On the desk today · TransDigm Group
The part costs $5,000. It used to cost $600. And the airline still has to pay.
| NYSE · TDG |
$1 quadrillion would be enough to send a check for $2.8 million to every man, woman, and child in America.
That's how big this opportunity is.
And you could claim a stake today…
Before the company goes public…
Starting with just $500.
The Part You
Can't Replace
In 1993, a man named Nick Howley was working at an industrial conglomerate called IMO Industries. His job was to package four underperforming aerospace parts units for sale. He studied the businesses. He saw something the parent company missed — each unit made small, specific parts that were designed into aircraft and certified by the FAA. Once certified, no one could swap in a different part without going through the entire approval process again. The parts were locked in. The customers were locked in. So Howley and his boss, Doug Peacock, maneuvered behind the scenes to buy the units themselves, partnering with the private equity firm Kelso. When management caught on, they fired Peacock. But they couldn't get rid of Howley — he was too deep in the sale process. "They weren't going to get much help from me," Howley said later, laughing.
I was reading a maintenance invoice for a friend's charter operation a few months ago. One line item caught my eye — a small actuator, roughly the size of a coffee mug, billed at $4,200. I asked if there was a cheaper option. He looked at me like I'd asked if the plane could fly without wings. There isn't one. There never will be.
TransDigm is not a defense contractor. It's not an airline supplier in the way you might think. It's a collection of 90-plus small businesses — each making proprietary, sole-source parts that are designed into specific aircraft platforms. Roughly 90% of its sales come from products where TransDigm is the only approved manufacturer. You can't switch. You can't substitute. You pay.
Howley and Peacock founded TransDigm in Cleveland in 1993 with those four IMO units. Howley had an MBA from Harvard and a conviction that proprietary aerospace parts — the smaller, the better — were the best business on Earth. He spent 30 years acquiring more of them. The company went public in 2006. Mike Lisman took over as CEO in October 2025. Howley remains chairman.
The math is extraordinary. In fiscal 2025, TransDigm reported $8.8 billion in revenue — up 11% from the year before. Net income hit $2.1 billion. The profit margin before interest, taxes, and depreciation was 53.9% for the full year — and 54.2% in the fourth quarter. Read that again. Fifty-four cents of every dollar of revenue drops to cash profit. In August 2025, the board declared a special dividend of $90 per share. That's not a typo. Ninety dollars. Per share. In a single quarter.
|
That 90% sole-source figure is the number you need to understand. It means nine out of ten dollars of revenue come from parts where TransDigm is the only approved supplier. The customer — an airline, a military depot, a maintenance shop — has no alternative vendor. The FAA certified that specific part for that specific aircraft. Switching to a different part would require a new certification process that costs millions and takes years. Nobody does it. The part stays. The price stays. And TransDigm sets both.
The pricing power is the most aggressive I've seen in any public company. After TransDigm acquires a parts maker, prices go up — sometimes dramatically. A motor rotor that cost $654 before acquisition was repriced to $5,474. A cable assembly went from $1,737 to $7,863. The Pentagon's inspector general found $20.8 million in excess profits on just 105 contracts. A congressman called TransDigm a "hidden monopolist." And the parts kept selling. Because the alternative — recertifying a different part on a flying aircraft — is worse than paying.
I keep coming back to the founding story. Howley was told to sell these businesses. Instead, he studied them, realized what they were worth, and bought them out from under his own employer. His formula — repeated for 30 years across 90-plus acquisitions — has never changed. He described it in three words: "You can get the price up, you can get the cost down, and you can generate new business." Price up. Cost down. New business. That's it. That's the entire playbook.
The flywheel runs through the aftermarket. Roughly 70% of TransDigm's revenue comes not from selling a part for a new aircraft — but from selling replacement parts for aircraft already flying. A commercial jet flies for 25 to 30 years. Every year, parts wear out. Every worn part must be replaced with the exact same certified component. TransDigm owns the design. TransDigm makes the part. TransDigm names the price. For the life of the aircraft.
WHY THIS WORKS
FAA certification is the lock. Once a part is approved for an aircraft, replacing it with a different design requires a new certification — millions of dollars and years of testing. No one does it for a $5,000 component.
Aftermarket revenue lasts decades. A jet flies for 25–30 years. Every worn part must be replaced with the identical certified component. TransDigm collects for the life of the aircraft.
Sole-source means no negotiation. 90% of revenue comes from parts with no approved alternative supplier. The customer's only choice is the price TransDigm sets — or grounding the plane.
Acquisitions compound the lock. Every new purchase adds more sole-source parts to the portfolio. TransDigm now makes over 400,000 different components. Each one is another door that only one key opens.
What most people miss: TransDigm was born because a man told to sell four businesses realized they were worth more than his employer knew. He bought them himself, raised the prices, and kept the formula for 30 years. The Pentagon called him a monopolist. Congress held hearings. And the margins hit 54%. The parts are still the only ones approved to fly — and the planes aren't landing anytime soon.
