Textron Inc.’s TXT business segment, Textron Aviation recently clinched a modification contract involving its T-54A aircraft. The award has been provided by the Naval Air Systems Command, Patuxent River, MD.
Details of TXT’s Deal
Valued at $276.8 million, the contract is projected to be completed by September 2026. The latest modification enables Textron to exercise options for the production and delivery of 26 T-54A trainer aircraft. Per the terms of the deal, TXT will also provide associated aircraft and engine spare parts and peculiar support equipment to aid the training of aviators and flight officers.
The contract will serve the U.S. Navy, Marine Corps, and Coast Guard. The majority of the work related to this contract will be executed in Wichita, KS.
What’s Favoring TXT?
In the modern era of warfare, factors like rapidly advancing technological development, competitive dynamics, increasing and unprecedented geopolitical threats and significantly enhanced defense budgets from varied nations, especially emerging ones in recent times, have been bolstering the growth prospects of the military training aircraft market.
This must have prompted Mordor Intelligence to predict that the military training aircraft market will increase from $2.76 billion in 2024 to $4.78 billion by 2030 at a CAGR of 9.6%.
Such an abounding growth prospect offered by the military training business should benefit TXT. Its Textron Aviation Defense unit offers the largest and most successful flight training system in the world. This unit’s training solutions are completely mobile.
Notably, apart from T-54A, Textron Aviation Defense’s portfolio also includes the Beechcraft AT-6E Wolverine jet, which covers a wide-mission spectrum including training, manned Intelligence Surveillance and Reconnaissance as well as light precision attack.
Opportunities for Peers
Other defense companies that are expected to enjoy the perks of the expanding military training aircraft market have been discussed below.
CAE Inc. CAE: The company supports military forces by providing pilot, rear crew, sensor operator and maintenance crew training systems on a broad range of military aircraft platforms, including combat aircraft, lead-in fighter trainers, special mission platforms such as maritime patrol aircraft, tanker/transport aircraft, helicopters and remotely piloted aircraft.
Following the acquisition of L3Harris Military, which included Link Simulation & Training, CAE is now the leading provider of F-16 pilot and maintenance training.
CAE has a long-term (three to five years) earnings growth rate of 15.9%. The Zacks Consensus Estimate for CAE’s fiscal 2025 sales indicates year-over-year growth of 2.1%.
The Boeing Company BA: The company delivers mission-ready aircrew and maintenance training solutions on all types of aircraft, including rotorcraft, fixed-wing and space. Its T-7A Red Hawk is the only digital, next-generation trainer on the market that possesses military certification and meets modern, low-cost needs.
Boeing has a long-term earnings growth rate of 19.3%. The Zacks Consensus Estimate for BA’s 2025 sales indicates year-over-year growth of 23.4%.
Lockheed Martin LMT: This company is yet another prominent defense contractor when it comes to fighter jets and their associated training. Its TF-50 trainer jet is a variant of the proven T-50 trainer platform, which is uniquely configured as an advanced trainer and light attack fighter. More than 2,500 students have been trained and more than 3,750 test flights have been conducted on the T-50 platform.
Lockheed has a long-term earnings growth rate of 4.5%. The Zacks Consensus Estimate for LMT’s 2024 sales indicates year-over-year growth of 5.4%.
TXT’s Stock Price Movement
Shares of TXT have lost 11.3%, in the past month compared with the industry’s 6.5% decline.
Image Source: Zacks Investment Research
TXT’s Zacks Rank
TXT currently carries a Zacks Rank #4 (Sell).
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