Falling from it’s comfortable altitude for the year of around 0.17, the penny stock of Avantair, Inc. (AAIR) dropped like a rock today after reported it’s in a critical financial situation at present. Commencing employee furloughs while the fractional provider of the Piaggio Avanti Turboprop airplane which can reach light jet speeds, averaging 425 mph, with up to 40% less fuel, AAIR stock made a huge impact today, nearly big enough to leave a massive crater on the OTC. Having just reported revenues for the 3 and 9 months ended worth $34.66 million and $ $113.02 million versus $45.60 million and $131.52 million for the same periods last year, is the sell of premature or has the altimeter really been readjusted for the troubling aviators?
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AAIR Stock Quote
Market Cap: 1.55M
Last: 0.041 ▼ -0.119 (-74.38%)
Volume: 3,160,742
Dollar Volume: $172,945
Open: 0.152
High: 0.16
Low: 0.0296
Trades: 226
Authorized: 75,000,000
Issued and Outstanding: 40,901,634
1st Resistance Point: 0.0536
1st Support Level: 0.0296
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Reports were out yesterday questioning the future of fractional ownership airline provider Avantair after the Company grounded its fleet and announced that additional financing is required in order to start flying again. The reports even mention that there is a strong possibility that the Company with total assets worth $78.25 million as of March 31, 2013 could be in danger of having some of its planes repossessed.
Looking almost like a typical promotion from Psycho, shares of AAIR stock opened lower and, at a speed less than what the Piaggio Avanti Turboprop can hit, began to drop trade by trade until finally hitting a low of 0.0296, the lowest the shares have ever traded. It’s an over-selling frenzy without a doubt for a Company which, as of June 30, 2012, operated 57 aircraft within its fleet which was comprised of 45 fractionally-owned aircraft, 6 company-owned core aircraft and 6 leased and company-managed aircraft – all of which are from a single manufacturer, Piaggio America, Inc.
The “shock effect” occurring on AAIR stock appears to be well over exaggerated for those who have had a chance to study the issues Avantair has been combating over the last 18 months. The Company has been implementing a well-drawn out plan of cost cutting initiatives which include:
• elimination of the Company’s satellite marketing office and related expenses;
• reducing compensation expense for Senior Management, as well as applying measures more broadly throughout the organization;
• reducing compensation to non-employee directors of the Company’s Board of Directors;
• implementing plans designed to reduce fuel expense by dissemination of process guidelines and real-time tracking of fuel usage on all flights together with renegotiation of fuel purchase contracts with key vendors; and
• lower maintenance costs resulting from strategically planning scheduled maintenance checks at our facilities, which in turn will reduce third party vendor costs, and optimizing parts inventory to reduce downtime and improve efficiency;
What’s encouraging for those looking to strike a bargain buy scooping up some AAIR stock is that, as of June 30, 2012, the Company had contractual commitments to purchase 48 additional Piaggio Avanti II aircraft through 2013. The commitments came with a mutual understanding that the aircraft delivery dates and any related payments could be extended. The total commitment if exercised during the period, including a proposed price escalation, was valued at approximately $305.1 million, net of deposits paid on future aircraft deliveries of $6.4 million.
Those types of commitments, partnered with cost cutting initiatives which have been addressed and implemented to some extent doesn’t sound like the type of actions a multi-million dollar company would make without knowing some turbulence was bound to hit at some point.
About AAIR Stock
Avantair, Inc. and its subsidiaries are in the business of providing private aviation services through three primary flight service programs: (i) the sale of fractional ownership interests through the Fractional Ownership program; (ii) the lease of fractional interests through the Axis Lease program; and (iii) the sale of flight hour cards through the Edge Card program.
Click here to view the SEC filings for AAIR.
Click here to view the website for AvantAir.
Last 5 Trading Sessions:
| Date | Last | Change | % Change | Volume |
| 06/26/13 | 0.1600 | unch | unch | 17,500 |
| 06/25/13 | 0.1600 | unch | unch | 1,500 |
| 06/24/13 | 0.1600 | -0.0100 | -5.88% | 131,000 |
| 06/21/13 | 0.1700 | +0.0100 | +6.25% | 45,000 |
| 06/20/13 | 0.1600 | +0.0100 | +6.67% | 25,000 |
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Bottom Line:
AAIR stock is hitting all the radar screens today due to it’s huge decline and volume spike making it a good penny stock to watch for those who can do some of their own research. Without having formally addressed the issues at hand other than an 8-K filing yesterday, any commentary with a positive twist to it from AvantAir could send AAIR stock back above 0.05, or even 0.10, within minutes so keep a look out for that.
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