Parsons' FAA Bid Loss Clouds Outlook After Rocky Year for Contractors

By Katherine Hamilton

Shares of Parsons Corp. plummeted after the company lost its bid for a multi-billion-dollar contract to overhaul the federal air traffic control system.

The Federal Aviation Administration on Thursday chose the private company Peraton over Parsons, sending the government contractor's stock down 22%, to $65.56, on Friday afternoon. Shares are down 31% this year.

The contract loss comes at the end of a rocky year for Parsons. President Trump's government-spending crackdown raised questions about how much funding the new administration would award to traditional contractors. Investors were expecting the FAA contract would give Parsons a boost in the near-term, but without it, analysts say there is uncertainty about how the company will hit financial targets in the coming fiscal year.

In June, Parsons teamed up with International Business Machines to make the bid, with hopes that the FAA contract could spur growth over the next few years. Parsons and Peraton were the main bidders for the project, which would require an overhaul of air traffic control's technology systems by 2028.

Congress approved $12.5 billion in funding for the contract as part of the One Big Beautiful Bill Act, and the FAA has said the project would need another $20 billion.

For Parsons investors, the FAA bid was the most clear-cut opportunity for immediate growth, Raymond James analysts led by Brian Gesuale said in a note. The contract "was the primary catalyst to positive revenue and EBITDA variance next year and made the overall forecast much more comfortable," Gesuale said.

The Transportation Department said Thursday it chose Peraton because its capabilities are aligned with Trump's goal to fundamentally change air traffic control for the better. The company will start work immediately.

"We stand ready to support the FAA on our existing contracts and expand our role as an implementation partner," Parsons said in a statement.

The company said Thursday it won a contract with a ceiling of $3.5 billion to do work for a Defense Department agency.

Government contractors have voiced concerns about a drop-off in revenues from the work they do for the federal government, as the Department of Government Efficiency reduced spending and slowed the contracting process earlier this year.

Parsons shares lost more than a third of their value in the first month of the Trump administration.

Parsons cut its sales outlook for the current fiscal year just before submitting its bid for the FAA contract. It had to remove a confidential contract from its guidance after the State Department said it was reorganizing. In November, it lowered revenue guidance again, citing the effect of federal customer capacity constraints.

Gesuale said there are still areas where Parsons could win contracts, such as Trump's Golden Dome initiative or border-control efforts, but those would likely take longer to show up in Parsons' financial results.

The company expects revenue this year to be $6.45 billion at the midpoint, which would be a 4.5% decrease from the year before.

Write to Katherine Hamilton at katherine.hamilton@wsj.com

(END) Dow Jones Newswires

December 05, 2025 14:39 ET (19:39 GMT)