Catalyst Watch – AerSale (ASLE)
AerSale (ASLE) specializes in the sale, lease, and exchange of used aircraft, engines, and components, in addition to providing a broad range of maintenance, repair, and overhaul and engineering services for commercial aircraft and components. On the company’s Q2 earnings call, CEO Nicolas Finazzo would say they continue to work towards final FAA approval of their Enhanced Flight Vision System, AerAware.
“If you recall, during our last quarter’s earning call, final certification of the system will follow the completion of 5 sets of flight tests proving different aspects of the system’s performance and reliability. Although we successfully passed the first four, several imaging issues were identified that required minor modifications to both software and setup procedures to ensure the images projected onto our head wearable displays align within the limits prescribed by the FAA. Identifying these issues and fine-tuning the system is part of the certification process and the reason for extensive flight testing. I’m pleased to report that we’ve made all the minor adjustments and modifications identified during flight testing, resulting in improved performance of the system and our readiness to demonstrate these adjustments to the FAA.”
He would add that earlier in the week, the FAA notified them that they had accepted these modifications and requested an in-person demonstration of the changes they made. This demonstration was tentatively scheduled for the weeks commencing August 14th or 20th subject to final paperwork and weather. Immediately following the demonstration, the fifth and final set of flight tests will commence and is expected to take approximately 1 week to complete. Assuming the successful completion of the final flight tests, AerSale said the FAA typically issues an STC, or Supplemental Type Certificate, within 30 days.
Stifel analyst Bert Subin sees this as a clear positive for AerSale as getting on the calendar with the FAA was something they thought would take longer. “As a result, if AerSale is able to successfully demonstrate it has addressed all the FAA’s prior requests/ concerns and no additional issues arise, which seems reasonable given over 300 hours of flight testing to date, that could put AerSale in a position to receive an STC by the end of September. Should that happen, we think the related stock reaction would be materially positive given the potential for AerAware to be worth up to $500M to AerSale, per our analysis.”
