The development announced today marks a key step in Orbital’s transition to an agreed supply contract in 2022.

Advanced UAV (unmanned aerial vehicle) engine manufacturer Orbital Corporation (ASX:OEC) today announced a major milestone as part of its latest engine development program, with the provision of an initial prototype engine for evaluation by Lycoming Engines.

The company is currently involved in an extensive development program with Lycoming, a subsidiary of the NYSE-listed industrials giant Textron (NYSE:TXT).

The collaboration, which was signed in March, will integrate an Orbital UAV-designed core engine, into the Aerosonde unmanned aircraft system, operated by Textron Systems, another subsidiary of Textron.

The delivery of the core engine as scheduled represents a key step in the 12-month long development program, allowing Lycoming to assess the engine to inform further integration and design customisation requirements.

Shares in OEC rose by 2.5pc following the announcement to close at 82c. And Orbital CEO, Todd Alder, is pleased with how the project is progressing.

“Our contract with Textron / Lycoming announced at the end of March highlighted the progress of our customer diversification strategy,” Alder said.

“Our portfolio of international defence prime contractors demonstrates our growing status within the global UAV defence industry, and we are excited to develop these relationships and opportunities further,” he added.

World leader in UAV systems

The goal of the program with Lycoming is to enable the integration of an Orbital UAV-designed 150cc core engine, including proprietary fuel and engine control systems, into Textron Systems’ Aerosonde program.

Textron is a world leader in unmanned aircraft systems, and one of the largest suppliers of tactical UAV to the US armed forces.

Upon completion of the program, the deal will transition to a broad-based engine supply contract encompassing the provision of engines, spare parts and support services.

The supply deal is set to run for a minimum of five years, with a potential five-year extension.

“Working closely with Textron Systems and Lycoming, we are driving the development timeline to ensure we are able to smoothly transition into production and the agreed supply contract in 2022,” Alder said.

Orbital UAV’s main focus is in developing integrated propulsion systems, and flight critical components for UAVs.

The company has been expanding globally and has an international client portfolio that includes the likes of Insitu, a subsidiary of Boeing for which it is currently the primary supplier in a multi-year engine production contract.

This article was developed in collaboration with Orbital Corp, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.