Velocity Composites PLC (LON:VEL) saw its shares surge in early morning trading Friday after it signed a long term supply agreement with US aircraft manufacturer Boeing Co. (NYSE:BA).
The AIM-listed composite material supplier said the agreement was to secure the supply of complex design consumable kits for the Boeing 737 Max programme and would extend to the end of 2021 with a contract value of £3mln.
The company added that the composite material kits would be produced at its Fareham site, starting immediately, and would be used for wing construction on the Boeing 737 Max.
Jon Bridges, Velocity Composites’ chief executive, said: "This latest signing of a Long Term Agreement with one of our existing customers is a significant and positive step for Velocity, and importantly is our first contracted Boeing platform, which continues the trading momentum that the Company has experienced in the year so far.
He added: “We are confident that the added value the Company brings through lowering waste and cost in the aerospace industry will lead to the continued growth of Velocity's role in the aerospace manufacturing supply chain. I am also hopeful that these two packages of work will, in turn, lead to further contract awards."
In a note to clients, analysts at City broker FinnCap commented: “The LTA [long term agreement] provides some encouragement as it extends an existing customer relationship onto a new aircraft platform…This news should also provide some relief to the shares, which have seen significant weakness, and highlights the company’s growth opportunity and longer-term market potential.”
Velocity shares were up 14.2% at 60p.