Beaten down aircraft manufacturing services company Avcorp (TSX:AVP) is topping the markets gainers today after announcing it had been awarded $27.4-million in an arbitration case against Cessna Aircraft.
Avcorp had filed the case, which relates to compensation production work for Cessna, in 2010. The arbitration panel determined that a strategic alliance agreement between the companies that specified how work would be handed back to Cessna was exclusive and binding, and that Avcorp had fulfilled its requirements.
In December, 2010 Avcorp confirmed that, after a brief transition period, it would cease building Cessnas. Avcorp began building components for the Cessna Citation CJ3 business jet in 2005, and as late as 2010, the contract accounted for nearly 40% of Avcorp’s revenue.
Founded in 1986, Delta BC-based Avcorp manufactures airframe structures and components for large carriers. The Cessna case isn’t the first time Avcorp has gone to court with a client. In 2007 the company sued Bombardier for $18 million regarding a contract Bombardier terminated. That case was put to the side when, this past summer, Avcorp signed a five-year contract extension with Boeing to provide the wheel well for the its 737 aircraft. The contract, which begins next year, will be worth approximately $80-million, says management.
Last week, Avcorp announced its Q3, 2012 results. The company lost $1.44-million on revenue of $19.32-million. Today’s win will help ease the company’s cash crunch; its cash posiiton had fallen to just $1.4-million in Q3, which ended September 30th.
At press time, shares of Avcorp were up 44.4% to $.065.