Star sells ADS to Almasria Universal Airlines
Nov. 25, 2013, Toronto - Star Navigation Systems Group Ltd. has announced that Almasria Universal Airlines of Egypt has now placed a firm purchase order with Star for the installation and activation of the STAR-A.D.S. system on two of its aircraft, an Airbus A-320 and an Airbus A-321.
The purchase order from Almasria contemplates installation commencing immediately upon receipt by Star of the required Supplementary Type Certificates (STC's), expected to take approximately 60 days from receipt of specific aircraft documentation. Star personnel have already been dispatched to Egypt and have commenced work on the STC program.
Almasria has been offered a unique choice of payment options. Within seven months of activation of the system, Almasria must elect to either purchase the two systems outright or, in the alternative, Almasria may elect to make no payment for the hardware components of the system, provided that they share the value of fuel savings realized through the use of the system with Star on a 50-50 basis. (Almasria will pay Iridium charges per flight hour and monthly licensing fees in any event). Should AlMasria feel that the fuel savings exceed their expectations, they can purchase the units outright and discontinue the profit share.
Star feels confident that, properly utilized, the STAR-A.D.S. system can help AlMasria save approximately three to five per cent of its fuel budget. Based on each aircraft flying 2500 hours per year, the aircraft would consume approximately $17,000,000 worth of fuel a year. Star's portion of the savings could be between $255,000 and $425,000 per year based on the profit share arrangement. Over the five-year term of the contract, the compensation could be between $1.275 million and $2 million.
Star feels confident that Almasria will choose to purchase the units.
The value of an outright purchase for the two aircraft, based on list prices, together with estimated airtime, licensing and "alerts" charges over the five-year term of the contract is approximately US$570,000 depending upon usage.
Almasria management said, "Although the potential fuel savings really got our attention, we also like the ECM, FOQA and MOQA monitoring provided by Star-A.D.S. together with its ease of use."
Viraf Kapadia, Star CEO said, "This order from Almasria for installation on board the A-320 and A-321's, two of the most popular commercial aircraft, will provide a stable revenue stream and allow us to further showcase our STAR-A.D.S.(TM) service. It also allows us to participate in the development of Almasria, a young, dynamic airline, located in a key part of the world. Almasria has indicated that it intends to expand its fleet in the near future and Star looks forward to contributing to its success. Together with our other STC's, we now are able to cover nearly 50% of the world commercial fleet of passenger planes. This order positions us strategically and commercially on several fronts".
Actual revenue generated by this contract will be included in our regular financial statements in accordance with our stated revenue recognition policies. Estimates of installation times and revenue recognition are correct to the best of our knowledge at this time. However, Star reminds shareholders and the investing public in general that actual results may vary as a result of factors beyond our control.