ALEXANDRIA, Va.--(BUSINESS WIRE)--VSE Corporation (NASDAQ: VSEC, "VSE", or the "Company"), a leading provider of aftermarket distribution and maintenance, repair and overhaul ("MRO") services for air and land transportation assets for commercial and government markets, announced today that it has entered into an asset purchase and perpetual license agreement with Honeywell International Inc. (“Honeywell”) to exclusively manufacture and support certain of Honeywell’s fuel control systems on four key engine platforms through its VSE Aviation business.
Under the terms of the agreement, VSE Aviation acquired certain contracts, equipment, and inventory from Honeywell and will utilize the acquired assets and the license to exclusively manufacture, manage aftermarket distribution, and repair more than 340 unique Honeywell fuel control systems. VSE Aviation will support three in-production engine platforms manufactured by Rolls Royce and Pratt & Whitney Canada (P&WC), including P&WC PT-6 engine variants. These systems and subcomponents will support more than 20,000 in-service aircraft powered by these engines, spanning over 120 platforms in the business and general aviation (B&GA) and rotorcraft markets.
This new agreement expands VSE Aviation’s existing capabilities supporting Honeywell’s fuel control systems and associated subcomponents. Since 2015, VSE Aviation has served as the exclusive distributor of these products. In addition, VSE Aviation has a long-established and successful history as an MRO provider to support these fuel control systems. Through this new agreement, VSE expands the relationship to become the licensed manufacturer with perpetual rights to the intellectual property of these components.
10 replies (most recent on top)
Tired Engineer is correct. This is not pruning the hedges or clearing dead weight. HON is licensing out 131 and and 331 APUs. These are HONs bread and butter after the already selling off the HTF line to standard aero. The new business model is licensing - provides a nice boost to make 1 quarter one time, everyone gets big bonuses, and the business gets smaller. The future is riding the license revenue. All licenses and no people, no buildings, no inventory, nothing. Just skimming the profits of the channel partners mafia style. You heard it here first.
Search "Honeywell License" on Google News, and I feel like you get a new hit every couple of weeks. The latest one seems to be from a week ago, regarding Ontic acquiring Honeywell's Thrust Reverser Actuation Systems line.
For awhile, it seemed like Honeywell was just "pruning the hedges" so to speak, licensing out the odds and ends (older avionics boxes with limited customer base, oddball engine configurations, product lines acquired during mergers that HW didn't really want, etc).
Lately, it seems like it's more and more core products. Gives HW a nice one-time boost in the bottom line, but once a product line is licensed out, that particular revenue stream is gone.
Much like tearing out every-other 2x4 from your walls to burn for heat. It works OK for awhile, until the whole place collapses.
Some agreements may be kept as long as Hon has capability but some will be either novated fully or partially. Depending on the contract.
Aren't some of those engines under service agreements with HoneyHell? How will that work?
Aero has been doing these fire sales for decades now to close quarterly sales gaps- Aerocontrollex comes to mind. Nothing new
Will Mexico be building RWAs (reaction wheel assemblies) ?
Everyone needs to watch "Pretty Woman", they will then understand Honeyhell.
Bleak times ahead in the industry as it all moves to third world locations. Not a place for the younger worker.
I expect to see ever more increasing break offs like this, the dismantlement of Honeywell will be mass selloff of IP with attached Honeywell brand licenses.
Remind me a little of Philips, all of their consumer tech and lighting businesses/IP are sold off now and companies just license the name to slap onto their products, I think their only internal business now is healthcare and grooming.
Honeywell got some cash! What's next?