Howmet Aerospace: A Turbocharged Play on Jet Engine Recovery

The aerospace industry's resurgence is being fueled by a silent but critical player: Howmet Aerospace. As Boeing and Airbus ramp up production to meet post-pandemic demand, the company's advancements in turbine blade manufacturing and strategic partnerships are positioning it as a linchpin in the global supply chain recovery. Let's dissect why investors should take note now.

Supply Chain Resilience: Anchored in Innovation

Howmet's recent strides in turbine blade production are nothing short of transformative. With 500 engine sets of new blades already delivered for CFM International's LEAP engine, the company is outpacing industry benchmarks. These blades, critical to the hot-section performance of jet engines, are now being produced at a rate that could soon hit 165–169 engines per month—a pace that directly supports Boeing's 737 MAX and Airbus's A320neo production targets.

But scalability isn't just about speed. Howmet has doubled production since 2019 while halving its workforce in key facilities, a feat achieved through automation and process optimization. This efficiency isn't just cost-saving; it's a competitive moat. Margins in Engineered Structures now sit at 18.4%, and fastener margins have surged by 400 basis points—proof that innovation translates to profitability.

Navigating Tariffs: A Model of Proactive Risk Mitigation

Tariffs once loomed as a major headwind, but Howmet has turned the tables. By leveraging force majeure clauses and renegotiating trade agreements, the company has slashed tariff-related costs below initial estimates of €15 million annually. This agility is critical as geopolitical tensions persist. Investors should note that Howmet's new plant in Japan, dedicated to industrial gas turbine (IGT) components, isn't just about growth—it's a strategic hedge against supply chain disruptions.

The 2025 Outlook: A Tipping Point for Growth

The company's 2025 delivery outlook hinges on two pillars: aftermarket expansion and legacy-to-modern blade transitions. Aftermarket revenue, now at 17% of total sales, is on track to hit 20% by 2026, driven by rising demand for spare parts as global air travel rebounds. Meanwhile, mass production of advanced blades for the GTF engine—a joint venture between Pratt & Whitney and Safran—will solidify Howmet's role in next-gen propulsion systems.

With $1.15 billion in free cash flow guidance for 2025, Howmet is primed to fund further automation and scale production. This isn't just about keeping pace—it's about outpacing competitors in a market where just-in-time delivery is non-negotiable.

Why Act Now?

The aerospace recovery isn't a temporary rally; it's a structural shift. Howmet's long-term agreements with CFM and its peers lock in demand visibility through 2025 and beyond. Couple this with margin expansion, tariff resilience, and a R&D pipeline focused on lighter, hotter-running blades, and the case for Howmet becomes undeniable.

Final Analysis: A Catalyst-Driven Opportunity

Howmet Aerospace isn't just riding the recovery—it's steering it. With Boeing and Airbus set to add over 1,000 new narrow-body aircraft annually by 2026, the company's leadership in high-value components positions it as a beneficiary of both production ramp-ups and aftermarket demand. For investors, this is a rare blend of near-term catalysts (2025 delivery targets) and long-term moats (automated manufacturing, trade resilience).

The question isn't whether Howmet will thrive—it's whether investors will act before the market catches on. The engines are revving; this is the time to fuel up.

Risk Disclosure: Investments in aerospace manufacturing carry risks, including supply chain volatility and regulatory changes. Past performance does not guarantee future results.