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Link Simulation & Training UK ("Link UK"), an L-3 Communications Holdings Inc.’s (LLL - Analyst Report) business in Crawley, U.K. has received a contract for the delivery of two A320 Full Flight Simulators and one A320 Flat Panel Trainer from China-based Spring Airlines.

These A320 Full Flight Simulators will make use of L-3 Link UK’s modular RealitySeven simulation architecture. The RealitySeven simulator solution applies commercial-off-the-shelf technologies in order to reduce a trainer’s life-cycle costs. The A320 Flat Panel Trainer will support procedural training, which will reduce the amount of time required in the Full Flight Simulators.

All the training devices will be supplied during the fourth quarter of 2013 to the airline’s future training center at Shanghai Pudong International Airport.

Link Simulation & Training UK (Link UK) business was recently acquired by L-3 Communications. In August this year, the company completed the acquisition of Thales Training & Simulation Ltd’s civil aircraft simulation and training business for $130 million. The business is now known as L-3 Link Simulation & Training U.K. Limited and has become a part of L-3’s existing Link Simulation & Training division, which is a unit of L-3’s Electronic Systems Group.

L-3 Link Simulation & Training is a world leader in providing total training solutions for operators and maintainers across a wide range of military and civil aircraft platforms. Its innovative solutions offer a variety of modern training technologies that includes high-fidelity immersive simulations and distributed academic and interactive courseware.

L-3 Communications’ revenue base is spread across a broad diversification of programs. Future growth will be driven by its strong presence in the current focus areas of command, control, communications, intelligence, surveillance and reconnaissance (“C3ISR”) equipment; precision-guided weapons; unmanned aerial vehicles (UAVs); and other electro-mechanical robotic capabilities.

The acquisition of Thales Training & Simulation has strengthened L-3’s Electronic Systems Group with its full flight simulator capability and has helped in expanding into the civil simulation market. The company will thus be able to offer a full range of total training system solutions to its military as well as commercial customers. This would not only expand the company’s global presence, but will diversify its product offering. Over the longer run, we view the company as one of the best-positioned pure defense players based on its non-platform focus, broad diversification of programs and its focus on shareholder value.

However, negative offsets include the loss of key contracts, defense spending cuts and the lack of near-term catalysts. Order growth and volume increases also remain dubious in this challenging environment. The company presently retains a short-term Zacks #4 Rank (Sell). We have a long-term Neutral recommendation on the stock.

Based in New York City, L-3 Communications is a prime contractor in C3ISR systems, aircraft modernization and maintenance, and national security solutions. L-3 is also a leading provider of a broad range of electronic systems used on military and commercial platforms.

The company mainly competes with FLIR Systems, Inc. (FLIR - Analyst Report) and API Technologies Corporation (ATNY - Snapshot Report).


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