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FTAI Aviation stock jumped around 7% on Wednesday morning after announcing a major customer agreement for its new unit that turns decommissioned jet engines into natural gas-powered turbines.
The company announced a five-year, $1.5 billion deal to supply an unnamed "international cloud service provider" with turbines made from refurbished jet engines. Under the deal, FTAI AviationFTAI and its joint venture partner Jereh Group will start delivering the turbines, known as "aeroderivative turbines," in November 2027.
FTAI Aviation's core business is performing aftermarket repairs on jet engines, especially the CFM56, which is among the most popular units in the world. Late last year, the company announced it was starting a new unit, FTAI Power, dedicated entirely to turning old jet engines into 25-megawatt gas-powered turbines. With the surge in energy demand needed to power AI data centers, FTAI decided to use its expertise in fixing jet engines to refurbish them into gas-powered turbines.
Wednesday's deal appears to be the first official announcement of a customer agreement for FTAI Power. While still in its initial phases, FTAI Power expects to start production of turbines in late 2026. By 2027, FTAI Power expects to produce 100 units. Management said demand for FTAI Power's turbines was strong even before Wednesday's announcement.
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"We expect to be mostly sold out of our 2027 target production in the near term with a meaningful portion of 2028 spoken for," President David Moreno said on an earnings call in April.
GE Vernova Validates FTAI Power's Thesis
FTAI Aviation isn't the only industrial company turning jet engines into turbines. Giants like GE VernovaGEV, Baker HughesBKR, Siemens EnergySMERY and Rolls-RoyceRYCEY all have units dedicated to aeroderivative turbines.
In its Wednesday earnings report, GE Vernova reported a more than sixfold increase in orders of gas-powered turbines made from decommissioned jet engines compared to Q1. Orders rose from nine in the first quarter to 61 in Q2. GE Vernova stock sank around 5.5% after missing on earnings.
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FTAI Aviation Stock
Shares of FTAI Aviation rose as much as 10% in early trading on Wednesday, before trimming gains to near 3%, according to MarketSurge.
The stock is up about 14% this year. However, Wednesday's opening price of 225.70 is 30% below FTAI's all-time high of 323.51 from late February. FTAI Aviation reports earnings on July 29.
Earlier this month, Morgan Stanley named FTAI Aviation among its top three aerospace and defense picks. Analysts at Citizens upgraded the stock to outperform with a price target of $375 a share.
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