Honeywell International Inc. (HON) announced that it has been awarded an additional option year on a contract from the U.S. Army to improve performance and extend the life of the AGT1500 turbine engine that powers the M1 Abrams tank.
The Total Integrated Engine Revitalization Program fourth year option has a not-to-exceed value of more than $300 million, bringing the total contract value to more than $1.4 billion. Honeywell is working with the Army’s Program Manager Heavy Brigade Combat Team, TACOM Life Cycle Management Command and Anniston Army Depot (ANAD) under the contract to provide parts, engineering, depot and field support services, enabling ANAD to reset and maintain approximately 750 engines.
The company also announced that United Kingdom’s Ministry of Defense will purchase the Honeywell 55-L-714A engine and spares, valued at approximately $185 million, to retrofit their fleet of Chinook helicopters. The engines will be provided to the Ministry of Defense over a five-year period.
The Chinook is a multi-mission, heavy-lift transport helicopter that primarily moves troops, artillery, ammunition, fuel, water, barrier materials, supplies and equipment on the battlefield. Chinook is the preferred aircraft in Afghanistan.
Honeywell has delivered more than 5,300 T55 engines. The T55 fleet has accumulated more than seven million hours of operation around the globe, powering helicopters in military operations since the 1960s. In addition to the U.K. Royal Air Force Chinooks, the Honeywell T55 engines are on Chinooks in the U.S. Army, Royal Netherlands Air Force and other fleets worldwide.
Honeywell International Inc. is a diversified technology and manufacturing company. Its nearest competitors are United Technologies (UTX), Goodrich Corp. (GR) and Johnson Controls Inc. (JCI). We currently have a Neutral recommendation on Honeywell.
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