Orbital (ASX:OEC) Signs First Power by the Hour Deal With American Aerospace

Sonal Goyal

23 October 2026 07:46 PM AEDT

Orbital (ASX:OEC) Signs First Power by the Hour Deal With American Aerospace

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Key Highlights

The first Power by the Hour agreement with AATI carries contract revenue of US$2.6 million (A$3.7 million) through to 31 December 2027.
The agreement includes a take-or-pay commitment of 200 engine hours per aircraft per month for a fleet growing to 10 aircraft.
Orbital recorded first-quarter revenue of $3.4 million, expanded its customer base to 16 and reported an order book of $2.0 million.
Cash and undrawn facilities were $2.4 million, with a $2.1 million FY2026 R&D claim expected in November 2026.

Orbital Corporation Limited (ASX:OEC) announced on 23 October 2026 that it has entered its first Power by the Hour (PBH) agreement, with American Aerospace Technologies Inc. (AATI), covering AATI's AiRanger unmanned aircraft fleet used in US coastal surveillance operations. The agreement carries contract revenue of US$2.6 million (A$3.7 million) over an initial term to 31 December 2027, and was released alongside the company's quarterly activities report for the period ended 30 September 2026.

How the Power by the Hour Model Works

Under the PBH model, Orbital retains ownership of its engines and provides maintenance, overhaul, performance support and replacement in return for an hourly service charge. The initial agreement supports a fleet expanding progressively to 10 aircraft by May 2027, with a take-or-pay commitment of 200 engine hours per aircraft per month. Renewal options extend beyond 31 December 2027.

The company said any expansion beyond the initial fleet is subject to extended end-user contracts and a separate Phase II agreement. It noted that no contract has yet been awarded under an April 2026 US Coast Guard request for information on medium-range UAS services.

Quarterly Activities

Orbital recorded first-quarter revenue of $3.4 million and expanded its customer base to 16. AATI completed the first flight of Orbital's 150HFE system on its AiRanger aircraft and ordered three further systems, taking cumulative orders to eight systems and integration services valued at more than US$750,000. MightyFly ordered three HFE systems, and Textron orders took cumulative 75HFE upgrade kit orders to 62, valued at US$673,000.

After quarter end, Larsen & Toubro ordered three 350HFE systems with the Gen II Power Management System. The order book stood at $2.0 million, separate from the PBH agreement. Cash and undrawn facilities were $2.4 million, new working capital facilities of $3 million were secured from major shareholders, and the company expects $2.1 million from its FY2026 R&D claim in November 2026.

Why This Could Matter

Chief Executive Stephen Pearce said the model reduces the upfront cost for operators to deploy Orbital engines while allowing the company to earn revenue over their operating life, and that minimum monthly commitments provide revenue visibility. He said the agreement provides a foundation to offer the model to other operators.

In Summary

Orbital has converted an existing propulsion supply relationship with AATI into an ongoing service arrangement, with a defined fleet, take-or-pay hours and a term to December 2027. Its stated priorities are fulfilling scheduled production, supporting customer testing and integration, and converting its pipeline into new production orders.

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