Sikorsky considers shuttering, selling light helicopter lines

[yasotay]

I don't think any foreign companies will be allowed to buy Sikorsky, assuming it is even marketed. At least not until after the Presidential Helicopter.

 

[Moose]

A foreign buyer is not out of the question, after all United Defense is now BAE Systems L+A, As long as the corporate structure allowed the "Sikorsky" subsidiary to remain a US company. Airbus or Finmeccanica would be problematic but not impossible. But the most likely path would still seem to be a US company.

 

[FighterJock]

If the rate of consolidation continues, I can see a future where there will only be one giant aircraft manufacturer in the US and that will be truly sad.

 

[Triton]

If the rate of consolidation continues, I can see a future where there will only be one giant aircraft manufacturer in the US and that will be truly sad.

We are a sentimental lot here on "Secret Projects" who love aviation and love aviation history. Aviation is like any other mature industry that sees consolidation. There are the big three domestic automakers in the United States: General Motors, Ford, and Fiat Chrysler Automobiles (FCA). Many times, we have almost seen the domestic auto industry go down to the big two and over the years we have lost many automotive brands.

Do automobile enthusiasts lament the loss of Saab, Mercury, Pontiac, Oldsmobile, and/or Saturn? Do they speak of the legacy of The Pontiac Spring and Wagon Works and of Albert G. North and Harry G. Hamilton? The legacy of Ransom E. Olds of Oldsmobile? The legacy of Edsel Ford and Mercury?

Young industries have many competitors and consolidation occurs over time to create economies of scale until mature industries only have a few players, that's capitalism boys and girls. We just don't have the same emotion and sentiment invested in products like steel or toilet paper because we love things that fly.

Perhaps the founders of aviation firms would be surprised that the last names standing were Boeing, Lockheed Martin, and Northrop Grumman in the United States, but I don't believe that they would be surprised by consolidation in the aviation industry. I would be very surprised if the majority of investors in United Technologies knows who Igor Sikorsky was, or the history of Sikorsky Aircraft, or even cares about the Sikorsky legacy. I am not even sure if the Sikorsky customer cares. Does the United States military have loyalty to any brand?

 

[Stargazer]

Do automobile enthusiasts lament the loss of Saab, Mercury, Pontiac, Oldsmobile, and/or Saturn? Do they speak of the legacy of The Pontiac Spring and Wagon Works and of Albert G. North and Harry G. Hamilton? The legacy of Ransom E. Olds of Oldsmobile? The legacy of Edsel Ford and Mercury?

I assume this is merely a rhetorical question. OF COURSE automobile enthusiasts are just as fond of obscure and forgotten automobile brands and companies as we are for airplanes.

that's capitalism boys and girls.

Nope. That's modern capitalism, and it sucks. Capitalism exists so long as any man can own land or equipment, employ people and make money out of it. That's a perfectly sane and normal way to do things... Even in the days of Taylor, Ford and all the great capitalists, there was room for everyone with an enterprising spirit and a desire to work hard. Don't go telling me that all through the 20th century, when all the great names of aviation (or automobile) were still there, they were not deeply involved in a capitalistic system. Of course they were! So it's not that we are suddenly awakened to capitalism, as you seem to suggest... but rather that capitalism has mutated to become a deeply, intensely perverse system that holds no respect of individuals, values, or anything BUT money for the sake of itself. A monster that devours companies, suburbs, entire economies, pushes countries to bankruptcy, places others in such debt that it would take centuries to get even... And it's only a handful of financiers that hold the leash of that monster, forever making more profit. The only thing they care to "consolidate" in the end is their own wealth. I deeply respect the capitalistic spirit of the early entrepreneurs, I don't believe for a split second in all the communist crap, but believe me, I absolutely LOATHE this world economy and system we have to live in.

I would be very surprised if the majority of investors in United Technologies knows who Igor Sikorsky was, or the history of Sikorsky Aircraft, or even cares about the Sikorsky legacy.

They probably don't know who George Washington was, likely place Paris in England, think Colombia is one of the United States of America, and couldn't care less either. Their sole purpose is to make big bucks, and so long as the dollars roll in, they're cool.

