By Air Marshal B.K. Pandey (Retd) Former Air Officer Commanding-in-Chief of Training Command, IAF

Marillyn A. Hewson,
Chairman, President and Chief Executive Officer,
Lockheed Martin Corporation

Announcement by Lockheed Martin Corporation of the company's move to acquire Sikorsky Aircraft, a business unit of United Technologies Corporation (UTC), for $9 billion, has put an end to all uncertainties and speculations in this regard with which the global aerospace industry was abuzz for the last two months or so. Lockheed Martin emerged as the leading contender in the race for the acquisition of Sikorsky Aircraft, the others in the race being US companies Textron and Boeing. The latter had evinced only peripheral interest and did not pursue the deal with any zest. Airbus Helicopters, the only non-American company that was believed to be a likely contender, did not take active interest in the acquisition deal in all likelihood on account of the anticipated objection by the US government for sale of a US firm to a non-American company. That left only Textron, the maker of Bell helicopters, as the only other serious competitor to Lockheed Martin. However, it appears that the $9 billion price tag for Sikorsky Aircraft was a powerful deterrent for Textron that withdrew from the race after its offer for merger with the company was turned down by UTC. The deal between Lockheed Martin and UTC is expected to be finalised by the end of this year or early next year subject to review and clearance by the US regulatory authorities.

UTC is an American multinational conglomerate with its headquarters in the United Technologies Building in Hartford, Connecticut and has seven business units. Three of the seven business units are dedicated to the aerospace industry. These are Sikorsky Aircraft, Pratt & Whitney and UTC Aerospace Systems. Of these three, Sikorsky Aircraft, established in the US in 1925 by Kiev-born Russian engineer who migrated to the US, has over two dozen rotary wing platform designs to its credit Today the company has a number of successful products that are currently in use by the US military as also by the armed forces of a number of other countries in the world. The company is best known perhaps for the famous UH 60 Black Hawk attack helicopter.

Sikorsky Aircraft that is focussed primarily on the manufacture of military aircraft, has reportedly been in difficulty on account of shrinking military budgets all over the world. Armed forces of several major nations have scaled down their inventory holdings thereby reducing demand for military rotary wing platforms. The parent company UTC probably considered it wiser and an opportune moment to shed Sikorsky Aircraft as this business unit was becoming increasingly difficult to sustain as a financially viable entity. The other two business units i.e. Pratt & Whitney and UTC Aerospace Systems have sizeable portion of their products associated with the civil aviation industry and are relatively easier to sustain as profitable ventures.

As per Greg Hayes, the Chief Executive Officer of UTC, "Exiting the helicopter business will allow UTC to better focus on providing high-technology systems and services to the aerospace and building industries and to deliver improved and sustained value to our customers and shareholders."

For Lockheed Martin, acquisition of Sikorsky Aircraft will surpass its largest purchase so far i.e. of Martin Marietta in 1995. Today Lockheed Martin is one of the leading companies in the world in the regime of aerospace and defence industry. Nearly 80 per cent of its revenues come from military sales. This American aerospace giant has been responsible for the fifth generation combat aircraft such as the F-22 Raptor and the F-35 Lightening II Joint Strike fighter with which the company appears to be in some difficulty. The acquisition of Sikorsky Aircraft will enable Lockheed Martin access new markets abroad and add value to its portfolio through enhanced sales in the military segment of its business. The company can then hope to compete successfully with Boeing, and Northrop Grumman, maker of the B-2 stealth bomber. The CH-53K heavy lift military helicopter which is being developed by Sikorsky Aircraft for the US Navy would be a key attraction for Lockheed Martin.

The situation for Lockheed Martin was summed up appropriately by Marillyn Hewson when she said "Sikorsky is a natural fit for Lockheed Martin and complements our broad portfolio of world-class aerospace and defence products and technologies."