Lockheed Martin to acquire Sikorsky Aircraft

Published 4:00 am Tuesday, July 21, 2015

Two major Pike County employers will merge as part of Lockheed Martin’s plans to acquire Sikorsky Aircraft, and local officials say the impact should be positive for the community.

Lockheed on Monday announced its plans to purchase Sikorsky Aircraft from United Technologies for a cash sum of $9 billion. The purchase is set to close in late 2015 to early 2016, and former Troy mayor and member of the Pike County Economic Development Corporation Jimmy Lunsford said that was about when he expected Pike County to see the impacts of the purchase.

“We’ve been reading financial articles and from what they’ve proposed, our impacts would be positive,” Lunsford said. “We know the Troy operation within their company would be one of the lowest cost-basis divisions in the company, and I would anticipate as previous discussion with the company implied that the impact would be positive for Troy.”

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Both Lockheed and Sikorsky have facilities in Pike County. Lockheed’s Pike County Operations produces Missile and Fire Control programs and employs 325. Sikorsky Support Services, located at the Troy Airport, manufactures helicopters and employs 650.

Local representatives for both Sikorsky Aircraft and Lockheed Martin were not available

When United Technologies announced it was considering selling or spinning off the Sikorsky business in June, Sikorsky officials announced plans to cut up to 1,400 jobs, or 9 percent of its workforce.

Lunsford said those cuts had not had any local impact, and merger could actually mean growth for the local plan. Sikorsky’s commercial helicopter business had suffered recently, as the drop in oil prices cut into its business with oil and gas companies. The Troy facility, however, manufactures and rehabs helicopters for military use. “I think we could see some growth with this merger,” Lunsford said.

As for Sikorsky, Lunsford said the company has been “a great, great corporate citizen here. They’ve done a wonderful job. They’ve grown dramatically here in Troy. We think, even by changing the name on the front of the building, we’ll still see them grow and do what they do now. Hopefully, we’ll continue to see an increase in growth.”

Founded on Long Island in 1925, Sikorsky manufactures and services military and commercial helicopters and fixed-wing aircraft. In 1929, it was acquired by the predecessor of United Technologies, United Aircraft and Transport Corporation.

In addition to Black Hawks, Sikorsky makes a range of commercial and military helicopters, including the S-76 and the S-92 commercial helicopters and the Seahawk military helicopter. It is also developing the CH-53K heavy-lift helicopter for the Marine Corps and the HH-60W combat rescue helicopter for the Air Force.

Last year, Sikorsky won the contract to build the next generation of Marine One helicopters, which are used to transport the president.

The purchase would further cement Lockheed’s designation as the world’s biggest military contractor. Lockheed officials said the purchase is part of its efforts to focus more on military hardware than on less profitable government services.

“Separately, we announced two portfolio shaping initiatives today, the acquisition of Sikorsky Aircraft and a strategic review of our IT services business in IS&GS and our technical services business in MFC. We look forward to welcoming Sikorsky to the Lockheed Martin team and determining the best path to long-term growth for the business under review,” said Lockheed president and CEO Marillyn Hewson.

Lockheed is expected to purchase Sikorsky with money from new debt issuances and available cash. Sikorsky and United Technologies Corporation have agreed to make a joint election under the International Revenue Code. This election will generate an estimated cash tax benefit of $1.9 billion for Sikorsky and its shareholders.

In other news on Monday, Lockheed officials released quarterly earnings statements. Lockheed boasted net sales of $11.6 billion, net earnings of $929 million, generated $1.3 billion in cash from operations, repurchased 4.9 million company shares for a total of $937 million and increased the 2015 outlook for operating profit and earnings per share.

The Pike County sector of operations in Missile and Fire Control’s net sales for the second quarter of 2015 decreased by 6 percent or $114 million. The decrease was attributed to lower net sales of approximately $115 million for air and missile defense programs due to fewer deliveries and reduced development activities.

MFC’s operating costs also decreased $42 million or 12 percent compared to the same period last year. This decrease was attributed to lower operating profits of approximately $30 million for fire control programs due to lower risk retirements.