TAT Technologies Signs a 5-Year, $17 Million MRO Agreement with Major North American Cargo Carrier

Rhea-AI Summary

TAT Technologies (NASDAQ: TATT) has secured a five-year MRO agreement with a major North American cargo carrier, valued at approximately $17 million. Under the agreement, TAT will provide repair and overhaul services for auxiliary power units (APUs) on the carrier's Boeing 757 and 767 aircraft. This contract strengthens TAT's position in the APU cargo carrier market, adding to their existing MRO agreements with major North American cargo carriers.

Positive

• Secured new 5-year contract worth $17 million
• Expands presence in North American cargo carrier market
• Adds to existing MRO agreements with major cargo carriers

Negative

• None.

Insights

Financial Analyst

The $17 million MRO agreement represents a significant win for TAT Technologies, accounting for approximately 5.8% of the company's market capitalization. This deal strengthens TAT's position in the lucrative cargo aviation maintenance sector, particularly in the APU market where margins tend to be attractive. The 5-year duration provides stable, predictable revenue streams averaging $3.4 million annually, enhancing revenue visibility. The contract's strategic importance extends beyond its monetary value - it completes TAT's coverage of major North American cargo carriers, potentially creating barriers to entry for competitors and solidifying their market leadership. The company's focus on cost-effective solutions and quality service could drive additional contract wins in this growing sector.

Aerospace Industry Analyst

This contract highlights TAT's strong positioning in the critical APU maintenance segment for Boeing's widely-used 757 and 767 aircraft. The timing is particularly strategic as cargo fleet operators are increasingly focused on maintaining aging aircraft amid new aircraft delivery delays and rising demand for air freight services. APU maintenance is essential for operational efficiency and regulatory compliance, making this a sticky, recurring revenue stream. TAT's ability to secure contracts with all major North American cargo carriers demonstrates their technical capabilities and competitive cost structure. The deal should provide steady work for their facilities while potentially creating opportunities for additional service offerings to these key customers.

TAT to repair APUs on the Carrier's Boeing 757 and 767 aircraft

NETANYA, Israel, Dec. 11, 2024 /PRNewswire/ -- TAT Technologies Ltd. (TASE: TAT Tech, NASDAQ: TATT), a leading supplier of products and services for the commercial and military aviation industries and the ground defense industries, today announced that it has signed a five-year agreement with a major North American cargo carrier.  

Under the terms of the agreement, TAT will provide repair and overhaul services under an MRO agreement for auxiliary power units (APUs) on the Carriers' Boeing 757 and 767 aircraft. The total contract value over the duration of the agreement is estimated at approximately $17 million.

Igal Zamir, President and Chief Executive Officer of TAT, commented, "This new contract  marks another milestone for TAT's leadership in the APU cargo carrier market, representing a significant addition to the MRO agreements that are already in place with all of the major cargo carriers in North America. The customer will benefit from our best-in-class APU repair capabilities, our unique cost structure, and our unwavering level of customer service."

About TAT Technologies LTD

TAT Technologies Ltd. is a leading provider of services and products to the commercial and military aerospace and ground defense industries. TAT operates under four segments: (i) Original equipment manufacturing ("OEM") of heat transfer solutions and aviation accessories through its Gedera facility; (ii) MRO services for heat transfer components and OEM of heat transfer solutions through its Limco subsidiary; (iii) MRO services for aviation components through its Piedmont subsidiary; and (iv) Overhaul and coating of jet engine components through its Turbochrome subsidiary. TAT controlling shareholders is the FIMI Private Equity Fund.

TAT's activities in the area of OEM of heat transfer solutions and aviation accessories primarily include the design, development and manufacture of (i) broad range of heat transfer solutions, such as pre-coolers heat exchangers and oil/fuel hydraulic heat exchangers, used in mechanical and electronic systems on board commercial, military and business aircraft; (ii) environmental control and power electronics cooling systems installed on board aircraft in and ground applications; and (iii) a variety of other mechanical aircraft accessories and systems such as pumps, valves, and turbine power units.

TAT's activities in the area of MRO Services for heat transfer components and OEM of heat transfer solutions primarily include the MRO of heat transfer components and to a lesser extent, the manufacturing of certain heat transfer solutions. TAT's Limco subsidiary operates an FAA-certified repair station, which provides heat transfer MRO services for airlines, air cargo carriers, maintenance service centers and the military.

TAT's activities in the area of MRO services for aviation components include the MRO of APUs, landing gears and other aircraft components. TAT's Piedmont subsidiary operates an FAA-certified repair station, which provides aircraft component MRO services for airlines, air cargo carriers, maintenance service centers and the military.

TAT's activities in the area of overhaul and coating of jet engine components includes the overhaul and coating of jet engine components, including turbine vanes and blades, fan blades, variable inlet guide vanes and afterburner flaps.

For more information of TAT Technologies Ltd., please visit our website: www.tat-technologies.com.

Safe Harbor for Forward-Looking Statements

This press release contains forward-looking statements which include, without limitation, statements regarding possible or assumed future operation results. These statements are hereby identified as "forward-looking statements" for purposes of the safe harbor provided by the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that could cause our results to differ materially from management's current expectations. Actual results and performance can also be influenced by other risks that we face in running our operations including, but are not limited to, general business conditions in the airline industry, changes in demand for our services and products, the timing and amount or cancellation of orders, the price and continuity of supply of component parts used in our operations, the change of control that will occur on the sale by the receiver of the Company's shares held by our previously controlling stockholders, and other risks detailed from time to time in the Company's filings with the Securities Exchange Commission, including, its annual report on form 20-F and its periodic reports on form 6-K. These documents contain and identify other important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. Stockholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-looking statement.

Contact:
Mr. Eran Yunger
Director of IR
erany@tat-technologies.com

View original content:https://www.prnewswire.com/news-releases/tat-technologies-signs-a-5-year-17-million-mro-agreement-with-major-north-american-cargo-carrier-302329563.html

SOURCE TAT Technologies Ltd.

FAQ

What is the value of TAT Technologies' new MRO agreement announced in December 2023?

The new MRO agreement is valued at approximately $17 million over a five-year period.

Which aircraft types are covered under TATT's new cargo carrier MRO agreement?

The agreement covers auxiliary power units (APUs) for Boeing 757 and 767 aircraft.

How long is the duration of TAT Technologies' new cargo carrier contract?

The contract has a duration of five years.

What services will TAT Technologies (TATT) provide under the new cargo carrier agreement?

TAT Technologies will provide repair and overhaul services for auxiliary power units (APUs) under the MRO agreement.