Diversified technology company, Honeywell International Inc. (HON - Free Report) recently inked a 15-year agreement with Dubai-based airline firm Emirates to offer maintenance and aftermarket components for its fleet. The agreement with the world’s largest operator of Airbus A380 and Boeing 777 aircraft aims to cut airline operating costs by reducing grounded aircraft time through round-the-clock support services.
Over the years, Honeywell has developed a rich expertise in the areas of aircraft component exchange and repairs. The company intends to leverage this strength to provide comprehensive repair and maintenance services to lower cost of ownership and increase the lifespan of aircraft components. This, in turn, will effectively reduce departure delays and cancellations and boost Emirates’ commitment to on-time arrivals.
The airline industry is fiercely competitive and each player in the market strives to incorporate all possible options to reduce operating costs. In tune with this strategy, Royal Jordanian Airlines selected Honeywell's Connected Aircraft GoDirect Fuel Efficiency software to minimize fuels usage on its fleet of 24 aircraft. The software utilizes data analysis and various monitoring tools to identify various fuel-saving opportunities to make operations more cost-effective and conducive to green environment.
Fuel consumption usually accounts for 20-40% of an airline’s operating costs and even a single-digit percentage improvement can reportedly save millions for an airline company. With this initiative, Royal Jordanian joins an expanding list of global customers that are patrons to the software, including India's Jet Airways, Japan Airlines, Finnair and Turkish Airlines.
On the back of such innovative portfolio of products and services, the company has outperformed the industry with an average year-to-date return of 25.8% as against a decline of 3.5% for the latter. Honeywell’s diversified business portfolio has the potential to earn consistent above-average returns and mitigate operating risks. The company’s diligent focus on working capital management, free cash flow generation and a conservative balance sheet remain key positives amid a challenging macroeconomic environment.
In addition, the company’s balanced mix of long- and short-cycle businesses, along with a decent organic growth in new products and expansion in high-growth regions augur well on a long-term basis. With a flexible yet disciplined focus on cost and productivity, Honeywell remains focused on increasing its presence in high-growth regions. Additionally, the company is building a robust pipeline of new products.
Honeywell currently has a Zacks Rank #2 (Buy). Some other noteworthy stocks in the industry are Danaher Corporation (DHR - Free Report) , Federal Signal Corporation (FSS - Free Report) and Leucadia National Corporation , each carrying Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Danaher has a long-term earnings growth expectation of 10.6%. It has beaten earnings estimates in each of the trailing four quarters with an average positive surprise of 2.6%.
Federal Signal has beaten earnings estimates thrice in the trailing four quarters with an average positive surprise of 11.5%.
Leucadia has a long-term earnings growth expectation of 18%. It has beaten earnings estimates thrice in the trailing four quarters with an average positive surprise of 21.2%.
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