Textron Inc. (TXT - Analyst Report) has agreed to take over two flight simulation and aircraft training product companies – Mechtronix Inc. and OPINICUS Corporation. Although the company did not disclose the financial terms of the acquisitions, Textron expects to close both transactions by the end of this year.
Located in Montreal, Quebec, Mechtronix mainly focuses on the civilian airline market and its key products include the FFSX and FFTX line of high-fidelity simulators and the FFT and Ascent line of flight trainers, as well as classroom training solutions.
On the other hand, OPINICUS is known for its ODYSSEY high-fidelity simulators, which have REALFeel control loading and REALCue motion controller. It has delivered turnkey simulator programs to many aviation industry behemoths including The Boeing Co. (BA - Analyst Report), Lockheed Martin Corp. (LMT - Analyst Report), Raytheon Co. (RTN - Analyst Report), Bell Helicopter, GE Aerospace, the Federal Aviation Administration (“FAA”) as well as various branches of the U.S. military.
Together these two acquisitions will be integrated into Textron Systems’ existing training and simulation business. The new division will be called Textron Simulation & Training Systems and following the completion of the transactions is expected to fetch revenues in excess of $100 million a year. Textron’s present training and simulation unit serves the military aircraft market through its facilities in Goose Creek, S.C.
Textron’s move into the aircraft pilot training market is aimed at plugging the gap in pilot shortage. This shortage is due to retirements, greater training requirements and more rest periods between shifts. Recently, United Continental Holdings, Inc. (UAL - Analyst Report) announced that it plans to recall about 600 pilots to fill gaps from retirements and rest rules.
As per the media report in October, a University of North Dakota study projected a shortfall of as many as 35,000 pilots required for U.S. air fleet over the next 20 years.
Textron is a global multi-industry company that manufactures aircraft, automotive engine components, and industrial tools. The company’s geographically-diverse network of aircraft, defense & intelligence, industrial and finance businesses negates any specific business risk.
However, the company, like its peers, continues to face defense budget deficits and political uncertainty. Though the company received a number of contracts in the third quarter, those were not sizeable. Budget cuts from sequestration have reduced the number of contracts awarded by the Department of Defense.
Again, its third quarter earnings missed the Zacks Consensus Estimate, hurt by a weak performance at Cessna. Textron also lowered its 2013 earnings per share guidance from continuing operations to $1.75–$1.85 from its previous expectation of $1.90–$2.10.
Based in Providence, Rhode Island, Textron currently carries a Zacks Rank #4 (Sell).