Sikorsky Aircraft Corp., the wholly-owned subsidiary of diversified business conglomerate United Technologies Corp. UTX, is reportedly considering plans to retrench 1,400 jobs in the next year as it counters lower demand on falling oil prices. The layoffs will include 342 employees on the direct payrolls of Sikorsky and 560 contractual staff in the U.S. and 510 workers in Poland.
Sikorsky is one of the world’s largest manufacturers of military and commercial helicopters. It also provides aftermarket helicopter and aircraft parts and services for its parent company United Technologies. Major production programs at Sikorsky include the UH-60M Black Hawk medium-transport helicopters and HH-60M Medevac helicopters for the U.S. and foreign governments, the S-70 Black Hawk for foreign governments, the MH-60S and MH-60R helicopters for the U.S. Navy, the International Naval Hawk for multiple naval missions, and the S-76 and S-92 helicopters for commercial operations.
With sustained decline in oil prices, major oil exploration companies have reduced their capital investments in offshore oil exploration projects. In addition, macroeconomic challenges have led to softness in demand in the global military market as well. Consequently, Sikorsky is likely to consolidate some of its operations in Poland, Pennsylvania and Connecticut facilities.
Speculations are rife that United Technologies is planning to divest the loss-making Sikorsky to improve its overall profitability. European companies seeking to enter the U.S. helicopter manufacturing market could be potential candidates for the bid. Airbus Group N.V. EADSY, The Boeing Company BA and Lockheed Martin Corporation LMT are also exploring options for the buyout. The layoffs, however, are independent of the proposed divesture of Sikorsky and are based on the market dynamics.
Based in Hartford, CT, United Technologies provides high-end technology products and services to the building systems and aerospace industries worldwide. The company is a diversified business conglomerate serving various end markets, such as, aerospace, defense and commercial construction. The business diversification allows the company to remain profitable even in a tough economic climate.
The operations of the company are primarily classified into two principal businesses: commercial and aerospace. Under its commercial business, the company has Otis and the UTC Climate, Controls & Security division, which combined the former Carrier and UTC Fire & Security divisions. The aerospace business of this Zacks Rank #3 (Hold) stock consists of Sikorsky aircraft and the UTC Propulsion & Aerospace Systems, which includes UTC Aerospace Systems and Pratt & Whitney divisions.
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