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United Technologies is rumored to be planning a sale or spinoff of its Sikorsky helicopters division. Here are three reasons it might sell -- and four better reasons why it shouldn't.TRANSCRIPT
3 Good Reasons for United Tech to Sell SikorskySikorsky’s CH-53E Super Stallion helicopter – the biggest helo in America. Source: Wikimedia Commons
Big Helicopters – Tiny BusinessSikorsky is United
Technologies' smallest business.
With $6.25 billion in revenues last year, Sikorsky is barely
half the size of United Tech's
second smallest business (Otis
elevators).
Otis Elevator Company Building in Portland, Ore. Source: Wikimedia Commons
Big Helicopters – Puny ProfitsSikorsky is also UTC’s
least profitable business. Its 10.3%
operating profit margin is worse than what UTC
earns at any other division.
Ex-Sikorsky, UTC would earn operating margins of 15.6% on average -- half again as good as Sikorsky. Otis alone earns a 21.4% profit
margin!
The innards of an Otis elevator. Source: Wikimedia Commons
Outclassed by the Competition?For that matter, Sikorsky
may be the least profitable helicopter
business in the country. Kaman gets 15.3% profit
margins from its aerospace business.
Textron Bell gets 12.7%. Only Boeing earns
military aircraft (helos and fixed-wings)
margins worse than Sikorsky produces --
9.2%.
A Sikorsky rival: Kaman’s Sea Sprite. Source: Wikimedia Commons
But none of that is the point.
From a purely financial perspective, it might seem like it would make sense for United Technologies to dump a less profitable division, and focus on businesses that make it more money.
But there are even better reasons for United Technologies to try to keep the Sikorsky brand in-house.
Reasons like...
4 Better Reasons for United Tech to Keep SikorskySikorsky’s UH-60L Blackhawk helicopter – the best-selling helo in the world. Source: Wikimedia Commons
UH-60L BlackhawkSikorsky makes
the world's most popular combat
helicopter – the Blackhawk.
Along with derivations such as the U.S. Navy’s
SH-60 Seahawk and HH-60G Pave Hawk used by
U.S. Special Forces, Sikorsky’s Blackhawk helicopter is the best-
selling helicopter in the world.
HH-60G Pave Hawks at work in Iraq. Source: Wikimedia Commons
CH-53E Super StallionIn addition to its
ubiquitous Blackhawks, Sikorsky boasts the
biggest helicopter in the Western world – the CH-53E Super
Stallion. Nearly 100 feet long and
28 feet tall, the Super Stallion can haul close to 18 tons of cargo, or carry as many as 55 soldiers in
its capacious hold.
Sikorsky’s biggest bird: the CH-53E Super Stallion. Source: Wikimedia Commons
“Marine One” Bragging RightsProducts like the
Blackhawk and Super Stallion made Sikorsky
famous. But the company’s marquee
product is the Presidential Helicopter,
“Marine One.”Sikorsky built President Obama’s helo – and is
in line to win the contract for the new
fleet of “Marine Ones,” as well.
Sikorsky H-3 Sea King departs the White House Lawn. Source: Wikimedia Commons
Present at the BeginningIt may be United
Technologies’ smallest division today, but
Sikorsky has been an integral part of UTC since 1929 — back
before Sikorsky was even building helicopters.
Back when it was still building planes like the Sikorsky Clipper flying
boat.
Sikorsky’s Clipper, c. 1935. Source: Wikimedia Commons
And so you see, United Technologies really wouldn’t be
United Technologies anymore without Sikorsky.
It might be a very profitable producer of elevators and HVAC systems...
It might be a producer of quality airplane engines...
but it wouldn’t be United Technologies...
... without its crown jewel.
Without Sikorsky.
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