Building a new aircraft gets most of the attention, but keeping one flying can generate revenue for decades.
Older fleets need replacement parts while manufacturers are simultaneously trying to increase production of new planes. HEICO reports Tuesday after the close, putting one of aerospace’s most attractive businesses directly in focus.
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Theme: Aerospace Components, Replacement Parts, Aftermarket Spending, Aircraft Production, and Defense
Every Plane Creates Years of Demand
An aircraft is not sold once and forgotten.
It can remain in service for 20, 25, or even 30 years.
During that time, components wear out. Engines need servicing. Electronics get replaced. Pumps, valves, actuators, fasteners, controls, and countless other pieces need maintenance.
That creates an unusually attractive installed-base business.
More aircraft entering service today can mean more aftermarket demand years from now.
Old Planes Can Be Good Business Too
Airlines would love unlimited supplies of brand-new aircraft.
Reality is messier.
Production constraints can force carriers to keep older planes operating longer than originally planned. Those older aircraft often require more maintenance and replacement parts.
For component suppliers, that can create a useful combination:
New aircraft production drives original-equipment demand while aging fleets support aftermarket demand.
You do not necessarily need aircraft manufacturers to solve every production bottleneck for the theme to work.
What’s Driving It
HEICO Is Tuesday’s Main Catalyst
HEICO releases fiscal Q3 results Tuesday after the NYSE close, followed by its conference call Wednesday morning.
The bar is already high.
Fiscal Q2 sales jumped 25% to a record $1.38 billion, while operating income increased 41% to $350.4 million. Net income climbed 49% to $233.8 million.
Even better, operating margin expanded from 22.6% to 25.5%.
That is not merely an aerospace recovery.
It is profitable growth.
Flight Support Is the Engine
HEICO’s Flight Support Group is particularly important for this theme.
Q2 sales increased 21% to a record $929.4 million, including 19% organic growth. Operating income jumped 31% to $243.1 million.
The business supplies replacement parts, repairs, distribution, avionics, specialty products, and other services.
That makes HEICO different from a company dependent entirely on aircraft production.
Every existing aircraft is a potential customer.
TransDigm Shows the Power of the Aftermarket
TransDigm takes the economics even further.
Fiscal Q3 sales increased 23% to $2.74 billion, with organic growth of 13%. Commercial aftermarket revenue grew 17%, while commercial OEM and defense also delivered double-digit growth.
Its EBITDA margin reached a remarkable 52.8%.
There is a reason these businesses can be so valuable.
Many aerospace parts are highly engineered, proprietary, certified, and difficult to substitute casually.
If a small component is critical to keeping a multimillion-dollar aircraft operating, the economics can look very different from ordinary manufacturing.
New Aircraft Production Adds Another Layer
Howmet Aerospace shows what happens when production growth joins the aftermarket story.
Second-quarter revenue increased 24% to $2.55 billion, including 28% growth from commercial aerospace. Adjusted EBITDA climbed 39%, while the margin expanded 340 basis points to 32.1%.
Engine Products revenue alone increased 32%.
Woodward is seeing similar strength.
Its fiscal Q3 Aerospace sales increased 19%, including 34% growth in commercial OEM and 24% growth in commercial services. Aerospace segment margin expanded to 24.0% from 21.1%.
Both sides of the aircraft lifecycle are contributing.
The Chain Reaction
Air travel grows → airlines need more aircraft
Aircraft production rises → component demand increases
More planes enter service → the installed fleet expands
Aircraft age → maintenance and replacement needs rise
Certified parts remain difficult to substitute → pricing stays attractive
Flight activity weakens → aftermarket demand can slow
What’s Working
Aftermarket Revenue Can Be Better Revenue
Selling a component onto a new aircraft is useful.
Selling replacement versions of that component for another 20 years can be considerably more valuable.
This is why installed base matters so much.
TransDigm says its parts appear on nearly every commercial and military aircraft in service, while its acquisition strategy specifically favors proprietary aerospace businesses with significant aftermarket content.
HEICO has built a similar advantage through decades of acquisitions.
The aircraft already flying become recurring opportunities.
Defense Makes the Story Broader
Commercial aviation is only part of the theme.
Curtiss-Wright’s Q2 aerospace and defense sales increased 6%, while new companywide orders reached $1.1 billion, producing a 1.16x book-to-bill ratio.
