1. Investor sentiment regarding the airline industry appears to be increasingly negative. Although we consider Gulfstream a unique play in the airline industry, investors may not make this observation in the current environment.
- Gulfstream was recently Notified by NYSE Amex of Continued Listing Standards Non-Compliance . The Company currently intends to prepare and submit a plan within the time frame required by the NYSE Amex.
- Since May 7, 2009 Gulfstream has been involved with FAA compliance issues and faces possible civil penalties. The company has filed a detailed response to the Federal Aviation Administration's findings from a 2008 inspection resulting in a proposed civil penalty. The company provided documentation that aimed to show that it was in compliance with the relevant regulations in substantially all of the findings by the FAA, therefore asserting that there were no violations in those cases"
'While we may respectfully disagree with the FAA's findings of violations in many cases, we do agree that any error is one too many. Beginning last summer, we immediately instituted daily flight record audits for 100 percent of our flights to prevent any future record-keeping errors,' Hackett said.
Please the SEC Filing 10Q (For the quarterly period ended: March 31, 2009, page 8), for more details on this matter.
The GeoTeam® still likes the Gulfstream story, but these the aforementioned issues may put a damper on investor enthusiasm. Whenever possible, we attempt to be involved in stories with limited controversy. Our decision is largely based on uncertainties and not the growth potential of the company. A major concern is not knowing the amount of the ultimate fine which is currently proposed to be $1,310,000.
We will continue to track Gulfstream, placing the company on the GeoBargain on the Radar List, and offer updates when warranted. It is possible that the second quarter press release will offer more clarification on these short term issues. We are hopeful that the Gulfstream story will gain traction once all outstanding issues are resolved. For long-term investors the story may still have legs, as the stock may have limited downside risk at current prices.