The western military market is now in a downturn, and this is a factor behind plans unveiled this week by United Technologies Corporation, the elevator and aircraft engine maker, to spin off Sikorsky, its helicopter business.
Modernisation programmes for the helicopter fleets of the US army and marine corps — the world’s two most important customers for rotorcraft — have been shelved because of budget cuts and the wind down of the Iraq and Afghanistan wars.
“The basic problem with the US helicopter market is that the leading customer, the US military, lacks the funding to modernise,” Loren Thompson, an analyst at the Virginia-based Lexington Institute, says. “Sikorsky has made a series of bets on future military rotorcraft but, at the moment, the army and the marine corps simply don’t have enough money to buy many helicopters.”
Meanwhile, helicopter orders from energy companies — which for several years filled the gap created by declining military sales — have fallen off sharply after the oil price plunge since last summer made expensive offshore oil exploration and production less attractive.
This combination of weak military and civilian demand for helicopters has forced Greg Hayes, UTC’s new chief executive, to recognise a longstanding issue, according to Richard Aboulafia, analyst at the Virginia-based Teal group. While other UTC businesses — such as Pratt & Whitney, the aerospace engine maker — supply kit to outside companies that fit the equipment into a finished product, Sikorsky is alone in the group as a systems integrator.
