MTUAY MTU Aero Engines AG (PK)

A business arm of L-3 Communications (LLL), Platform Integration Division, announced that it has signed a memorandum of agreement with ViaSat Inc. (VSAT) to offer advanced in-flight connectivity capabilities to private transport aircrafts.

Per the agreement, both the companies will jointly work on a broadband satellite communication system for high-end aircrafts used by Heads of State and high-profile clients.

The new communication features include an airborne shipset and worldwide broadband network services that will be provided by ViaSat. L-3 Communications will deliver system integration, installation, engineering, design, in-cabin passenger networking and certification facilities.

This is the second communications-related deal signed by L-3 Communications following the recent $39.0 million dual satellite telecommunication terminal contract with the Australian Defense Force. This reflects the company’s aggressive pursuit of options to develop this business segment.

With its varied businesses, L-3 Communications has managed to maintain a stable earnings flow. Going forward, better prospects from overseas customers are expected to lead to earnings accretion. In the first quarter 2013, L-3 Communications’ international business registered 18% growth.

The combined efforts towards the development of the new technology will be a profitable addition to L-3 Communications’ logistics business. The company’s overall bookings at the end of 2012 stood at $10.9 billion. In the first quarter 2013, its backlog of orders remained solid at $10.5 billion which will lend significant upside to returns.

However, austerity in defense budget will continue to act as a deterrent to L-3 Communications’ broad growth objectives. The company presently carries a Zacks Rank #3 (Hold).

Other stocks in the defense domain currently performing well are Wesco Aircraft Holdings, Inc. (WAIR) and MTU Aero Engines Holding AG (MTUAY). Both holds a Zacks Rank #2 (Buy).

Headquartered in New York, NY, L-3 Communications offers command, control, communications, intelligence, surveillance, and reconnaissance (C3ISR) systems; aircraft modernization and maintenance; and national security solutions in the United States and internationally. Currently, it has a market capitalization of $7.58 billion.

 
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