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AAR Secures a $1.2B Deal for Its P-8A Poseidon Aircraft
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AAR Corp. (AIR - Free Report) recently secured a nearly $1.2 billion deal for five years of indefinite delivery/indefinite quantity with the U.S. Navy's Naval Air Systems Command (“NAVAIR”). Per the contract, AIR will look after the engine depot maintenance and repair of the P-8A Poseidon Aircraft fleet.
A Brief Note on AAR’s Deal
For the Navy's expanding fleet, AIR and its strategic partner Delta TechOps will boost engine asset availability starting in October 2024 by offering program management, supply-chain management, technical support, and maintenance and repair services. Through this relationship with AAR, the U.S. Navy will be able to accomplish its essential national security mission and continue operating the P-8A due to its enhanced engine repair capabilities.
This deal represents a significant step forward in AAR's aim to expand and enhance its commercial derivative business through the supply of integrated solutions. It is also projected to boost the volume of engine parts sold in the company's Part Supply division.
AAR’s Growth Prospects
The increasing defense budgets and advancements in aerospace technology must have increased the demand for maintenance and upgrade solutions. As nations are spending heftily these days to secure their borders, fighter jets are playing a key role in defending a country’s safety. This has been boosting the demand for fighter jets. As demand for new aircraft is rising, so is the need for maintenance, repair and overhaul (MRO) services.
Per a report by Mordor Intelligence, the Military Aircraft MRO market is projected to reach nearly $47.48 billion by 2029, with a CAGR of 2.8% between 2024 and 2029. Such growth opportunities offered by the aforementioned market should bode well for AAR in the coming years.
AAR is a renowned provider of aircraft MRO solutions to commercial and defense aircraft with operations in more than 20 nations. The company is currently the largest independent MRO service provider in North America, which operates six certified hangars in the United States and Canada with thousands of commercial and military aircraft under its care.
AAR’s talented aircraft technicians and engineering experts carry out major maintenance services as well as airframe repair, modifications, inspections, upgrades, refurbishments and painting services for a variety of aircraft platforms, including Airbus, Boeing, Bombardier and Embraer.
Opportunities for Other Aerospace Companies
Defense contractors that are anticipated to benefit from the expanding Military Aircraft MRO market are as follows:
RTX Corporation (RTX - Free Report) : The company’s unit, Collins Aerospace, is known for its advanced avionics solutions. Its MRO services include the maintenance and repair of avionics systems, seat inspections, teardown and analysis, from minor repairs to major repairs.
RTX has a long-term (three to five years) earnings growth rate of 10.4%. The Zacks Consensus Estimate for RTX’s 2024 sales suggests growth of 7% from the prior-year reported figure.
Lockheed Martin (LMT - Free Report) : Its Sikorsky Military Aircraft’s Overhaul and Repair organization offers a diversified range of system services, repairing and overhauling dynamic systems, blades, avionics and numerous other components, from aircraft tip to tail.
Lockheed Martin has a long-term earnings growth rate of 4.7%. The Zacks Consensus Estimate for LMT’s 2024 sales implies growth of 5.3% from the prior-year reported figure.
Curtiss-Wright Corporation (CW - Free Report) : The company has more than 25 years of expertise in repairing and overhauling complex flight control actuators and structural components that support them. CW provides heavy maintenance support, modification programs and customized component repair solutions for these vital parts.
Curtiss-Wright delivered an average earnings surprise of 11.52% in the last four quarters. The Zacks Consensus Estimate for the company’s 2024 sales indicates an improvement of 7.1% from the prior-year reported figure.
AAR Stock Price Movement
In the past six months, AIR shares have risen 9.8% compared with the industry’s growth of 17.5%.
Image: Bigstock
AAR Secures a $1.2B Deal for Its P-8A Poseidon Aircraft
AAR Corp. (AIR - Free Report) recently secured a nearly $1.2 billion deal for five years of indefinite delivery/indefinite quantity with the U.S. Navy's Naval Air Systems Command (“NAVAIR”). Per the contract, AIR will look after the engine depot maintenance and repair of the P-8A Poseidon Aircraft fleet.
A Brief Note on AAR’s Deal
For the Navy's expanding fleet, AIR and its strategic partner Delta TechOps will boost engine asset availability starting in October 2024 by offering program management, supply-chain management, technical support, and maintenance and repair services. Through this relationship with AAR, the U.S. Navy will be able to accomplish its essential national security mission and continue operating the P-8A due to its enhanced engine repair capabilities.
This deal represents a significant step forward in AAR's aim to expand and enhance its commercial derivative business through the supply of integrated solutions. It is also projected to boost the volume of engine parts sold in the company's Part Supply division.
AAR’s Growth Prospects
The increasing defense budgets and advancements in aerospace technology must have increased the demand for maintenance and upgrade solutions. As nations are spending heftily these days to secure their borders, fighter jets are playing a key role in defending a country’s safety. This has been boosting the demand for fighter jets. As demand for new aircraft is rising, so is the need for maintenance, repair and overhaul (MRO) services.
Per a report by Mordor Intelligence, the Military Aircraft MRO market is projected to reach nearly $47.48 billion by 2029, with a CAGR of 2.8% between 2024 and 2029. Such growth opportunities offered by the aforementioned market should bode well for AAR in the coming years.
AAR is a renowned provider of aircraft MRO solutions to commercial and defense aircraft with operations in more than 20 nations. The company is currently the largest independent MRO service provider in North America, which operates six certified hangars in the United States and Canada with thousands of commercial and military aircraft under its care.
AAR’s talented aircraft technicians and engineering experts carry out major maintenance services as well as airframe repair, modifications, inspections, upgrades, refurbishments and painting services for a variety of aircraft platforms, including Airbus, Boeing, Bombardier and Embraer.
Opportunities for Other Aerospace Companies
Defense contractors that are anticipated to benefit from the expanding Military Aircraft MRO market are as follows:
RTX Corporation (RTX - Free Report) : The company’s unit, Collins Aerospace, is known for its advanced avionics solutions. Its MRO services include the maintenance and repair of avionics systems, seat inspections, teardown and analysis, from minor repairs to major repairs.
RTX has a long-term (three to five years) earnings growth rate of 10.4%. The Zacks Consensus Estimate for RTX’s 2024 sales suggests growth of 7% from the prior-year reported figure.
Lockheed Martin (LMT - Free Report) : Its Sikorsky Military Aircraft’s Overhaul and Repair organization offers a diversified range of system services, repairing and overhauling dynamic systems, blades, avionics and numerous other components, from aircraft tip to tail.
Lockheed Martin has a long-term earnings growth rate of 4.7%. The Zacks Consensus Estimate for LMT’s 2024 sales implies growth of 5.3% from the prior-year reported figure.
Curtiss-Wright Corporation (CW - Free Report) : The company has more than 25 years of expertise in repairing and overhauling complex flight control actuators and structural components that support them. CW provides heavy maintenance support, modification programs and customized component repair solutions for these vital parts.
Curtiss-Wright delivered an average earnings surprise of 11.52% in the last four quarters. The Zacks Consensus Estimate for the company’s 2024 sales indicates an improvement of 7.1% from the prior-year reported figure.
AAR Stock Price Movement
In the past six months, AIR shares have risen 9.8% compared with the industry’s growth of 17.5%.
Image Source: Zacks Investment Research
AAR’s Zacks Rank
AAR currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.