Key Highlights

  • Orbital Corporation signed its first Power by the Hour contract with American Aerospace Technologies Inc., worth US$2.6 million (A$3.7 million).
  • The contract runs to 31 December 2027 with renewal Options and is take-or-pay, with a minimum of 200 engine hours per aircraft per month.
  • The fleet is to build up to 10 aircraft by May 2027, and two engines already ordered will move into the Power by the Hour fleet.

Orbital Corporation (ASX:OEC) has signed its first Power by the Hour (PBH) contract, with American Aerospace Technologies Inc. (AATI), a United States developer and operator of long-endurance unmanned aircraft. The company says the agreement is worth US$2.6 million (A$3.7 million) in contract Revenue and runs to 31 December 2027, with renewal options beyond that date. It follows Orbital's 24 July 2026 announcement previewing the contract.

AATI operates the AiRanger platform, which Orbital says holds United States commercial beyond-visual-line-of-sight approvals and uses Orbital's 150HFE engine. The aircraft currently fly coastal surveillance missions, and AATI also provides contractor-operated intelligence, surveillance and reconnaissance services to the US Coast Guard.

Under a PBH arrangement Orbital keeps ownership of the engines and provides maintenance, overhaul, performance support and replacement. The customer pays an hourly service charge instead of buying engines upfront. Orbital says the arrangement produces recurring monthly revenue tied to engine operations and support, and expects to earn more over an engine's operating life than from a one-off sale.

Contract terms

The fleet is to build up to 10 aircraft by May 2027. The contract is take-or-pay, with a minimum of 200 engine hours per aircraft per month. Two engines already ordered but not yet delivered will be moved into the PBH fleet. The announcement does not disclose the hourly rate, a monthly revenue schedule or margins. Revenue depends on the fleet ramping up and on the monthly minimums being met.

Separately from the PBH contract, AATI has ordered five Gen II Power Management Systems worth US$60,000 in total.

Potential expansion

Orbital says growth beyond the initial fleet is not part of the contract and depends on extended end-user contracts and on a separate Phase II agreement. AATI is positioning the AiRanger for government and commercial work. As context, the announcement refers to an April 2026 request for information from the US Coast Guard for contractor-owned, contractor-operated medium-range surveillance services covering up to 35 shore sites. The proposed structure is a Basic Ordering Agreement with a five-year base period and one five-year option. Orbital states that no contract has been awarded under that request and that it is not part of this agreement.

Risks and limitations

The agreement is with a single customer, and Orbital says it wants to diversify its customer base over time. The fleet reaches full size by May 2027, and the two undelivered engines must still be delivered and converted to the PBH model. Because Orbital retains ownership of the engines, it provides maintenance and replacement over the term. Orbital also notes that outcomes may differ materially from those described in its forward-looking statements.

The announcement describes the US$2.6 million as contract revenue to the end of 2027. The confirmed milestones in the release are the ramp-up to 10 aircraft by May 2027 and the contract term ending on 31 December 2027, subject to the renewal options. Orbital Corporation (ASX:OEC) did not state what share of its future revenue the arrangement could represent.