Lack of air traffic no concern for simulation developer Adacel, upgrades profit

Air traffic may be significantly reduced at the moment due to COVID-19 travel restrictions but Adacel Technologies (ASX: ADA) has used the opportunity to upgrade its air traffic simulators and increase training capabilities to be a rare flight-related company that has provided an increase in profit guidance.

Through a combination of critical infrastructure installations, updates of its MaxSim simulator for existing clients and new air traffic management projects, Adacel anticipates FY20 profit before tax to be 20% higher than previously indicated, approximately $4.8m.

“I am very pleased with our progress despite the challenges our teams faced with COVID-19. We monitored and adapted quickly to our customers’ needs and mobilized our resources efficiently,” said Adacel CEO, Daniel Verret.

“Looking forward to FY2021, assuming modest and steady recovery from the COVID-19 disruption, we anticipate continued improvement in our financial performance.”

The profit guidance upgrade follows on from a very strong few months for Adacel which in June secured a $2.8 million contract from the U.S Army for 60 Adacel simulators for its Air Traffic Control Program. The simulators will be installed throughout the world to provide Army and Guard units with immersive simulation scenarios to maintain a high state of readiness.

The company is also in the process of accelerating its Aurora air traffic management projects in Fiji and Portugal.

The profit upgrade comes despite an ongoing legal matter playing out in the State of Florida between Adacel and former CEO Gary Pearson who departed the Company after 19 years, in March 2019, on the same day as then-Chairman Peter Landos.

Following news of their profit upgrade, ADA shares reached a high of $0.57 in morning trade, a rise of 32.5% on their previous $0.43 close.