Agreement between BAE Systems Operations Ltd. and Avcorp Industries Inc. with
respect to production of F35 - Carrier Variant - Outboard Wing (CV-OBW)

VANCOUVER, July 21 /CNW/ - Avcorp Industries Inc today announced the signing of an agreement between the company and BAE Systems Operations Ltd. for the production of the F35 CV-OBW commencing in 2010 and with potential deliveries through 2023. The Carrier Variant or F35C is currently only required by the US Navy. The Memorandum of Agreement and associated Terms and Conditions were signed today at the Canadian Pavilion at the Farnborough International Air Show. In attendance were the Honourable Tony Clement, Minister of Industry and the Honourable Lynne Yelich, Minister of State - Western Economic Diversification, for the Government of Canada.

Avcorp is establishing a production capability in 2010 and assembly will start by the end of the year with initial deliveries by mid-2011. Most of this work will be completed in a dedicated facility in Delta BC with use of an extensive US and Canadian supply network.

"This contract is a significant step in achieving the strategic diversification of the Avcorp portfolio of business," said Mark van Rooij, CEO of Avcorp. "It is the culmination of a lot of hard work by an outstanding team of Avcorp employees. The F35 work represents a step up in the capabilities at Avcorp and establishes the company as one of very few capable of producing aerostructure assemblies for the latest 5th generation fighter aircraft."

"This is the second Industrial Participation contract established in Canada by BAE Systems, with Avcorp being the planned single source supplier for the F35 Outboard Wings. To date Avcorp have demonstrated a very high level of proactive commitment to the Program and we are confident that the relationship will continue to develop with Avcorp enabling BAE Systems to deliver on its commitments to on time, quality OBW's that achieve the affordability targets for the F35 Lightening Program" said C. Addison BAE Systems F35 Project Director.

Avcorp has succeeded in reaching this point on the program by engaging early with Government of Canada initiatives (led by Industry Canada) and by investing in the upgrading of people, skills and facilities. Throughout this process BAE Systems has provided leadership and support for the company's efforts. This initial step may result in the delivery of up to 340 shipsets of the CV-OBW by Avcorp, representing in excess of US$500 million in revenues over 10 to 15 years of production. Approximately 75 direct and indirect jobs will be created by this contract at Avcorp.

About BAE Systems

BAE Systems is a global defence, security and aerospace company with approximately 107,000 employees worldwide. The Company delivers a full range of products and services for air, land and naval forces, as well as advanced electronics, security, information technology solutions and customer support services. In 2009 BAE Systems reported sales of (pnds stlg)22.4 billion (US$ 36.2 billion).

About Avcorp

Avcorp designs and builds major airframe structures for some of the world's leading aircraft companies, including Boeing, Bombardier, and Cessna. With more than 50 years of experience, 500 skilled employees and 354,000 square feet of facilities in Delta BC and Burlington ON, Avcorp offers integrated composite and metallic aircraft structures to aircraft manufacturers, a distinct advantage in the pursuit of contracts for new aircraft designs, which require lower-cost, light-weight, strong, reliable structures. Avcorp is a Canadian public company traded on the Toronto Stock Exchange (TSX:AVP).

    
    (signed)                                (signed)

    MARK VAN ROOIJ                          PAUL KALIL
    CHIEF EXECUTIVE OFFICER                 PRESIDENT
    

Forward-Looking Statements

Certain statements in this release and other oral and written statements made by the Company from time to time are forward-looking statements, including those that discuss forecasted revenues and financing requirements. These forward-looking statements based on management's projections of customer orders and operating needs, and are subject to risks and uncertainties that may cause actual results to differ materially from those contained in the statements, including the following: (a) the extent to which the Company is able to achieve savings from its restructuring plans; (b) uncertainty in estimating the amount and timing of restructuring charges and related costs; (c) changes in worldwide economic and political conditions that impact interest and foreign exchange rates; (d) the occurrence of work stoppages and strikes at key facilities of the Company or the Company's customers or suppliers; (e) government funding and program approvals affecting products being developed or sold under government programs; (f) cost and delivery performance under various program and development contracts; (g) the adequacy of cost estimates for various customer care programs including servicing warranties; (h) the ability to control costs and successful implementation of various cost reduction programs; (i) the timing of certifications of new aircraft products; (j) the occurrence of further downturns in customer markets to which the Company products are sold or supplied or where the Company offers financing; (k) changes in aircraft delivery schedules or cancellation of orders; (l) the Company's ability to offset, through cost reductions, raw material price increases and pricing pressure brought by original equipment manufacturer customers; (m) the availability and cost of insurance; (n) the Company's ability to maintain portfolio credit quality; (o) the Company's access to debt financing at competitive rates; and (p) uncertainty in estimating contingent liabilities and establishing reserves tailored to address such contingencies.

SOURCE Avcorp Industries Inc.

For further information: For further information: Sandi DiPrimo, Investor Relations Contact, 604-587-4938


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