Orbital begins recurring UAV revenue with first Power by the Hour deal

Orbital locks in recurring UAV service revenue

Orbital Corporation Limited (ASX:OEC) has moved beyond selling engines to charging for their use, signing its first Power by the Hour agreement with American Aerospace Technologies Inc. The contract is expected to generate US$2.6 million in revenue through 31 December 2027, equivalent to approximately A$3.7 million based on the company’s stated conversion.

The agreement supports an AiRanger fleet progressively expanding to 10 aircraft by May 2027. A take-or-pay commitment requires a minimum 200 engine hours per aircraft each month, giving Orbital a contracted baseline for maintenance, overhaul, replacement and performance support rather than relying solely on upfront propulsion sales.

AiRanger relationship shifts from supply to operations

The deal follows the AiRanger first flight, which used Orbital’s 150HFE propulsion system and led to follow-on propulsion orders. Under the new structure, Orbital retains ownership of the engines and earns an hourly service charge as the aircraft operate in US coastal surveillance missions. Two engines previously ordered but not yet delivered will be transferred into the Power by the Hour fleet.

Orbital CEO Stephen Pearce said the model was intended to reduce operators’ upfront deployment costs while allowing the company to earn revenue over the engines’ operating lives. The company also described the arrangement as a platform for offering the service model to other UAV fleet operators, but the announcement does not disclose the contract’s profitability, cost structure or cash-flow timing.

US Coast Guard opportunity remains unawarded

AATI is providing contractor-owned, contractor-operated intelligence, surveillance and reconnaissance services to the US Coast Guard, while positioning AiRanger for government and commercial applications. The US Coast Guard issued a request for information in April for Group 2 and Group 3 UAS services covering as many as 35 shore-based sites across the Atlantic, Pacific and Alaska-Arctic regions, but Orbital noted that no contract has yet been awarded under that process.

That distinction matters: the current agreement is contracted revenue, while any larger fleet opportunity remains prospective and would require extended end-user contracts plus a separate Phase II agreement. Orbital has also received orders for five Gen II Power Management Systems worth US$60,000, outside the Power by the Hour contract. The next measurable test is whether the fleet reaches 10 aircraft by May 2027 and whether the initial service arrangement is renewed or expanded.