the weather and other circumstances. The expected total savings for a typical flight are shown in the figure below.
This gives a total savings potential as follows.
- Together with a major Northern European airline, an extension of AVTECH's SIGMA service is planned. The ambition is to deliver a service for monitoring flight through volcanic ash within a six-month period in order to optimize engine maintenance. The service is considered to be of interest to more airlines.
- The discussion with Gatwick regarding Target Time Arrival Manager (TTAM) continues in anticipation of the position of new majority shareholders. The project will be completed in the middle of the 2020s.
- The maximum effect of AVTECH's product portfolio will be achieved by the full introduction of Time Based Operations. This requires increased cooperation between airlines, airports and air traffic management. Under current plans, implementation of TBO will be implemented in the 2020s.
- The dialogue with airlines within the Lufthansa group has intensified. Eurowings has begun a longer trial period of Aventus NowCast full-flight.
- A letter of intent was signed at the end of July with a medium-sized European airline to launch Aventus NowCast full-flight in the airline business. The paid trial period will last for six months. A final contract is expected to be completed during the test period.
- An important part of our marketing plan is participation in trade fairs and conferences for the aviation industry. AVTECH intends to attend:
o Connected aircraft and digital cabin conference, 1-2nd Oct, London
o Electronic Flight Bag User Forum, 5-7nd Nov, Madrid
o 13th Annual Flight Operations Conference 3-4 Dec, London
- On September 12, AVTECH will conduct an online webinar on cruise optimization service for participants in the aviation industry. Previous webinars have been well attended with about 30 airlines represented.
- Along with Met Office representatives, two presentations are scheduled at two major airlines during Q3 2019.
- During Q3, the marketing team was strengthened with a full-time marketing coordinator. The intention is also to engage in an additional sales resource with flight background during Q3.
- The number of pilots using proFLIGHT in their daily operations is constantly increasing. The users today represent more than 70 global airlines that together have a line network that covers the whole world. We see increased interest in the airlines for proFLIGHT and are currently in discussions with most major European operators regarding the possibility of implementing proFLIGHT in their daily operations. The process of obtaining proFLIGHT approved and verified by the European Union Aviation Safety Agency (EASA) is continuing and is expected to be completed before the end of 2019. This means that future revenue from the proFLIGHT app will not be calculated until 2020.
- Recently, an NDA has been signed with IATA regarding their initiatives in real-time turbulence observations. The agreement means that AVTECH will have access to valuable information that can supplement the high-resolution turbulence forecast found in the SIGMA and proFLIGHT services. The incident information comes from observed events during flights. Only observed turbulence at a given altitude, time and position gives limited information on whether turbulence is best avoided by rising or falling. If many aircraft are in the same airspace at about the same time, an excellent tool is created to confirm or correct existing turbulence forecasts. The combination of observation and forecast gives the overall picture of what the turbulence looks like and how it can be effectively avoided. Several of AVTECH's customers participate in IATA's turbulence program and for this information becomes easily available in AVTECH's services such as the proFLIGHT app.
Kista, August 24, 2019 AVTECH Sweden AB (publ), the Board of Directors. This report has not been reviewed by the company's auditors.
For further information, please contact
Christer Fehrling, President and CEO, +46 (0) 8 544 104 80
Britt-Marie Lodenius, Chief Financial Officer, +46 (0) 8 544 104 80
or visit the company's website www.avtech.aero
AVTECH Sweden AB ( publ), corporate registration number 556568-3108, has its registered office in Stockholm municipality.
Postdress: Färögatan 33, 24 tr, 164 51 KISTA, Sweden.
The company's B-share (short name AVT B) has been traded on NASDAQ OMX First North since February 2012. The company's A share is not traded on any marketplace. Certified Adviser is currently Redeye AB (www.redeye.se), tel: 08-121 576 90, e-mail address certified firstname.lastname@example.org. For explanation of technical terms, see the glossary on page 73 of the company's New Issue Prospectus 2011. The information in this press release is such that AVTECH Sweden AB (publ) is obliged to publish in accordance with the EU Market Abuse Regulation. The information was submitted, through the agency of the above contact person, for publication on August 28, 2019 at 08.30 CET.
ABOUT AVTECH Group
AVTECH develops products and services for digital air traffic management systems. Customers are the global aviation industry's players such as airlines, airports, air traffic control providers, technology companies and aircraft manufacturers. With the help of the company's products and services, each individual flight or entire flight operation can be optimized in terms of economy, noise and emissions, efficiency, capacity, punctuality and safety. The head office is in Stockholm, Kista. For more information, see www.avtech.aero.