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Another Contract Extension for EAC

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Erickson Air Crane Inc.’s newly acquired subsidiary, Evergreen Helicopters Inc., received a contract extension from the U.S. Army’s Garrison in Hawaii for the supply of rotary wing aerial services to support air medical evacuation and training activities.

The Army Contracting Command in Fort Shafter, Hawaii is the contracting authority. With this order the total value of the contract will reach over $10.0 million. The federal contract was previously awarded in Jun 2013.

Erickson-Air Crane has been known to offer aircraft services to the U.S. military over the past four decades. The key factor that drives Erickson-Air Crane’s business is its diversified nature of operations. From transport to the energy sector, the company has been successful in spreading its business capabilities in the U.S. as well as in the international market.

Recently, Erickson-Air Crane cemented relations with Flour Corporation by clinching an annual contract extension for sharing project management capabilities and delivery of multiple aircraft, pilots and ground crew for both passenger and cargo transport to support ongoing military operations in Afghanistan.

This was topped by two back-to-back contract renewals with Special Operations Command Africa/SOCAFRICA for the delivery of fixed and rotary wing aircraft for personnel and cargo transport for the Department of Defense in Central Africa.

The buyout of Evergreen Helicopters from Evergreen International Aviation, Inc. proved to be an important catalyst for Erickson-Air Crane’s growth prospects. This high-quality acquisition boosted the company’s industry position and allowed it to secure a slew of domestic and overseas contract extensions in the first half of 2013.

However, the threat of budget austerity in the U.S. has reduced the total value of such contracts. Moreover, International Monetary Fund’s lower economic growth forecast of 1.9% in 2013 owing to the impact of sequestration. This will further put pressure on the defense sector spending thereby affecting Erickson-Air Crane’s future opportunities.

At the moment, the company carries a Zacks Rank #3 (Hold). Other defense industry counterparts worth considering are Zacks Ranked #2 (Buy) Boeing Company (BA - Free Report) , Embraer S.A. (ERJ - Free Report) and Northrop Grumman Corp. (NOC - Free Report) .

Based in Portland, Ore., Erickson Air Crane manufactures and operates Erickson S-64 Air crane (S-64) heavy-lift helicopters and has a market capitalization of $202.6 million.

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