Harris to Improve Air Travel Safety

Harris Corporation ( HRS - Analyst Report ) , a leader in the public safety and professional communication market, has received an order to supply 81 Automatic Dependant Surveillance-Broadcast (ADS-B) receiver payloads to Aireon LLC – a joint venture between satellite operator Iridium Communications ( IRDM - Snapshot Report ) and air traffic management (ATM) provider NAV Canada.

The payloads, which will be placed on Iridium’s Iridium NEXT satellite constellation, is expected to transform ATM from the current ground based radar system to a global satellite based aircraft tracking system. From Harris’ viewpoint, this engagement with Aireon will help the Melbourne, Florida-based company offer innovative products to air navigation service providers (ANSP) and thus open up new opportunities for its satellite communication service segment.

As a part of the deal, Harris’ ADS-B will perform the air-traffic surveillance functions from the Iridium NEXT satellite constellation, which includes 66 low Earth-orbiting satellites, six on-orbit spares and nine ground spares. After receiving positional information from airplanes, the payload will transfer it to the Aireon’s ground based tower, which in turn will pass on the messages to the ANSP’s in real quick time to determine the exact locations of aircrafts.

Additionally, by sharing Iridium’s on-orbit ground infrastructure, the ADS-B payloads will reduce the expense of building and launching separate satellites by public and private organizations.

Airplane accidents have increased substantially in the last few years, many of which occurred due to lack of efficient aircraft surveillance opportunities, particularly in remote areas. In this context, we see the Harris deal as an effort by ANSP’s like the U.S. Federal Aviation Administration (FAA) and NAV Canada to modernize the ATM by equipping modern airplanes with this ADS-B system.

This new technology will help air traffic controllers to quickly pinpoint an aircraft’s position while allowing the airplane to take the most efficient route between two separate locations. However, the only downside to this technology is that it cannot monitor aircrafts flying over oceans or other remote areas where placing an ADS-tower is very difficult.

The companies have also entered into a strategic agreement, whereby they will jointly pursue other business opportunities in the advanced communication segment, which will also help Harris Corp. to benefit from Iridium’s leading position in the payload segment.

Recommendation:

We are maintaining our long-term Neutral recommendation on Harris Corporation. Currently, Harris Corporation has a Zacks #3 Rank, implying a short-term Hold rating on the stock.