Management also raised its full-year sales and margin outlook.
Defense aircraft can remain in service for decades too.
That adds another long-duration installed base.
What to Watch
HEICO Needs Broad Organic Growth
Acquisitions are an important part of HEICO’s strategy.
That means you need to separate purchased growth from what existing businesses are producing organically.
Q2 consolidated organic sales growth exceeded 18%, while Flight Support delivered 19% organic growth.
Watch whether that pace remains strong.
Margins Tell You About Pricing Power
HEICO’s Q2 operating margin reached 25.5%.
TransDigm’s EBITDA margin exceeded 50%.
Howmet and Woodward are also expanding profitability.
Those numbers are a reminder that this is not simply a volume story.
You want to see companies convert aircraft demand into higher earnings rather than allowing labor, materials, or production costs to absorb the upside.
HEICO (HEI)
What it does:
HEICO supplies replacement parts, repair services, avionics, electronics, and specialty components across commercial aerospace and defense.
Why it fits:
This is Tuesday’s direct catalyst and one of the purest ways to own the aerospace aftermarket.
What stands out:
Q2 sales increased 25%, operating income rose 41%, and Flight Support organic growth reached 19%.
What to watch:
Organic growth, Flight Support demand, margins, acquisitions, cash flow, and full-year commentary.
The Takeaway: Buy this if you want the broadest exposure to keeping the existing aircraft fleet flying.
The risk is that a premium business often comes with a premium valuation.
TransDigm Group (TDG)
What it does:
TransDigm produces highly engineered components used across commercial and military aircraft.
Why it fits:
Its proprietary products and huge installed base make it one of the strongest aftermarket businesses in aerospace.
What stands out:
Fiscal Q3 sales rose 23%, commercial aftermarket growth reached 17%, and EBITDA margin was 52.8%.
What to watch:
Aftermarket growth, pricing, acquisitions, debt, commercial traffic, and margins.
The Takeaway: Buy this if you want the highest-margin version of the aerospace-parts theme.
The risk is leverage and a valuation that leaves little room for execution problems.
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Howmet Aerospace (HWM)
What it does:
Howmet supplies jet-engine components, aerospace fasteners, structures, and other engineered products.
Why it fits:
It gives you stronger exposure to increasing production of new aircraft and engines.
What stands out:
Q2 commercial aerospace revenue grew 28%, while adjusted EBITDA increased 39%.
What to watch:
Engine Products growth, aircraft build rates, margins, capacity investments, and free cash flow.
The Takeaway: Buy this if you want the production-growth play with rapidly improving profitability.
The risk is aircraft manufacturing delays disrupting expected volumes.
Woodward (WWD)
What it does:
Woodward produces control systems and components for aircraft engines and industrial equipment.
Why it fits:
It participates in both new aircraft production and commercial aerospace services.
What stands out:
Q3 commercial OEM sales jumped 34%, commercial services increased 24%, and Aerospace margin reached 24%.
What to watch:
Commercial services, OEM production, margins, capacity expansion, and cash flow.
The Takeaway: Buy this if you want balanced exposure to both new aircraft and the installed fleet.
The risk is execution as the company expands capacity to meet higher demand.
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Curtiss-Wright (CW)
What it does:
Curtiss-Wright supplies aerospace controls, actuation systems, defense electronics, naval equipment, and industrial technologies.
Why it fits:
It adds defense and military aerospace exposure to the basket.
What stands out:
Q2 adjusted operating income rose 12%, new orders increased 8% to $1.1 billion, and management raised full-year guidance.
What to watch:
Aerospace orders, defense electronics, backlog, margins, naval demand, and free cash flow.
The Takeaway: Buy this if you want the defense-heavy version of the aerospace component theme.
The risk is program timing creating uneven quarterly growth.
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The Plane Is Just the Beginning
Aircraft manufacturers get the headlines when another jet rolls off the production line.
For many component companies, that is only the start of the relationship.
HEICO sells replacement parts. TransDigm owns proprietary components across an enormous installed fleet. Howmet benefits as engine production rises. Woodward participates in both OEM and service demand. Curtiss-Wright adds defense programs that can last for decades.
For you, the better way to think about aerospace may be simple:
Building the plane creates one sale. Keeping it flying can create years of them.
Best Regards,
— Adam Garcia
Elite Trade Club
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