Structural Monitoring Systems (ASX:SMN) has executed the first commercial agreement related to its “CVM” technology for detecting fatigue in composites and metals, with Delta Air Lines, Inc (NYSE:DAL).
The 10-year aircraft component purchase agreement with Delta is non-exclusive, with rolling 10-year extension provisions.
Structural Monitoring’s CVM technology monitors the development of cracks in predefined areas on an aircraft that are deemed to have a high risk of crack formation.
The implementation of this technology can reduce the cost of structural integrity maintenance inspections, increase aircraft performance, and increase the safety of air travel.
Delta will partner with Structural Monitoring to identify CVM applications on multiple aircraft types, across Delta’s entire mainline aircraft fleet.
The revenue value associated with the initial sales of CVM equipment to Delta is expected to be in the vicinity of $US6-7 million.
Through the purchase of an initial threshold level of CVM equipment, Delta will earn the right to receive commissions on all sales of CVM equipment and technology to other global airline operators.
Importantly, a major global carrier’s adoption and fleet-wide installation of CVM technology is expected to lead to the widespread use of CVM products by the global commercial aviation sector.
Subsequent sales to the world’s remaining airline carrier fleets could generate revenues that are many multiples higher than those revenues generated with Delta.
From the ASX announcement SMS executes world first agreement with Delta Airlines 17/8/17
Through the purchase of an initial threshold level of CVM™ equipment, Delta will earn the right to receive commissions on all SMS sales of CVM™ equipment, and technology license agreements, transacted with global airline operators. 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
Interestingly, at the time shares closed at $1.88 valuing the company — which had no sales revenue — at $192.6 million
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