Investing.com -- United Technologies Corporation (NYSE:UTX) is mulling the spin-off of a longtime unit known mostly for producing the iconic Black Hawk helicopter, CEO Gregory Hayes said at its annual investor conference on Thursday.
The Hartford-based multinational conglomerate, which has a market value of more than $100 billion, will engage in a lengthy review on whether to sell Sikorsky Aircraft, one of the world's largest helicopter manufacturers. The process could be completed by the end of the year, Hayes said.
Besides producing the legendary Black Hawk, Sikorsky is also the manufacturer of the Presidential Marine One helicopter and a host of other defense aircrafts. Sikorsky, the largest helicopter producer in the United States, derives more than two-thirds of its sales from defense contracts.
"Today, Sikorsky is a world leader in the design, manufacture and service of military and commercial helicopter platforms. It has unmatched technological capabilities, outstanding people and a strong backlog," Hayes said in a statement. "Looking to the future, we are evaluating whether Sikorsky's unique business as a rotorcraft OEM with a predominately military customer base is best positioned as a stand-alone company, and whether a separation would allow United Technologies to better focus on providing high-technology systems and services to the aerospace and building industries."
While Sikorsky posted revenues of more than $7 billion last year, it ceased being "as attractive as the rest of the business," Hayes told investors. In 2014, Sikorsky's operating profit margin of 2.9% significantly fell behind other units of the company. Sikorsky's UH-60 L Black Hawk has manufacturing cost of more than $6 million, while its Air Force HH-60 G Pave Hawk has a price tag of more than $10 million.
Shares in United Technologies rose 2.53% or 2.99 to 121.33 on Thursday. Since Hayes succeeded former CEO Louis Chenevert in December, United Technologies is up more than 5%.
United Technologies also owns jet engine unit Pratt & Whitney and UTC Aerospace Systems.