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Honeywell to Power Asiana Airlines, Reduce Operating Costs

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Industrial goods manufacturer, Honeywell International Inc.HON recently secured an order from Asiana Airlines, one of South Korea's two major airlines, to supply auxiliary power units (APU) for its fleet. The strategic move is aimed at improving operational performance and lower maintenance costs in the cut-throat aviation industry.

The APU is a critical aircraft component offering primary or backup electrical power for environmental, cockpit and hydraulic systems during flight. Asiana Airlines will utilize Honeywell's 131-9A APU series to power its main engines and run the air conditioning units while the aircraft is on the ground, for a more soothing passenger onboarding experience.

About 49 131-9A APUs from the Honeywell stable will be retrofitted to the airline's existing Airbus A320ceo and A321ceo fleet, while 25 will be employed on its new Airbus A321neo fleet. In addition, the company will offer a global network of maintenance services leveraging its local customer support team based in South Korea and an established APU maintenance facility in Singapore.

With a significant rise in air traffic in the Asia Pacific in the recent times, airline companies like Asiana Airlines aim to remain highly competitive with reduced operational costs and smooth on-time flight experience. Honeywell's APUs are expected to help a great deal in this regard.

Incidentally, the company has outperformed the Diversified Operations industry with an average year-to-date return of 15.6% compared with just 1.4% gain 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 include Barloworld Limited BRRAY , Bunzl plc BZLFY and United Technologies Corporation UTX , each carrying a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Barloworld has a long-term earnings growth expectation of 17.2%. It surpassed estimates thrice in the trailing four quarters with an average positive earnings surprise of 1.3%.

Bunzl has a long-term earnings growth expectation of 3.2%.

United Technologies surpassed estimates thrice in the trailing four quarters with an average positive earnings surprise of 5.4%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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