IBM Inks 10-Year Deal With Emirates Airline Worth $300M

After collaborating with Etihad Airways a few months back, International Business Machines (NYSE:IBM) has now partnered with another big Middle East based airlines—Emirates. The deal worth $300 million encompasses providing IT infrastructure as a service (IaaS), helping the airlines to improve its passenger support system operations over the next decade.

Emirates Airline, one of the biggest airlines in terms of international traffic, is one of IBM’s long standing customers. Emirates has been using IBM z Systems Technology for the last three decades for intricate operations like flight information & reservations, ticketing and check in. It has also employed IBM’s services to enhance its Passenger Service System (PSS).

As per the new deal, IBM services will allow Emirates to “encrypt data in near real-time”. IBM also said that the platform will allow “the airline to build new apps that will support the API Economy - a commercial exchange of business functions, capabilities, or competencies as services packaged in APIs”.

Last September, IBM struck a 10 year partnership worth $700 million with Abu Dhabi based Etihad for providing a multitude of services including IBM’s latest mobile and cloud technologies and services to improve operations and security. The deal also covered Etihad's seven partner airlines. Moreover, IBM will build a cloud data center in Abu Dhabi for Etihad.

IBM is currently undergoing a painfully long drawn transformation in its business model. It is moving away from its traditional businesses to newer (read lucrative) business avenues like cloud and data analytics. Though IBM’s Strategic Imperatives are performing well but these are not enough to make up for the weakness in its traditional business. However, we believe that over the long run these efforts should yield positive results for the company.

Currently IBM carries a Zacks Rank #3 (Hold). Better-ranked stocks in the broader technology space are Facebook Inc. (NASDAQ:FB) , NetEase Inc (NASDAQ:NTES) and Elli Mae Inc (NYSE:ELLI) , all of which sport a Zacks Rank #1 (Strong Buy).