This article first appeared on GuruFocus.
Canada is starting to translate its defense spending push into tangible contract flow, awarding roughly C$1.5 billion in long-term support agreements to L3Harris Technologies Inc. (NYSE:LHX) and Airbus SE (EADSY) as part of a broader effort to strengthen military readiness. The contracts are tied to the country's incoming CC-330 Husky fleet, a multi-role platform expected to handle air-to-air refueling, passenger transport, medical evacuation, and strategic missions. The move comes as Canada aligns more closely with NATO spending targets, which could signal a more sustained pipeline of defense-related investments over the coming decade.
Under the agreements, L3Harris' military aircraft solutions unit secured two contracts totaling about C$1.1 billion to provide maintenance services, while Airbus' defense and space unit received a C$374 million contract focused on engineering and airworthiness support. These contracts support a broader fleet acquisition announced in 2023, when Canada committed to purchasing nine Husky aircraftfour new Airbus A330 Multi Role Tanker Transport planes and five converted A330-200sfor a total cost of C$3.6 billion. The new fleet is expected to replace the aging CC-150 Polaris aircraft, with first delivery anticipated in 2027.
The spending backdrop could be just as important for investors as the contracts themselves. Canada recently increased defense spending to reach NATO's 2% of gross domestic product target in 2025 and has committed to a longer-term goal of 5% by 2035, a trajectory that could support continued demand for defense contractors. Government officials indicated the Husky-related agreements have the potential to create and maintain about 720 jobs across Ontario, Quebec, and Alberta, while helping ensure the fleet can respond to evolving threats and support Canada's commitments to its allies.
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