Textron Wins $510M Navy Deal for Building AH-1Z Aircraft

Textron Inc TXT's Bell business segment recently secured a $510 million modification contract for manufacturing and delivering 29 units of AH-1Z new aircraft of the 15th Lot, in support of the Marine Corps H-1 upgrade program. The contract was awarded by the Naval Air Systems Command, Patuxent River, MD.

Per the terms, the contract entails the company to provide long lead material and components for an additional seven Lot 16 aircraft. Work related to the deal will majorly be performed in Fort Worth and Amarillo, TX, which is expected to get completed by February 2021.

What's Favoring Textron's Bell Segment?

Textron's Bell segment is one of the leading suppliers of advanced military helicopters to the U.S. Government and to military customers outside the United States. As a result, the company has successfully been able to procure pivotal contracts. Apart from supplying helicopters, the segment also provides support to corporate, offshore petroleum exploration and development, utility, charter, police, rescue and emergency medical helicopter operators, and foreign governments.

Moreover, from the viewpoint of its military business, the company signed a third V-22 multiyear procurement contract with the U.S. Department of Defense for delivering 58 units, beginning in 2020. The multiyear contract is worth $4.2 billion, of which $2.2 billion represents Bell's content. The contract also has flexibility structured to allow for additional aircraft.

Interestingly, the company also gained congressional approval in the second quarter to provide 12 H-1 attack helicopters to Bahrain. Also, in the first six months of 2018, the Bell segment contributed a significant 22.3% of the company's total revenues. With such development within the segment highlighted by solid order growth, considering the latest contract win, we may expect the Bell segment to reflect similar solid performance in the third quarter as well.

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