21 July 2015 — This is the big news of the summer. While ago in Paris for the biannual Le Bourget International Air Show the question was on every expert’s lips — who will save Sikorsky ? —, Lockheed Martin has announced that it is ready to buy Sikorsky Aircraft from UTC for over $8 billion, US news agency Reuters reported on Sunday. Such a deal would enhance Lockheed Martin’s dominance in the aerospace market, while adding a civil element to its mostly defense-oriented trade. The demand for military and civil helicopters has softened in recent years, primarily due to reduction in request from the military and offshore operators in the oil and gas business whose choice rather swinger to European-made rotorcraft with Airbus Helicopters and Agusta Westland in the lead.
Lockheed is likely to preserve the highly historical Sikorsky brand and business operation instead of integrating it into its already huge Aeronautics division, which had revenues of over $14 billion last year. If approved, the deal will be the largest acquisition of Lockheed martin since it bought he Martin Marietta Corporation for about $10 billion two decades ago. UTC in March said it would explore alternatives for Sikorsky, which accounted for $7.5 billion in sales last year out of total UTC revenues of $65 billion. In June, it said it would exit the helicopter business and sell or spin off Sikorsky, which expects slower revenue growth and has lower profit margins than other UTC divisions. Sikorsky’s first-quarter operating profit dropped 11 % on a 7 % fall in sales. In June, the unit announced 1,400 job cuts and said it would consolidate facilities.
Lockheed Martin and Sikorsky Aircraft have already cooperated in several projects, primarily the naval Anti Submarine and Surface Warfare (ASuW) MH-60R (Romeo) programme for the US Navy. Lockheed’s main competitor Boeing, which also competes with Sikorsky with its heavy lift and tilt-rotor aircraft, has teamed up with Sikorsky to develop a next-generation helicopter for the US military.
As for UTC, Cutting ties to Sikorsky will let the company focus on producing jet engines, air conditioners and elevators while leaving to Lockheed Martin the very different job of supplying rotary-wing aircraft to the US and foreign armed forces.
By Jean-Michel Guhl
