Tactical UAVs are used by global defence forces for intelligence, surveillance and reconnaissance (ISR) missions. Image supplied.
Orbital UAV ships first next-gen Tactical UAS engines to Boeing’s key Aussie defence program
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Orbital UAV (ASX:OEC) has begun delivering engine builds to Boeing’s Insitu Pacific, the team responsible for supplying the Australian Army with its next generation of tactical uncrewed aerial system (UAS).
Insitu Pacific – a wholly owned subsidiary of The Boeing Company – became the Aussie government’s preferred supplier to Army’s LAND 129 Phase 3 program back in March 2022.
According to Orbital UAV (ASX:OEC), the deal includes delivery and initial support of the Integrator UAS as well as associated Ground Systems and Prime Systems Integrator services.
Todd Alder, CEO and MD of Orbital UAV, told Stockhead the firm is already targeting a larger slice of the $3 billion annual global tactical UAV defence market.
“Now, with heavy fuel (jet fuel) engine capability a clear objective requirement within the tactical UAV market, Orbital’s Aussie-made, patented tech solves the heavy fuel engine challenge for tactical UAVs going forward.”
What’s flying under the radar for investors is consideration of the longer term opportunity and revenue potential involved in the kind of maintenance, repair and overhaul contracts associated with these programs.
Orbital currently has two Boeing Insitu engine production lines in operation and a further five engine development programs for major US prime contractors Textron Systems and Anduril. OEC aims to capture 20% of the tactical UAV engine market within four years – representing ~$60M revenue in FY27.
Primary position
As Insitu Pacific’s primary engine supplier, Orbital UAV’s industry leading propulsion manufacturing capability was a big part of the successful LAND 129 bid.
“We are incredibly proud to support Insitu Pacific in the delivery of the Integrator UAS to the Australian Army,” Alder said.
“We have been working closely with the Insitu Pacific team over recent months to ensure the on-time delivery of their propulsion system requirements to support delivery of the Integrator to the Army through 2023 and 2024.
“First engine shipments are a significant milestone in this program of work and our broader relationship with Insitu Pacific.”
A partnership to deliver sovereign capability
The Integrator is a proven, expeditionary UAS in service globally that delivers enduring multi-domain effects to enable a 24/7 intelligence, surveillance and reconnaissance (‘ISR’) capability.
“Our suppliers bring home-grown, Australian innovation and ingenuity to the program,” said Andrew Duggan MD of Insitu Pacific.
“The delivery of the Integrator system to the Australian Army will be underpinned by our shared commitment to further develop sovereign capability and supports the growth of businesses directly on our team, as well as their respective ecosystems of Australian suppliers.”
Members of the Queensland-based Insitu Pacific team recently toured Orbital UAV’s Western Australia development and manufacturing facilities to see the Integrator engine production line in operation and explore the long-term maintenance, repair and overhaul (‘MRO’) requirements associated with the LAND 129 Phase 3 program.
“Sustainment programs represent a critical component of all defence contracts and the delivery of the country’s long-term sovereign capability objectives,” said Alder. “We look forward to implementing a comprehensive MRO agreement that will appropriately support Insitu Pacific and fully address the needs of the end user.”
“After the initial delivery of Integrator, our effective through-life support to Army will include working with our strong, established supplier base such as Orbital to continue to deliver capability and content locally to meet Army’s requirements,” said Duggan.
Orbital UAV growth strategy
Orbital UAV is a world leader in the design and manufacture of integrated engine systems for military drones. The company has a unique product offering that is targeting a $3 billion annual global tactical UAV defence market.
The relationship with Insitu Pacific and the delivery of engines to support the Aussie Defence Force represents one of a bunch of production opportunities being advanced by Orbital UAV.
These include a broad range of established defence prime contractors and potential market disruptors. Orbital UAV’s near-term strategy is to convert engine development contracts into future high volume production opportunities.
Orbital UAV’s ambition is to expand existing production contracts and convert existing development contracts over the next four years such that the company captures 20% of the relevant UAV engine market, resulting in significant revenue growth and high profitability.
Orbital UAV maintains its revenue guidance of $20-$25 million for financial year 2023.
This article was developed in collaboration with Orbital UAV, 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.
