FTAI Aviation Agrees to Purchase Lockheed Martin Commercial Engines Solutions
FTAI Aviation (NASDAQ: FTAI) has agreed to acquire Lockheed Martin Commercial Engine Solutions (LMCES) from Lockheed Martin Canada for $170 million. The deal, expected to close in the second half of 2024, is subject to regulatory approvals. LMCES operates a 526,000-square-foot aircraft engine maintenance facility in Montréal, focusing on CFM56 engine repairs. This acquisition will enhance FTAI’s Maintenance, Repair, and Exchange (MRE) business and establish permanent engine and module manufacturing capabilities in Canada. Currently serving over 50 airlines and lessors globally, FTAI aims to expand its module customer base and create a center of excellence for piece-part repairs. CEO Joe Adams highlighted the acquisition as a milestone for FTAI, emphasizing the value of the facility's technical expertise and quality.
- Acquisition of LMCES for $170 million enhances FTAI's MRE business.
- LMCES operates a large 526,000-square-foot facility in Montréal.
- The facility can repair up to 900 CFM56 modules yearly.
- FTAI will gain permanent engine and module manufacturing capabilities in Canada.
- FTAI currently serves over 50 airlines and lessors globally.
- Creation of a center of excellence for piece-part repairs.
- Expected closing of the acquisition in the second half of 2024.
- The acquisition is subject to customary regulatory approvals.
- Potential risks of integration and operational challenges post-acquisition.
Insights
The acquisition of Lockheed Martin Commercial Engine Solutions (LMCES) by FTAI Aviation Ltd. for
From a financial standpoint, this acquisition opens up potential growth avenues for FTAI. By expanding its module manufacturing capacities and enhancing its piece-part repair services, FTAI can leverage its existing customer base of over 50 airlines and lessors globally. This is critical as it not only diversifies revenue streams but also strengthens long-term relationships with key partners.
Furthermore, the creation of a center of excellence for piece-part repairs in Montréal indicates an investment in quality and innovation, which could lead to better margins and market competitiveness.
The acquisition of LMCES by FTAI is a strategic milestone that enhances its position in the aviation maintenance sector. The Montréal facility's capacity of handling up to 900 CFM56 modules per year is significant, given the CFM56 engine’s widespread use in commercial aviation. The integration of LMCES into FTAI's operations will not only streamline the supply chain but also ensure better control over quality and turnaround times for repairs and maintenance.
This move aligns well with industry trends where companies are increasingly looking towards in-house maintenance capabilities to reduce costs and improve service reliability. Establishing a center of excellence for piece-part repairs will further solidify FTAI’s reputation in the market, especially in terms of technical expertise and quality assurance. Moreover, the presence of three test cells on-site at LMCES could mean quicker testing and certification processes, providing a competitive advantage.
As the aviation industry recovers from the impacts of the pandemic, the demand for reliable maintenance services is expected to rise, making this acquisition timely and potentially lucrative for FTAI.
The acquisition expands FTAI's footprint in the aviation maintenance market, positioning the company to capitalize on the growing demand for MRE services. The emphasis on CFM56 engines is particularly noteworthy as these engines power a significant portion of the global commercial aircraft fleet, including popular models like the Boeing 737 and Airbus A320. This ubiquity ensures a steady and potentially growing demand for maintenance and repair services.
The decision to expand the module customer base and establish a center of excellence for piece-part repairs in Montréal suggests a strategic focus on enhancing service offerings and capturing a larger market share. By providing high-quality, reliable repair services, FTAI can attract and retain more clients, broadening its revenue base. Additionally, the geographical location of Montréal could serve as a strategic hub for North American and international operations, facilitating better logistics and quicker turnaround times for customers.
Given these factors, FTAI's acquisition of LMCES appears to be a well-calculated strategic move that could result in substantial long-term benefits, increasing the company's market share and reinforcing its market position.
NEW YORK and MONTRÉAL, May 30, 2024 (GLOBE NEWSWIRE) -- FTAI Aviation Ltd. (NASDAQ: FTAI) announces entry into an agreement to purchase Lockheed Martin Commercial Engine Solutions (“LMCES”) from Lockheed Martin Canada for a purchase price of
LMCES is a 526,000-square-foot aircraft engine maintenance repair facility located in Montréal, Quebec, with extensive engine and piece-part repair capabilities for CFM56 engines. FTAI, LMCES’s largest customer, and LMCES established The Module Factory™ at the facility in 2020 to distribute CFM56 modules globally. The facility has a capacity for up to 900 CFM56 modules per year and houses three test cells on-site.
This acquisition will further enhance FTAI’s Maintenance, Repair, and Exchange (MRE) business, and create permanent engine and module manufacturing capabilities in Canada. FTAI will continue to expand its module customer base, which currently includes over 50 airlines and lessors globally. Additionally, FTAI expects to establish a center of excellence in Montréal for piece-part repairs, serving both its own operations, including the Used Serviceable Material business, and third-party customers.
“Acquiring Lockheed Martin Commercial Engine Solutions represents a significant milestone for FTAI as we expand our MRE offerings,” said Joe Adams, CEO of FTAI. “We know the facility well and greatly value the team’s technical expertise and commitment to quality. We are excited to grow the shop’s piece-part repair capabilities and continue delivering modules and engines to the aftermarket from a world class facility in Montréal.”
About FTAI Aviation Ltd.
FTAI owns and maintains commercial jet engines with a focus on CFM56 and V2500 engines. FTAI’s proprietary portfolio of products, including The Module Factory and a joint venture to manufacture engine PMA, enables it to provide cost savings and flexibility to its airline, lessor, and maintenance, repair, and operations customer base. Additionally, FTAI owns and leases jet aircraft which often facilitates the acquisition of engines at attractive prices. FTAI invests in aviation assets and aerospace products that generate strong and stable cash flows with the potential for earnings growth and asset appreciation.
Cautionary Note Regarding Forward-Looking Statements
This communication contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to the anticipated timing for closing the acquisition and ability to close such acquisition, expectations regarding FTAI’s ability to further enhance our MRE business and create permanent engine and module manufacturing capabilities, continued expansion of our module customer base and the ability to establish and grow a center of excellence for piece-part repairs. You can identify these forward-looking statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” “target,” “projects,” “contemplates” or the negative version of those words or other comparable words. Any forward-looking statements contained in this communication are based upon our historical performance and on our current plans, estimates and expectations in light of information currently available to us. The inclusion of this forward-looking information should not be regarded as a representation by us that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements, including, but not limited to, the risk factors set forth in Item 1A. “Risk Factors” of FTAI’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and FTAI’s Quarterly Reports on Form 10-Q, as updated by annual, quarterly and other reports FTAI files with the SEC.
For further information, please contact:
Alan Andreini
Investor Relations
FTAI Aviation Ltd.
(646) 734-9414
aandreini@fortress.com
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