(HON) Honeywell International Signs Aircraft Memorandum of Understanding

Honeywell International Inc. (HON) entered into a memorandum of understanding (MoU) with Safran, a leading provider of aerospace products of France, for forming a joint venture to provide a pioneering new electric green taxiing system for the new as well as the existing aircraft.

The new taxiing system is expected to be fitted on new aircraft and retrofitted on the existing ones by the beginning of 2016. With the new system, airline operation will be significantly enhanced and will also reduce carbon and other releases during the runway taxi operations, thus creating environmental benefits. Annual fuel consumption of a short-haul aircraft is about 5 million tons. The installation of the new system will decrease fuel consumption by 4%.

Auxiliary Power Unit (APU) generator of the planes will be used as leverage by Honeywell and Safran to power electrical motors in the aircraft’s main wheels. Therefore, the main engines will not be used for aircraft ground operations and will thus lead to a decrease in costs, emissions and dependability on fossil fuels.

Honeywell’s short-cycle businesses as well as its commercial aerospace spares and residential and commercial retrofit businesses are performing impressively well and are expected to support future growth outlook of the company. First-quarter 2011 was the eighth consecutive quarter in which orders in short-cycle businesses have increased. The company’s long-cycle backlog continued to be at near record levels.

The savings incurred from the implementation of Honeywell’s building techniques will be used for development without any need for outside funding. Further, the program will create job facilities for local contractors and housing authority residents.

Based in Morris Township, N.J., Honeywell International Inc. is a Fortune 100 company providing technical and manufacturing support to customers worldwide. It also provides aerospace products and services; control technologies for buildings, homes and industry; automotive products; turbochargers; and specialty materials. Major competitors of Honeywell are BorgWarner Inc. (BWA), United Technologies Corp. (UTX) and Johnson Controls Inc. (JCI).

We currently maintain our Neutral rating on Honeywell, with a Zacks #2 Rank (Buy recommendation) over the next one-to-three months.

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