I am not even sure if the Sikorsky customer cares. Does the United States military have loyalty to any brand?

Probably not. But let someone decide to "consolidate" Burger King and McDonald's and you'll see armies get raised up. It's truly a sad world we're living in.

 

[Triton]

"Editorial: Spinning Sikorsky, Bowing To Wall Street"
Mar 24, 2015

Source:
http://aviationweek.com/defense/editorial-spinning-sikorsky-bowing-wall-street

Like any business that has survived for 90 years, Sikorsky has weathered a lot of ups and downs since it was acquired by United Technologies Corp. (UTC) three months before the great stock market crash of 1929. So the recent decision by UTC to spin off the storied helicopter manufacturer says less about Sikorsky than it does about its parent company.

The Pentagon’s leading rotorcraft supplier certainly is in better shape than it was a decade ago, when as a somewhat dysfunctional operation it lost a contract to build a new fleet of presidential helicopters. Now, with a backlog valued at $49 billion, the company has more business lined up than any other military helicopter manufacturer. The big CH-53K is the Pentagon’s largest rotorcraft program, at almost $25 billion, and last year Sikorsky won both the $8 billion U.S. Air Force Combat Rescue Helicopter pact and a re-scoped presidential rotorcraft contract worth $3.2 billion.

Sikorsky also is on the cutting edge of rotorcraft technologies, investing in advanced vehicle autonomy—a top Pentagon priority—and prototypes such as the high-speed X2 technology demonstrator, the S-97 Raider light tactical helicopter and (with Boeing) the SB-1 joint multirole technology demonstrator for the U.S. Army. Market research firm Forecast International projects Sikorsky will remain a leading manufacturer of helicopters for at least 15 years “and likely beyond.”

Credit: U.S. Army

And Sikorsky is profitable. But with the military market in a downturn and its margins capped by the Defense Department, the problem is that it is not making enough money to keep Wall Street happy. It cannot keep up with its two larger sister units, Pratt & Whitney and United Technologies Aerospace Systems, which are suppliers rather than platform builders and have much more exposure to commercial markets. Gregory Hayes, UTC’s new shareholder-focused CEO, notes that Sikorsky’s operating margins of about 10% and projected sales growth are significantly lower than for the company’s other businesses.

Still, UTC stood by Sikorsky in much more difficult times, and we find management’s decision to jettison a perfectly good business troubling. During the global economic downturn, Sikorsky’s robust gains in sales and profits helped offset, to a degree, large declines at the company’s non-aerospace businesses.

The move is emblematic of a shift in the aerospace and defense industry where pleasing shareholders has become paramount, even at the expense of funding research in new technologies and products to ensure long-term competitiveness. Frank Kendall, the U.S. undersecretary of defense for acquisition, has worried aloud that some contractors are mainly interested in generating returns in as little as one or two years.

UTC has not been a shortsighted company—witness Pratt’s $10-billion investment in the PW1000G geared turbofan engine. But giving up Sikorsky is a shortsighted move that could prove to be more of a disservice than a boon to investors in the long run.

 

[Triton]

Mark Huber believes that Sikorsky Aircraft will be broken up when it is spun-off from United Technologies. Boeing purchases the military product portfolio from Sikorsky while Bell Helicopter purchases the general aviation product portfolio.

"AIN Blog: Will Sikorsky be sold whole?"
by Mark Huber
- March 31, 2015, 4:11 PM

Source:
http://www.ainonline.com/aviation-news/blogs/ain-blog-will-sikorsky-be-sold-whole

United Technologies (UTC) appeared to back away from Sikorsky long before new CEO Greg Hayes began dropping hints earlier this year that the technology conglomerate wanted to shed its underperforming rotorcraft subsidiary. The handwriting has been on the wall for the better part of a decade: the complicated nine-year trek to develop, certify and deliver the S-76D; the relatively slow pace of product improvement on the S-92A; and the virtual orphaning of its acquired Schweizer small helicopter division were all clues that UTC’s romance with rotors was over, despite the high-profile, experimental X2 and its military prototype S-97 descendant.

