Wednesday, April 09, 2008 2:27:34 PM
Carl Gutierrez, 04.09.08, 2:05 PM ET
Supply contracts don't normally make news, but Honeywell International's $23 billion deal with Embraer was too big to ignore.
After the market closed on Tuesday conglomerate Honeywell International (nyse: HON - news - people ), announced it won a $23 billion contract to supply its HTF7000 series of turbofan propulsion engines to Brazilian commercial jet maker Embraer (nyse: ERJ - news - people ).
"It's no question this is a good move for Honeywell," said Paul Nisbet, an aerospace analyst at JSA Research. "It should result in somewhere in the neighborhood of $1 billion a year in revenues, which is a 3% increase over current levels, so this is not something to be sneezed at." Nisbet added that in signing the deal Honeywell outfoxed Rolls Royce and Pratt & Whitney which undoubtedly were trying to get their engines in the Embraer planes.
Despite starting the day strong, shares of Honeywell were dragged down by Wall Street's tough day, trading up only 0.9%, or 52 cents, to $57.71, in early-afternoon trading, while Embraer shares actually fell 1.1%, or 49 cents, to $43.12.
Christopher Glynn, an analyst at Oppenheimer, said that the revenues should start flowing in 2011 and the contract has 20-to-25 years of life to it. He pointed out, though, that the far bigger piece of the deal comes from the after-market lift.
"The original equipment content is in the engine, but those engines will have to be services regularly," Glynn said.
Honeywell said the HTF7500-E features new technology which reduces emissions and helps improve fuel efficiency. The engines are earmarked for Embraer's new MSJ and MLJ business aircraft.
"It would be safe to assume that over the next 20 years or so there will be over 1,000 of these Embraer aircraft built because they're talking about 2,000 engines and they're twin engine aircraft," Nisbet noted.
The contract follows Honeywell's March win at Gulfstream valued at $3 billion, an Air Tran contract earlier this year valued at $1 billion and an Airbus A350 deal announced in the fourth quarter valued at $16 billion.
The Associated Press contributed to this article
Recent HON News
- HONEYWELL AND SAMSUNG E&A PLAN COLLABORATION TO HELP REDUCE POWER PLANT EMISSIONS • PR Newswire (US) • 09/17/2024 12:00:00 PM
- Norfolk Southern CEO Fired, Ryanair Lowers Fare Forecast, 23andMe Considers Acquisition Proposals • IH Market News • 09/12/2024 10:02:29 AM
- Broadcom Down 10% Post-Earnings, UiPath Up 8%; Qualcomm Eyes Intel Assets; Salesforce Acquires Own Company • IH Market News • 09/06/2024 11:59:00 AM
- Form 8-K - Current report • Edgar (US Regulatory) • 09/05/2024 10:09:49 AM
- HONEYWELL ANNOUNCES CHIEF FINANCIAL OFFICER SUCCESSION • PR Newswire (US) • 09/05/2024 10:00:00 AM
- HONEYWELL COMPLETES ACQUISITION OF CAES • PR Newswire (US) • 09/04/2024 12:30:00 PM
- HONEYWELL ANNOUNCES PARTICIPATION AT UPCOMING INVESTOR CONFERENCES • PR Newswire (US) • 08/29/2024 01:00:00 PM
- HONEYWELL AND CISCO LEVERAGE AI AND AUTOMATION TO HELP REDUCE BUILDING ENERGY CONSUMPTION • PR Newswire (US) • 08/29/2024 12:00:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/16/2024 08:02:32 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 08/15/2024 08:30:00 PM
- HONEYWELL LAUNCHES INNCOM DIRECT TO HELP MID-MARKET HOTELS REDUCE THEIR CARBON FOOTPRINT • PR Newswire (US) • 08/14/2024 12:00:00 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 08/12/2024 09:16:55 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/01/2024 10:56:38 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/01/2024 10:47:39 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/01/2024 10:46:49 PM
- Form 424B5 - Prospectus [Rule 424(b)(5)] • Edgar (US Regulatory) • 08/01/2024 04:39:22 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/30/2024 10:52:12 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/30/2024 10:49:49 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/30/2024 10:46:48 PM
- Form 424B5 - Prospectus [Rule 424(b)(5)] • Edgar (US Regulatory) • 07/29/2024 12:03:12 PM
- HONEYWELL ANNOUNCES QUARTERLY DIVIDEND • PR Newswire (US) • 07/26/2024 12:30:00 PM
- Form 10-Q - Quarterly report [Sections 13 or 15(d)] • Edgar (US Regulatory) • 07/25/2024 01:38:50 PM
- U.S. Index Futures Mixed After Tech Sell-Off, Oil Prices Drop on Weak China Demand and Ceasefire Expectations • IH Market News • 07/25/2024 10:21:35 AM
- Form 8-K - Current report • Edgar (US Regulatory) • 07/25/2024 10:03:44 AM
- HONEYWELL DELIVERS STRONG SECOND QUARTER RESULTS AND BEATS EARNINGS GUIDANCE; UPDATES 2024 OUTLOOK • PR Newswire (US) • 07/25/2024 10:00:00 AM
VHAI - Vocodia Partners with Leading Political Super PACs to Revolutionize Fundraising Efforts • VHAI • Sep 19, 2024 11:48 AM
Dear Cashmere Group Holding Co. AKA Swifty Global Signs Binding Letter of Intent to be Acquired by Signing Day Sports • DRCR • Sep 19, 2024 10:26 AM
HealthLynked Launches Virtual Urgent Care Through Partnership with Lyric Health. • HLYK • Sep 19, 2024 8:00 AM
Element79 Gold Corp. Appoints Kevin Arias as Advisor to the Board of Directors, Strengthening Strategic Leadership • ELMGF • Sep 18, 2024 10:29 AM
Mawson Finland Limited Further Expands the Known Mineralized Zones at Rajapalot: Palokas step-out drills 7 metres @ 9.1 g/t gold & 706 ppm cobalt • MFL • Sep 17, 2024 9:02 AM
PickleJar Announces Integration With OptCulture to Deliver Holistic Fan Experiences at Venue Point of Sale • PKLE • Sep 17, 2024 8:00 AM