United Technologies Corporation Explains Why Spinning Off Sikorsky Is 'The Right Thing To Do'

United Technologies Corporation

is contemplating selling off its helicopter business, Sikorsky. Gregory Hayes, United Technologies CEO, was on CNBC Thursday to explain why he thinks it is the right thing to do for the company. Creating Value "What we have been doing for the last 5 or 6 years under Louis [Louis Chenevert, former UTX CEO] are things we all agree were the right things to do for the business," Hayes said. "We bought Goodrich, we spent $18 billion, we made a big bet n commercial aerospace there and we also bought our partner Rolls Royce, when we bought IAE for about, turned out be about $5 billion, again betting on the future of commercial space. We also did $8 billion of divestitures." He continued, "The issue with Sikorsky here is not that Sikorsky is a bad business. Sirkosky is a great helicopter business, as we think about the portfolio though it's really a question of – how you position yourself for above GDP growth, for a higher margin into the future? And we are looking at the next 10 years and well it's a difficult decision to spin-off Sikorsky. The fact is we think it's the right thing to do because it creates value." The Problem With Sikorsky Hayes was asked why he thinks Sikorsky won't have an above GDP growth. He replied, "Sikorsky is a great business, they have got about $16 billion backlog. They won a bunch of programs last year, the new presidential helicopter, the combat rescue helicopter, the joint multi role, they have got a great future, but defense spending is going to be the [governor] and growth for them." "Two thirds of their sales go to the DoD today and as much as I like doing business with the Dod, there's huge uncertainty as well as the margin cap," Hayes concluded.