The renewal and expansion of an existing contract with an an unnamed Asia-Pacific based carrier is a positive sign that Guestlogix (TSX:GXI) can reach other, similar deals, says Cantor Fitzgerald Canada analyst Justin Kew.
Yesterday, Guestlogix announced that a deal had been reached with said carrier to continue the use of Guestlogix’s onboard retailing technology. CEO Brett Proud commented on the deal.
“We are pleased to have earned the continued trust and confidence of this Asia-Pacific carrier and remain committed to providing seamless retailing on board its fleet,” he said. “With this renewal and technology upgrade, we will implement our PCI-compliant hand-held POS devices to enable chip and PIN payments on board, further protecting both the airline and its passengers. At the same time, our business intelligence platform will be deployed to gain further insights into the airline’s retail performance, enhancing its ability to make informed business decisions.”
Kew thinks the unnamed carrier is likely Qantas, pointing to the fact that a deal with that airline was announced four years ago, on September 13th, 2010. He says the deal, paired with the recent successful re-upping of Southwest Airlines, gives him confidence that other pending renewals will take place, including those with United, Alaska and Ryanair, which are all due in the second half of 2014. The analyst says he also expects good news on the traction of the company’s in-flight entertainment efforts in the same time period.
In a research update to clients yesterday, Kew maintained his “Buy” rating and $2.00 one-year target on Guestlogix, implying a return of 65% at the time of publication.