AerSale Corporation (NASDAQ:ASLE) Q2 2023 Earnings Call Transcript

Give us the paperwork we need and let’s start flying. First thing that the FAA will do is to verify all these minor adjustments that we’ve made that they’ve been told about, that they can actually see them on the very first hour of flight. And as long as they see that — I mean, we’ve seen it already, but as long as they see it, they’re willing to go ahead and start on that same day, start on our last set of flight tests. So, expectation is we will demonstrate to them that the adjustments we made are what they requested, what we’ve already seen and we will roll it right into our final set of flight tests. So, when will that be finished? I think that we’ve been told to expect that there’s about a week of flying that the FAA will want to see and that could start as soon as next week or the week after.

Kenneth Herbert: And just finally, Nick on that final flight testing, the fifth set of tests, is that dependent upon certain weather conditions or what would be the gating factors on timing of that last set of test flights?

Nicolas Finazzo: We don’t have to chase weather anymore. So, we’ve already proven the system works in weather. So, this is just to operate the airplane in a normal airline type environment, start out in one city, fly to another city, go to another city, stop overnight, start the next day flying a different rotation to demonstrate to the FAA that the airplane is functioning. The pilots are able to use the system as they would if they were flying a normal airline type daily operation. It’s really just to prove that over the period of time that they observed the airplane during the final set of flight testing, that everything works the way it has been working with the exception of the changes we’ve made and that all of that continues to work throughout the duration of the flight testing.

That’s just the reliability portion of it. It’s really not to prove the system does what it’s supposed to do. It’s to prove that the system works for that period of time without an issue. The risk is, obviously, if there’s a mechanical problem with the airplane, which happens, then it had nothing to do with AerAware that could delay if we have to fix it and we can’t get it fixed overnight or quickly, that could delay the completion of those test flights. If something else were to come up and we put a lot of flying on this airplane, but if something else were to come up that nobody has seen at this point. And I don’t expect anything to come up. but if it did, FAA could then say guys, we saw something else and we want to understand that. It may not even be a true problem with the system.

It just could be they don’t understand it. and we’ve seen that already, where they thought things were incorrect. and we proved to them that it was within limits, but we ended up making it better as a result of their questioning some of these issues.

Kenneth Herbert: Great. Thanks, Nick. I’ll pass it back there.

Nicolas Finazzo: Okay. You’re welcome, Ken.

Operator: Our next question comes from Bert Subin with Stifel. Please go ahead.

Bert Subin: Hey. good afternoon and thank you for the question. Maybe, just following up there on AerAware, nick, what do you think would have to happen for the FAA to reject an STC, to say ultimately that this product is still not allowed to go forward? Is that a possibility or would it just become a timing issue, where you just keep fixing problems in sort of the worst-case scenario?