When the latter was unveiled in 2010 it should have been a joyous occasion for Sikorsky. Instead, then-president Jeff Pino lamented, “At this point in the development cycle, it appears that our biggest customer [the U.S. Department of Defense] is unwilling to invest major dollars in future technology. That is the real message that is being sent to us.” His pledge to develop the S-97 alone with industry partners rang hollow; U.S. rotorcraft innovation–both military and civil–ultimately requires DoD funding. Almost every significant U.S. civil helicopter program since the late 1950s was spawned from a military requirement and Defense Department dollars. Last summer the Pentagon did direct some new technology funding that could be applied to the S-97 Sikorsky’s way, in the form of selecting it as a finalist in the Joint Multi-Role Technology Demonstrator Project (JMR-TD); but the amount is not enough to cover costs.

So what happens now? Sikorsky still has a respectable, albeit stale, military business with the time-tested UH-60 Black Hawks and CH-53 Stallions, with the former still winning the occasional foreign military sale. Speculation has abounded that the entire enterprise may be acquired by a solitary buyer from the industry, but that seems unlikely given what will probably be an asking price of nearly $8 billion and the anti-trust phalanx any existing OEM would need to run to get the deal done.

Spinning off Sikorsky as a separate entity also has been mentioned as a possibility, but that likely would produce a tepid response on Wall Street. And Sikorsky will need a steady infusion of funds, either from additional equity or by floating debt, if it wants to remain a player with relevant products in both the military and civil sectors. No, Sikorsky is more likely a “parts and pieces” sale, either indirectly by selling the whole to investment bankers, who would carve it up, or by directly conducting an a la carte bidding war for its separate product lines.

On the civil front Bell seems the logical, and maybe the only, choice to pick up the S-76 and S-92 lines. Doing so would give the Textron unit a larger and more lucrative installed customer base and a complete twin-engine product line that could compete head-to-head with AgustaWestland and Airbus Helicopters, especially for the offshore energy market. Potential suitors for Schweizer seem less apparent, but do not be surprised if the new owners speak Mandarin.

The military side of the house would likely appeal to Boeing, by expanding its offerings beyond the current CH-47 Chinook heavy transport and AH-64 Apache gunship. That is, of course, unless the likes of a Lockheed-Martin gets in the game. For the moment, that appears unlikely, as LMCo seems content with its role as a systems integrator on select rotorcraft projects, including the new Marine One.

Whatever fate awaits Sikorsky, UTC’s signaled divestiture is a powerful reminder of just how difficult the current helicopter market has become for all participants, even those whose parents have deep pockets.

 

[Stargazer]

Mark Huber believes that Sikorsky Aircraft will be broken up when it is spun-off from United Technologies. Boeing purchases the military product portfolio from Sikorsky while Bell Helicopter purchases the general aviation product portfolio.

Easier said than done. If the military products range was absolutely distinct from the civilian one, that wouldn't be too complicated... But Sikorsky has always developed products that could wind up on both markets (probably something that explains the company's longevity, too). Models such as the S-58, S-61, S-70 or S-92 have had long careers both as military AND commercial types. How do you set about splitting the S-92? It doesn't make sense to separate the military and commercial versions of already existing types, since they are built on the same lines and have much in common! It would be more sensible to differentiate between light and heavier helicopters... but Sikorsky has already done that by relinquishing their Schweizer range of helos. Or between helicopters and UAVs... but even that wouldn't work in Sikorsky's case. Despite the great potential of the Cypher and such, they never managed to find a market niche and now Sikorsky seems to have given up on unmanned systems altogether, anyway.

I guess the only way they could perform a split of Sikorsky's activity is by separating the existing products from the upcoming ones. The Raider and Defiant represent a new generation with no commonality to the S-70 and S-92.

 

[yasotay]

The parachutes have started coming out of Sikorsky. Friend of mine says his company just hired a fellow from Sikorsky with an impeccable background.
(Edit) Looking even more grim with the switch out of CEO. Guy with continued potential moved to UTC and a already retired UTC CEO has been moved into Sikorsky.
I sure hope you all are able to tease me this time next year for being a nervous lout, but I am not thinking this is looking good.