Monday, June 29, 2015

Future of Sikorsky Sale Still Uncertain

Future of Sikorsky Sale Still Uncertain: Although United Technologies has received multiple bids for its subsidiary Sikorsky Aircraft, there are still obstacles to overcome before a sale can go through, and a spinoff of the helicopter business is still possible.

Lockheed Martin, Textron and Airbus are all believed to still be in the running, sources said, with bids that have made it past the initial stage. While there would be synergies for Airbus and Textron, which already manufacture helicopters, there could also be antitrust concerns of one company having too much of a share of the helicopter market.

For that reason, Richard Aboulafia, the Teal Group's vice president of analysis, said Lockheed Martin might be the best fit, even though it doesn't produce helicopters. But with an already successful business integrating mission systems and sensors for helicopters, Lockheed may decide to stay out of the business of building helicopters.

"I'm not so sure they'd want to get platform specific. They've done pretty well being ecumenical," Aboulafia said.

Mike Blades, an analyst who covers defense and aerospace for Frost & Sullivan, said Sikorsky likely will be spun off as a separate entity from UTC. With the Future Vertical Lift program under development by the Pentagon as the next generation of military helicopters, Sikorsky has teamed with Boeing to compete. Textron subsidiary Bell Helicopters is also in the running, so if Textron acquired Sikorsky, it would effectively have interest in both sides of the competition, he said.

If Sikorsky is acquired by either Bell or Boeing, the number of American helo makers drops from three to two, which drastically reduces competition, he said.