Honeywell Bags Air China Contract

Honeywell International Inc. (HON - Analyst Report) recently said it would provide its 131-9A Auxiliary Power Units (APUs) for Air China’s new A320 aircraft deliveries and effect an exclusive supply agreement with 141 Airbus and Boeing (BA - Analyst Report) aircraft, for a total contract value of $64 million.

Honeywell's 131-9A is the most popular APU for single-aisle commercial transport, with more than 1,700 APUs in the field, including both forward-fit and retrofit applications. An APU is a small gas-powered turbine engine that provides bleed air to start the main engine and electrical power for cockpit and galley systems.

Since its introduction in 1998, the 131-9A has been through several technological advancements, including a 5% fuel consumption savings for de-rate modification. It provides a 10% power advantage over other APUs, which allows it to cool or heat the cabin two minutes faster.

Air China’s 25 A320 deliveries will start from this year. The maintenance agreement covers 89 Boeing Next-Generation 737s using Honeywell's 131-9B APU and a total of 52 A320s using 131-9A.

In a related development, The US Federal Aviation Administration approved Honeywell’s SmartRunway and SmartLanding, allowing the company’s aerospace unit to begin delivery of the products. The systems alert pilots about runway and taxi locations for prevent runway accidents at crowded airports.

Honeywell is a diversified technology and manufacturing company, serving customers worldwide with aerospace products and services, control, sensing and security technologies for buildings, homes and industry, turbochargers, automotive products, specialty chemicals, electronic and advanced materials, process technology for refining and petrochemicals and energy efficient products and solutions for homes, business and transportation. Its major competitors include Goodrich Corp. (GR - Snapshot Report) and United Technologies Corp. (UTX - Analyst Report).

Based in Phoenix, Arizona, Honeywell's aerospace business is a leading global provider of integrated avionics, engines, systems and service solutions for aircraft manufacturers, airlines, business and general aviation, military, space and airport operations. We currently have a Neutral recommendation on the stock.