The VSE Aviation segment of aftermarket distribution and MRO services provider VSE Corporation has been awarded six new distribution agreements with a number of manufacturers for a combined value of approximately $750 million. The agreements are expected to begin in the first quarter of 2024, with contract terms ranging between one and 15 years in duration.

VSE Aviation also plans to open a 45,000sq ft distribution facility in Hamburg, Germany in the first quarter of 2024, to serve as the distribution centre of excellence supporting Europe, the Middle East and Africa. This investment positions the company to expand global coverage and support for its distribution aftermarket product lines, including the tyre, tube and battery product lines associated with its acquisition of Desser Aerospace earlier this year.

"We are very proud to announce the award of several new commercial and business and general aviation distribution agreements with a number of leading original equipment manufacturers, including an expansion of our flagship distribution agreement with Pratt & Whitney Canada," says president and VSE Corp CEO John Cuomo. "The expansion of our agreement with Pratt & Whitney Canada supporting Europe, the Middle East and Africa is the culmination of our successful partnerships and recognition of the service and value our VSE Aviation business provides to the market."

"VSE Aviation continues to be recognised as a trusted partner within the aviation aftermarket, and our tip-to-tail distribution and product line management offerings continue to resonate with leading OEMs," adds president Ben Thomas. "We believe OEMs will continue to look for, and be attracted to, VSE Aviation's highly technical, differentiated solutions that allow us to better support OEM products in the aftermarket.

"We look forward to opening our German distribution centre of excellence to support our EMEA region customers. The facility is expected to play a critical role in supporting the expansion of our Pratt & Whitney Canada EMEA agreement and the global expansion of our newly acquired Desser Aerospace business. This facility will better position VSE Aviation to provide world-class customer service and product support to our regional customers in EMEA."

The EMEA distribution agreements include:

- A new 15 year distribution agreement with P&WC, representing a geographic expansion of the two previously awarded distribution agreements covering North America (announced in 2021) and Asia Pacific (announced in 2022). Under the terms of the new agreement, VSE Aviation will provide engine line maintenance spare parts and engine accessory exchange support to engine operators, customers and maintenance providers in the region. It expects to service 80 unique engine platforms across 85 countries.

- An expansion of an existing agreement with Honeywell to be the sole aftermarket distributor for its JetWave tail-mounted antenna systems in EMEA and India (EMEAI). The previously awarded distribution agreement, made in October 2022, covered fuselage-mounted antenna systems. VSE Aviation now supports all JetWave satellite communication systems in the EMEAI region.

- A new distribution agreement with a tyre supplier to be the exclusive distributor of retreaded tyres for the international regional airline market. This partnership leverages VSE's acquisition of Desser Aerospace.

- The expansion of an existing five year distribution agreement with a leading manufacturer of starting and ground power batteries to support the distribution of lead-acid batteries across the B&GA market.

- A new distribution agreement with a provider of airframe interior plastic components, including tray tables, seat shrouds, plastic wall and ceiling panels, flooring, lavatory shrouds and nearly any other product made of plastic throughout the aircraft. This offering further expands VSE's tip-to-tail approach to customer product support.

These agreements are collectively expected to contribute approximately $25 to $30 million of new revenue in 2024, scaling during a 12 month transition period, with revenue increasing to more than $50 million in 2025. Working capital requirements to support initial investments are expected to be approximately $30 million beginning in 2024.