Civilian Aircraft Manufacturing Enterprise was opened in Tbilisi in 2018 with an investment of USD 93 million, co-financed by the state-owned Partnership Fund and Israeli technology company Elbit. The company was certified by Boeing in early 2019 and received the status of the supplier of composite parts.
A few days ago, the company published its financial report 2020. The document reveals that the value of the parts supplied by the company to the American giant in 2020 was USD 9 million (GEL 28.2 million). For comparison, the company’s revenue in 2019 amounted to GEL 12.2 million. According to the report, due to the pandemic, the production volume turned out to be smaller than planned, so the company ended 2020 with a loss of GEL 13.2 million.
The financial report states that in 2020, the company produced a total of 325 composite parts for Boeing. At the same time, it is indicated that due to the pandemic, the number of Boeing 787 orders decreased in 2020, which had a negative impact on the financial income of the Georgian company. The strategic plan, which was based on the improved expectations from 2023, had been also changed.
"In 2020, the company significantly increased sales due to the full transition to mass production, and also launched a new project (D640, Intercostals). However, 2020 was not profitable for the company and it was expected because such a level of sales could not fully cover the expenditures. The slowdown in sales was in turn caused by the global pandemic (COVID-19).
Despite the revenue from sales increased significantly compared to 2019, the original sales plan was set at GEL 44.6 million and actually, 63% of the plan was fulfilled.
The company was manufacturing parts for the Boeing 787 Dreamliner, while the following risk factors affect the profitability of the company and its financial condition:
In 2020, COVID-19 pandemic led to cuts in production by Boeing, including the closure of the 787 Dreamliner plant in South Carolina for a few weeks. This led to a decrease in the company's orders. If the pandemic continues for an extended period, the air shipping service will continue to shrink, which means a reduction in demand for aircraft parts (details). This will make adjustments in the company's activities. If a similar scenario develops, the company will not be able to fully meet the financial forecasts planned for that particular year.
According to the forecast of international experts from the aviation sector, in 2021-2022, this market segment will not grow and will be maintained at 2020 level, or may even decrease. 2023 will be normal for the market, while from 2024 sales growth is expected. In 2026-2028, sales will reach a peak and return to pre-pandemic levels. This coincides to the strategy of JSC "Aeronautical Technologies (Cyclone)", which means maintaining the company's activities in 2021-2022 and optimizing costs to overcome this crisis relatively painlessly. And preparing for growth in 2023,” the company's management report said.
According to the company’s financial report, the company has assets of USD 51.7 million and employs 167 people.
