Rockwell Collins Inc. (COL) received a contract from The Boeing Company (BA) to supply large-format flight displays as standard equipment for Boeing 737 MAX flight deck.
Rockwell will provide four configurable 15.1-inch landscape LCD displays for the new jet's flight deck, which will enhance situational awareness and efficiency of the aircraft. Currently, Rockwell supplies these displays to Boeing for its 787 Dreamliner and KC-46 Tanker. Moreover, Boeing also intends to use these standard equipments for its existing 757 and 767 aircrafts.
Boeing has also chosen Honeywell International Inc. (HON) for the supply of an electronic bleed air system that keeps in control the cabin pressure and helps in getting ice off the wings.
The company expects the first delivery of Boeing 737 MAX aircraft with Rockwell Collins’ flight displays in 2017. Boeing is currently producing 35 737 jets per month. The company plans to increase the production rate to 38 airplanes per month beginning in 2013 and 42 airplanes per month beginning in 2014. Currently, Boeing has more than 900 orders for the 737 MAX.
Based in Cedar Rapids, Iowa, Rockwell Collins designs, manufactures, and supports software and hardware solutions for aircraft communication, navigation, signals intelligence, and weapons systems as well as surveillance systems. Going forward, Rockwell will benefit with the increase in the number of orders for 737 MAX.
Recently in October, Rockwell Collins Inc. reported fourth quarter fiscal 2012 earnings results ending September 30, 2012. The company reported adjusted earnings per share of $1.32, beating the Zacks Consensus Estimate of $1.09 for the quarter. Earnings were up 17.0% year over year. During the quarter, sales related to aircraft original equipment manufacturers were up 15% year over year to $307 million driven by increased sales of Airbus and Boeing, resulting from higher production rates of the 787, 737 and A320 aircrafts.
Rockwell Collins is the foremost global supplier of communications and avionics equipment for both commercial and military customers. The company’s balanced exposure to both types of customers allows the company to use government funding to develop products for the dual-end market.
However, we expect growth of the business aviation market to be hampered by slower global economic recovery. The company presently retains a short-term Zacks #4 Rank (Sell). We have a long-term Neutral recommendation on the stock.