ICTS International NV (Nasdaq: ICTS) announced on Friday that its wholly owned subsidiary Huntleigh had lost its primary source of revenue, after the US government decided to take over full responsibility for airport security.
Huntleigh USA, a provider of security and other services to airlines and airports in the US, said it had signed an agreement with the Transportation Security Administration (TSA) for security services to be provided during a bridge period lasting between February 18, 2002 and November of 2002. In November, the US government will assume full responsibility for airport security.
The terminated security agreements, which covered 39 airports, represented 71% of Huntleigh's revenue in 2001.
During the bridge term the company anticipates that revenue and profits will increase. However, ICTS warned that the government takeover of security will have an adverse effect on its revenue and profits after the bridge period ends in November of 2002.
Huntleigh's non-security service agreements with the airlines have not been terminated. These remaining agreements represent $30 million in revenue on an annual basis.
ICTS said that despite the new agreement with the TSA and its full cooperation with the authority, it had preserved its rights for "just compensation" for the taking of Huntleigh's business. The company was exploring all alternatives to obtain compensation as called for in the Aviation and Transportation Security Act of 2001, ICTS added.
ICTS International provides aviation security and other aviation services. The company’s shares fell 2.8% on Nasdaq on Friday and closed at $7.24.
Published by Israel's Business Arena on 24 February, 2002