HARTFORD, Conn. (WTNH) — United Technologies announced early Monday morning that it will separate its Connecticut-based Sikorsky Aircraft business from the rest of the company.
In a statment released by UTC Monday, the company stated they will focus on high-technology systems and services to the aerospace and building industries. It says a decision on selling or spinning off Sikorsky will be made by the end of the third quarter.
United Technologies President and Chief Executive Officer Gregory Hayes made the official announcement early Monday:
“Our strategic review has confirmed that exiting the helicopter business is the best path forward for United Technologies. Sikorsky is the world’s premier helicopter company and through a series of strategic wins is well positioned for long-term growth. However, separation of Sikorsky from the portfolio will allow both United Technologies and Sikorsky to better focus on their core businesses. Over the coming weeks, we’ll determine whether a spinoff or direct sale is the best way to enhance Sikorsky’s long-term success and create the most value for customers and shareholders.”
“It’s very simple Sikorsky lately has had about a 2.9 percent profit margin and that’s insufficient for CEO Hayes,” said Quinnipiac Business Professor David Cadden. When News 8’s Stephanie Simoni asked him, ‘If you were an employee at Sikorsky right now would you be nervous?’ Cadden replied, “To some extent I would be nervous. They have about 15,000 people worldwide so it’s probably going to be acquired rather than a straight spin-off.”
If they do sell, Cadden says layoffs are likely.
“Whenever there’s an acquisition you always anticipate you’re gong to save money that you spent buying the company by cutting staff,” said Cadden. He said Boeing might be a contender to buy the company. “If I were a betting man which I’m not I’d say it would be with Boeing.”
Excluding Sikorsky, United Technologies expects 2015 earnings per share of $6.35 to $6.55 on sales of $58 to $59 billion. With Sikorsky, earnings per share are expected at $6.55 to $6.85, from $6.85 to $7.05.
United Technologies expects 10 cents to 20 cents per share of separation costs and a 10-cent per share decline in Sikorsky operations due to oil and gas market weakness.
Senator Richard Blumenthal (D-Conn.) issued the following statement regarding the anouncement:
“Regardless of corporate structure, Sikorsky’s skilled and dedicated workforce will continue to produce the world’s best helicopters– a critical national security asset. I will continue to strongly support military budgets that recognize the vital value of Sikorsky helicopters to our national defense, including robust funding in the authorization bill now before the Senate. For both military and civilian uses, Sikorsky’s products are the gold standard– a fact unchanged by this planned shift in ownership,”
Later Monday morning, Stratford Mayor John Harkins echoed Senator Blumenthal’s comments.
“Since Igor Sikorsky first flew the helicopter here decades ago, Stratford has been home to the best helicopters in the world. Regardless of who owns Sikorsky Aircraft after the restructuring recently announced by UTC, the Town of Stratford is looking forward to continuing its strong working relationship with Sikorsky for many more decades to come.”