ASX listed Structural Monitoring Systems plc (ASX: SMN) has confirmed it has executed the “world’s first” commercial agreement related to the supply and permitted use of a structural health monitoring (“SHM”) technology with a commercial airline operator.
The Aircraft Component Purchase (“ACP”) Agreement with prominent North American airline Delta Air Lines, Inc. (“Delta”), is non-excusive and for an initial period of 10 years (with rolling 10 year extension provisions). It will see Delta partner with SMN to identify multiple CVM applications, on multiple aircraft types, across Delta’s entire mainline aircraft fleet.
Through the purchase of an initial threshold level of CVM™ equipment, Delta will earn the right to receive commissions on all SMN sales of CVM™ equipment, and technology license agreements, transacted with global airline operators. It is also permitted to purchase CVM™ sensors, hardware and related peripheral equipment at a discount to the SMN global catalogue list prices paid by Delta competitors.
The approximate revenue value associated with these initial threshold sales of CVM™ equipment to Delta is expected to be in the vicinity of $US6-7 million.
SMN believes that a major global carrier’s adoption and fleet-wide installation of CVM™ technology, would lead the global commercial aviation sector to full, widespread use of CVM™ products.
Subsequent sales of CVM™-related equipment to the world’s remaining airline carrier fleets would be expected to generate revenues that are many multiples higher than those revenues generated with Delta – and this excludes the per annum revenue value that would be derived from annual, continuously renewable CVM™ technology licensing agreements.
The commercial value of technology license agreements will ultimately peak at approximately $US10-15 million, on a per annum/per operator basis, for a typical Tier I airline operator.
Commenting on the Agreement, SMN Chief Executive Officer, Toby Chandler, said, “We are extremely pleased to have now executed what is undoubtedly the world’s most significant agreement in the burgeoning field of Structural Health Monitoring with Delta Air Lines.
“We have worked with Delta for a long time to finally achieve this extremely important “company-making” milestone Agreement.
“As SMN has matured into a progressive and rapidly evolving technology company, we are extremely fortunate to have such a high-profile, commercially powerful and globally-recognised partner to accelerate CVM™ into the commercial realm.
“SMS has now well and truly “arrived”, and the Company enjoys a very visible, and substantial, “first-mover” advantage coupled with a unique and highly disruptive technology; we intend to exploit these clear commercial advantages to their fullest.
On behalf of Delta Air Lines, David Piotrowski, Senior Engineer, Delta Tech Ops, added, “Delta TechOps looks forward to incorporating the use of CVM™ technology across the Delta fleet to help us maintain our aircraft in a more cost-efficient, and time-efficient, manner.”
“We firmly believe that SHM is the next level of non-destructive testing (“NDT”), and the commercial relationship we have cemented with this agreement advances and elevates our investment in, and commitment to, SMN’s CVM™ technology as the clear industry leader in this game-changing field. We look forward to a close and highly productive association for years to come”.
