Goodrich Wins Icelandair Contract – Analyst Blog

Goodrich Corporation (GR) signed an agreement with Icelandair to maintain the airline’s Rolls Royce Group’s (RYCEY) RB211-535E4 engine that powers the fleet of Boeing Company’s (BA) 757 series aircraft.

 

Goodrich will do the maintenance work at its Prestwick Service Center in Scotland. Goodrich has been providing its expertise to Icelandair for the RB211-535 program since initial design and certification activities in the late 1970s and continues to provide technical, spare parts and repair and overhaul support.

 

Icelandair is the flag carrier airline of Iceland, based in Reykjavik. It is a part of the Icelandair Group and provides services to 25 cities in 12 countries on both sides of the Atlantic. Its main base is Keflavik International Airport. Icelandair operates a single aircraft type fleet of 19 Boeing 757, powered by RB211-535E4 engines.

 

Goodrich’s fortunes in recent times have been suffering due to lower sales of engine controls, aviation airplane spares, and aviation airplane aftermarket sales. The company reported a 35% year-over-year decline in first-quarter 2010 earnings from continuing operations with flat sales year-over-year. However Goodrich expects sales to trend upward throughout the rest of the current fiscal. It also anticipates a 4% – 7% growth in sales for full year 2010 over 2009.

 

Based in Charlotte, North Carolina, Goodrich supplies components, systems and services to the commercial and general aviation airplane markets. The company also supplies systems and products to the global defense and space markets. Businesses include manufacturing, service and sales, which are carried out at various locations throughout the world.

 

The company’s products and services are sold in North America, Europe and Asia. Goodrich operates through three business segments – Actuation and Landing Systems, Nacelles and Interior Systems, and Electronic Systems.

 

Goodrich Corporation’s geographically diversified customer mix, strong balance sheet, incremental dividend, an ongoing share repurchase program and a relatively cheap earnings-based valuation supports our bullish outlook for the company.

 

However, this is offset by the dwindling fortunes of the commercial aerospace market, dependence on international sales, high research and development overhead, and regulatory risks. The company mainly competes with Rockwell Collins Inc. (COL), and Alliant Techsystems Inc. (ATK).

 

We currently have a market Neutral recommendation on the Zacks #3 Rank (hold) Goodrich stock.