UTC may struggle selling off Sikorsky
“As part of the portfolio review announced last December, we are exploring strategic options for Sikorsky to determining the best way to enhance its long-term success and create improved long-term value for UTC’s customers and shareholders.” said Gregory Hayes, CEO of Sikorsky, in a written statement.
Which in plain English means bye-bye Sikorsky.
The company finds itself in an unusual position at the moment. The backlog at $16 billion is healthy, as was 2014s $7 billion revenue, but with uncertainty in the markets it competes in, United Technology might not find it easy to offload the company.
It would be difficult for United Technology to split the military business from the civil business – and Sikorsky has traditionally favoured the military side – so it is hard to see the US government allowing a foreign buyer to step in. The last five years have seen big defence cuts – especially with the US running down operations in Iraq and Afghanistan which has affected Sikorsky.
But despite strong demand for S76 and S92 programmes in their markets Sikorsky has been happy to produce less than 50 civil helicopters each year.
Now the balance may be shifting again. Sikorsky is seeing strong demand from Eastern European countries, which are watching the Russia/Ukraine conflict, and many of the large oil and gas operators are concerned about low oil prices.
Possible buyers will need to make their own predictions on the two markets. Not an easy job.