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Honeywell Signs $16 Billion Contract with Airbus

Reuters
Wednesday, 19 Sep 2007 | 10:17 AM ET

Diversified U.S. manufacturer Honeywell International said Wednesday it signed a contract to provide major mechanical systems for Airbus's new long-range, wide-body A350 aircraft, and expects to generate more than $16 billion in revenue over the projected 20- to 25-year life of the program.

Honeywell , the world's largest maker of cockpit electronics, said the order is the largest Airbus has so far awarded for the A350.

Airbus, owned by European aerospace company EADS, has so far received about 254 orders and commitments for the aircraft. The first deliveries of the A350 are expected in 2013.

Honeywell's $16 billion revenue forecast includes both components for new planes and maintenance revenues.

Rob Gillette, president of Honeywell Aerospace, said the order marked a change for Honeywell since it would be producing entire systems for the aircraft, not just individual components.

"We're providing a solution, as opposed to Airbus having to manage it across a much broader supply base," Gillette said on a conference call with journalists.

Honeywell will produce components including an auxiliary power unit and heating, cooling and pressurization systems for the aircraft.

"With the A350, we are initiating a different type of relationship with the (supplier) community," said Tom Williams, executive vice president of programs and procurement at Airbus, in a statement. "We attribute larger, complete work packages to a smaller number of major suppliers."

Analysts, on average, expect Honeywell to generate $33.97 billion in revenue this year, according to Reuters Estimates.

The order comes at a time when Honeywell has run into difficulties on another big order with Airbus's main rival, Boeing.

The first test flight of Boeing's upcoming 787 Dreamliner has been pushed back by about three months due to delays in programming the flight control software, which Honeywell is providing, as well as a shortage of bolts, made by Alcoa.

Both suppliers have said they are working with Boeing to address the issue.

Honeywell shares rose 1.6 percent, or 91 cents, to $58.19 on the New York Stock Exchange. So far this year, they have gained about 29 percent, almost triple the 11 percent rise of the Dow Jones industrial average, of which Honeywell is a component.

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