Erickson Air-Crane Inc. (EAC) has entered into a five-year lease contract from Los Angeles County that has an annual value of $2.7 million. The three-year contract includes two optional years thereafter. Per the contract, the company will provide Los Angeles County a provision for aerial firefighting services, including personnel, equipment, tools, material, maintenance and supervision required to support operations.
The greater Los Angeles area is one of the most densely populated regions in the U.S. and is one of the most fire-prone areas too. Specifically, Erickson will provide one S-64 helicopter equipped with the company’s proprietary 2,650-gallon fire suppression system, a detachable water tank with multiple refill options and eight coverage levels for targeted fire suppression.
The S-64 helitanker and an additional S-64 for urban firefighting will be operated from Van Nuys airport. During the contractual service period, the equipment will be available for fire suppression efforts 24×7.
Erickson Air-Crane has a 13-year tie with Los Angeles Area Fire Authorities. The company has seasonal firefighting contracts with the U.S. Forest Service, Los Angeles City, and Los Angeles County Fire Departments.
Being a leading global provider of aviation services, the company has continuously been receiving contracts. Recently, the company received a new five-year contract to provide comprehensive replenishment and logistics services to Military Sealift Command. Prior to that, it received a modification contract from the Helicopter Transport Services for adjustments and modernization of seven CH54B tail boom and pylon assemblies.
Despite Erickson Air-Crane’s continuous contract wins, the company is vulnerable to defense budget cuts and sequestration. Erickson Air-Crane presently retains a short-term Zacks Rank #3 (Hold).
Among the stocks worth considering in the space are Huntington Ingalls Industries, Inc. (HII), Lockheed Martin Corp. (LMT) and Northrop Grumman Corp. (NOC), all with a Zacks Rank #2 (Buy).
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