Textron Inc.’s TXT, business unit, Textron Aviation Defense, recently delivered five Beechcraft T-6C Texan II planes to Vietnam Air Force, marking a historic milestone. These planes will support pilot training for the Vietnam Air Defense Air Force and strengthen the United States-Vietnam partnership.
This delivery comes as part of a contract for a total of 12 planes, ordered in August 2022. The remaining seven aircraft are expected to be delivered by mid-2025.
What’s Favoring TXT?
As nations across the globe are strengthening their defense force, military training aircraft play a critical role in shaping the future of global security and military preparedness.
It is imperative to mention in this context that Textron’s Beechcraft T-6C is a premier military flight trainer. This jet’s low acquisition, operating and sustainment costs enable global air forces to fast-track the training of their fighter pilots, thereby effectively preparing them for real-world missions. Its state-of-the-art, all-digital, open-architecture glass cockpit offers crystal-clear visibility, necessary for completing complex missions.
Such remarkable features of the T-6C training aircraft are likely to have been fetching solid order flows for Textron, involving the production and enhancement of these jets.
The viability of this training aircraft can be further gauged from the fact that a global fleet of more than 1,000 Beechcraft T-6 Texan II aircraft has surpassed 5 million flight hours across 13 nations and two NATO flight schools since 2001, as of August 2023.
TXT’s Prospects in Military Training
The military training aircraft market is growing quickly, driven by new technology, rising defense budgets and increasing geopolitical tensions. Emerging nations are also investing more in defense, which, in turn, has been boosting the demand for advanced training aircraft.
This must have prompted Mordor Intelligence to project that the Military Training Aircraft market size will grow from $2.76 billion in 2024 to $4.78 billion by 2030 at a CAGR of 9.6%.
TXT’s unit, Textron Aviation Defense, is well-positioned to benefit from this market’s growth. It offers successful flight training systems, which are adaptable for use in diverse locations. In addition to the T-6C Texan II, its portfolio includes the Beechcraft AT-6E Wolverine, which supports training, surveillance and light precision attack missions.
Opportunities for TXT’s Peers
Other defense contractors that enjoy a significant presence in the Military Training Aircraft market and are expected to gain from the market’s growth opportunities 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.
The company boasts 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 1.8%.
The Boeing Company BA: The company delivers mission-ready aircrew and maintenance training solutions on all types of aircraft, rotorcraft, fixed-wing and space. Its T-7A Red Hawk is the only digital, next-generation trainer in the market that possesses military certification and meets modern, low-cost needs.
The company boasts a long-term earnings growth rate of 19.3%. The Zacks Consensus Estimate for BA’s 2024 sales indicates year-over-year growth of 23.4%.
Lockheed Martin LMT: This company is 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.
The company boasts 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 Stock’s Price Movement
Shares of TXT have gained 2.3% in the past month against the industry’s 1.7% decline.
Image Source: Zacks Investment Research
TXT’s Zacks Rank
TXT currently carries a Zacks Rank #4 (Sell).
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