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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.

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.

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Sikorsky with link Sikorsky with link Presentation Transcript

  • Sikorsky’s CH-53E Super Stallion helicopter – the biggest helo in America. Source: Wikimedia Commons 3 Good Reasons for United Tech to Sell Sikorsky
  • Big Helicopters – Tiny Business Sikorsky 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 Profits Sikorsky 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...
  • Sikorsky’s UH-60L Blackhawk helicopter – the best-selling helo in the world. Source: Wikimedia Commons 4 Better Reasons for United Tech to Keep Sikorsky
  • UH-60L Blackhawk Sikorsky makes the world's most popular combat helicopter – the Blackhawk. Along with derivations such as the U.S. Navy’s SH-60 Seahawk and HH60G Pave Hawk used by U.S. Special Forces, Sikorsky’s Blackhawk helicopter is the bestselling helicopter in the world. HH-60G Pave Hawks at work in Iraq. Source: Wikimedia Commons
  • CH-53E Super Stallion In 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 Rights Products 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 Beginning It 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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