Following a period of engine development, the deal is expected to transition to a multi-year supply contract.

Advanced UAV engine manufacturer Orbital UAV (ASX:OEC) has landed another big-name client in the global aerospace industry.

The company announced a new supply agreement this morning with Lycoming Engines, a subsidiary of the NYSE-listed industrials giant Textron (NYSE:TXT).

The deal will kick off with a 12-month engine development program, which will see the integration of the Orbital UAV-designed core engine as part of the Aerosonde program operated by Textron Systems.

Upon completion of the development program, the deal will transition to a broad-based engine supply contract encompassing the provision of engines, spare parts and support services in the construction of advanced UAV (unmanned aerial vehicle) engines.

The supply deal will run for a minimum of five years, with a potential five-year extension. Delivery of the production engines is expected to commence in the 2023 financial year.

Textron Systems senior vice president Wayne Prender said the partnership will help to further establish Textron’s position as a market leader in UAV construction.

“Orbital UAV’s heavy fuel technology and design expertise coupled with Lycoming Engines’ world class reputation further supports Textron Systems’ industry-leading UAV mission readiness rates, and reputation for reliability and durability,” he said.

 

Global execution

Along with the financial incentive of a new multi-year contract opportunity, the latest deal with Textron is evidence of Orbital’s increasing traction in the global market for UAV engine manufacturing – a sector with high barriers to entry.

The company is currently working through a five-engine contract with Insitu, a defence-focused subsidiary of global aerospace company Boeing which is the result of a multi-year partnership going back to 2013.

Contracts with companies like Boeing and Textron aren’t won overnight.

As Orbital CEO Todd Alder explained to Stockhead recently, “you need to be able to consistently demonstrate performance and reliability. It’s one thing to get that with our customers, but it’s another to get it with the end user in a field such as US defence.”

Having now gained market traction, Orbital is positioned to build on that market reputation with other major clients to continue to drive revenue in the years ahead.

Commenting on today’s announcement, Alder said it marks another step forward as the company executes on what is now a global market opportunity.

“This relationship further enhances our status within the global UAV defence industry and provides the opportunity to increase our market share and deliver on our strategic growth objectives,” Alder said.

This article was developed in collaboration with Orbital Corporation, 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.

Read MoreDrones

Featured Companies

You might be interested in