Jan. 28--United Technologies Corp. declined on Monday to discuss published reports that it is considering a sale or spinoff of Sikorsky Aircraft, which faces challenges in an era of lower Pentagon spending for helicopters.
Defense News, which first reported the deliberations, cited unnamed sources who said that a spinoff or divestiture are the most likely options for the Stratford-based helicopter manufacturer. The New York Times reported much the same, though it added that discussions were preliminary and could result in no deal.
John Moran, a spokesman for Hartford-based United Technologies, said the company does not comment on market rumors.
Shares of United Technologies closed 1.8 percent higher on Monday, a suggestion that the sale had some market interest, one analyst said.
Industry analysts said Monday that rumors that United Technologies wants to sell Sikorsky are common, and that the new reports, in their opinion, don't seem to hold any more weight than previous ones. If true, however, the move could have an underlying logic, analysts said, as the Pentagon lowers its demand for helicopters and United Technologies could definitely use the cash.
"It's not inconceivable," said aerospace analyst Richard Aboulafia of the Teal Group in Fairfax, Va.
Some analysts viewed a sale or spinoff of Sikorsky as doubtful.
"While spinoffs are indeed back in vogue across the industrial sector, our take is that a Sikorsky divestiture is unlikely," Citibank analyst Deane Dray said in a research note that called the Defense News report "out-of-left-field unsubstantiated speculation."
He added: "The business is in the earliest stages of a meaningful recovery and that the timing of a divestiture would not make sense."
The Stratford helicopter manufacturer has spent the past few years dealing with lower demand from the Pentagon, leading to cost-cutting and lower profits. The division amounted to 10 percent of United Technologies'$62.6 billion in overall sales last year and had the lowest profit margin of the company's four divisions.
Sikorsky had at least two significant rounds of layoffs in 2013. In June, it eliminated about 200 salaried jobs, mostly in Connecticut, as company President Mick Maurer cited Pentagon cutbacks in spare parts orders. In October, the company announced a layoff of about 200 hourly jobs, again mostly in Connecticut.
Despite those cuts, about half the company's overall workforce remains in its home state, where Sikorsky has about 8,300 employees. Sikorsky is the United Technologies division with the highest percentage of its total workforce in Connecticut.
Sikorsky President Jeffrey Pino retired in mid-2012 at age 57, as United Technologies was working to push profit margins from lagging levels in the recession. He was replaced by Maurer, a graduate of the United States Naval Academy.
Aboulafia said that Sikorsky rumors are common and that he hasn't heard a sale was being discussed. He said, however, that Sikorsky's place has never fully been cemented in the manufacturing conglomerate that includes Otis Elevator, Carrier air conditioning, Pratt & Whitney engines, and UTC Aerospace Systems.
"Sikorsky was always an unusual part of UTC, everything else was building systems, air conditioners and aircraft components and engines," he said.
That combined with a scaled-back defense budget that is cutting into Sikorsky's revenues, and United Technologies' need for cash after its recent multibillion dollar purchase of Goodrich Corp., make a sale plausible, Aboulafia said.
Another view is that the rumors are a "reflection of how Pentagon demand for rotorcraft is softening," said Loren Thompson, a defense consultant and chief operating officer of Lexington Institute, a Virginia-based think tank.
He too said that rumors of a sale have been common for years, adding that "Sikorsky looks pretty good for the next several years, but the military services in general are not encouraging optimism about when they are going to buy new rotorcraft."
Courant staff writer Dan Haar contributed to this story.
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