Israeli company Bet Shemesh Engines Ltd. (TASE: BSEN) will continue manufacturing jet engine parts for Pratt & Whitney Canada until at least 2039. Bet Shemesh Engines announced today that an extension of its long-term contract with Pratt & Whitney had been agreed.
The Israeli company said that its revenue from the agreement would amount to $800 million spread over 2020-2039. The new agreement brings Bet Shemesh group's frame orders under its agreements to $2.6 billion.
The new contract extends and substantially increases the volume of the existing contract, which expires at the end of 2019. Most of the parts included in the new contract are already being manufactured for Pratt & Whitney.
Pratt & Whitney designs, develops, and manufactures jet engines for a broad range of airplanes and helicopters. It is one of the world's three largest airplane engine manufacturers, and accounts for a substantial proportion of US corporation United Technologies' activity.
Pratt & Whitney has been a strategic customer of Bet Shemesh Engines for 35 years. Bet Shemesh Engines produces a wide variety of jet engine parts for it, among them technology-rich items in precision castings, forges, advanced processing, and airplane frame assembly.
Bet Shemesh Engines CEO Ram Drori says that the deal is the biggest in Bet Shemesh Engines' history. "The agreement with Pratt & Whitney is extremely important for Bet Shemesh Engines. It includes renewal and extension of the original agreement to supply for the next 20 years," Drori says.
Drori added, "This deal is an expression of long-term strategic cooperation between Bet Shemesh Engines and Pratt & Whitney and the close relations between the companies. With this deal, we have reached a peak of $2.6 billion in revenue from framework agreements. The orders backlog is being structured according to the group's plans and capabilities for the purpose of meeting the timetables for supplying the products that we have promised.
"We are glad that one of the world's leading jet engine players in both quantity and quality is expressing confidence in the Bet Shemesh Engines group's capabilities. Renewal of the agreement is evidence of the customer's trust in the Bet Shemesh Engines group as an important supplier in its value chain, in the present and the near and distant future. This is an important milestone in our quest to achieve growth and build the group's future. It constitutes a major anchor for long-term planning and appropriate preparation for efficient production on a large scale."
Bet Shemesh Engines' share price has responded to the news with an 8% jump on the Tel Aviv Stock Exchange (TASE), and is now up 15% on the year. The company, whose market cap now stands at NIS 860 million, is controlled by FIMI Opportunity Funds, which holds 45% of the company's shares.
Published by Globes, Israel business news - en.globes.co.il - on June 24, 2019
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