NEW YORK - FTAI Aviation Ltd. (NASDAQ: FTAI), a commercial jet engine owner and lessor, announced Thursday that it has agreed to purchase the Lockheed Martin (NYSE:LMT) Commercial Engine Solutions (LMCES) from Lockheed Martin Canada for $170 million. The acquisition is contingent on customary regulatory approvals and is expected to be finalized in the latter half of 2024.
LMCES, based in Montréal, Quebec, operates a 526,000-square-foot aircraft engine maintenance and repair facility. The site specializes in CFM56 engines, a widely used model for commercial jets. With this purchase, FTAI, which is already the facility's largest customer, aims to bolster its Maintenance, Repair, and Exchange (MRE) business.
The Montréal facility, which established The Module Factory™ in partnership with FTAI in 2020, is capable of producing up to 900 CFM56 modules annually and is equipped with three engine test cells. FTAI's CEO, Joe Adams, expressed the company’s enthusiasm for the acquisition, citing the technical expertise and quality commitment of the LMCES team.
Adams also highlighted plans to expand the facility's piece-part repair capabilities and to establish a center of excellence in Montréal, which will serve both FTAI operations and third-party customers.
FTAI Aviation Ltd. is known for its proprietary portfolio, which includes The Module Factory and a joint venture to manufacture engine PMA. The company's business model focuses on providing cost savings and flexibility to its customer base, which comprises airlines, lessors, and maintenance operations. Moreover, FTAI's strategy involves investing in aviation assets and aerospace products that generate stable cash flows and have the potential for earnings growth and asset appreciation.
The acquisition is poised to create permanent engine and module manufacturing capabilities in Canada and expand FTAI's global module customer base, which currently includes over 50 airlines and lessors. This move represents a significant expansion of FTAI's MRE offerings, according to the company’s statement.
The information for this report is based on a press release statement from FTAI Aviation Ltd.
InvestingPro Insights
FTAI Aviation Ltd.'s strategic acquisition of Lockheed Martin Commercial Engine Solutions underlines its commitment to enhancing its Maintenance, Repair, and Exchange (MRE) business and expanding its global module customer base. The financial metrics and market performance of FTAI provide a deeper understanding of the company's current position and future potential.
According to InvestingPro data, FTAI boasts a robust market capitalization of $7.93 billion USD, reflecting investor confidence in the company's business model and growth strategies. The company's impressive gross profit margin, which stands at 49.19% for the last twelve months as of Q1 2024, demonstrates its ability to efficiently manage costs and maximize profitability from its operations.
Investors are also taking note of FTAI's revenue growth, which has surged by 32.49% over the last twelve months as of Q1 2024. This growth trajectory is indicative of the company's expanding market presence and successful execution of its business initiatives.
An InvestingPro Tip highlights that analysts are optimistic about the company's prospects, anticipating sales growth in the current year. Moreover, the company's stock has experienced significant appreciation, with a 188.64% return over the last year, showcasing the strong investor sentiment and market performance of FTAI.
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The acquisition of LMCES is a strategic move that aligns with FTAI's growth-oriented approach, as reflected in the company's solid financial metrics and positive market performance. With the expansion of its MRE business and the establishment of a center of excellence in Montréal, FTAI is poised to strengthen its position in the aviation industry.
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