- 01Orbital lands A$3.7m AATI deal to 2027.
- 02PBH deal adds recurring engine-service revenue.
- 03Fleet targets 10 AiRangers; 200 engine hours/month each.
Orbital Corporation (ASX: OEC) has secured its first Power by the Hour (PBH) agreement with American Aerospace Technologies Inc (AATI), establishing recurring revenue from propulsion support for unmanned aerial vehicles (UAVs) operating in the US.
Worth US$2.6 million (A$3.7m) through 31 December 2027, the take-or-pay contract covers an AiRanger aircraft fleet scheduled to grow to 10 by May 2027.
Under the arrangement, Orbital will retain ownership of its engines and receive hourly service payments rather than relying solely on the initial sale of propulsion equipment.
The agreement extends an existing supply relationship into support for AATI’s coastal surveillance operations and gives Orbital a commercial model it intends to offer other fleet operators.
Orders for Gen II Power Management Systems are excluded from the PBH contract, with five units ordered to date for US$60,000.
Minimum Engine Hours
AATI has committed to a minimum of 200 engine hours per aircraft each month, providing a contractual revenue floor as its fleet progressively expands.
In return, Orbital will provide engine maintenance, overhaul, replacement, and performance support throughout the initial contract term, with options for renewal beyond December 2027.
Two engines that had been ordered but not delivered will instead be allocated to the PBH fleet, linking the new service arrangement with existing orders.
“Our broader focus is on building a more diversified customer base across commercial and defence applications,” chief executive officer Stephen Pearce said.
“Adding Power by the Hour to our engine sales and support offering gives us another way to attract customers and generate greater value from our technology, while reducing our reliance on any single program over time."
Commercial Fleet Expansion
AATI is already using Orbital propulsion systems in its AiRanger platform, which has recorded intelligence, surveillance, and reconnaissance missions lasting up to 20 hours.
The aircraft is deployed for US coastal surveillance, while AATI is pursuing further government and commercial opportunities that could increase demand for propulsion services.
Any fleet expansion beyond the initial 10 aircraft remains conditional on additional end-user contracts and a separate second-phase agreement, rather than forming part of the existing commitment.
One potential market is a US Coast Guard procurement process for contractor-owned and contractor-operated medium-range unmanned aircraft surveillance services covering up to 35 shore-based locations.
That process contemplates a five-year base period and a five-year option, but no contract has yet been awarded under the request for information issued in April 2026.
Broader Recurring Revenue
The PBH approach is designed to lower upfront engine costs for aircraft operators while allowing Orbital to generate service income across the operational life of its propulsion systems.
Orbital sees the structure as a way to diversify beyond individual engine deliveries and broaden its customer base across commercial and defence aviation applications.
The manufacturer points to more than one million hours of US maritime operations as an established performance record supporting its move into long-duration fleet services.
Its heavy fuel propulsion systems already serve Group 2 and Group 3 UAV applications, with the new contract adding an operational support component to that existing product offering.
While further contracts are not guaranteed, the AATI arrangement provides a first operating example of a recurring-revenue model that Orbital could extend to other customers.
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