https://www.barrons.com/articles/ge-stock-honeywell-merge-aerospace-2a97740c
Behind a paywall.
Dont forget that barons is a complete tool.. they get paid to publish articles by companies. This is what "floating an idea" looks like.
9 replies (most recent on top)
I believe it will happen. The antitrust issue will probably be resolved this time.
Foreign citizens see and dispatch approval for every share folder access and know the name and skills of every person working every we-pon, building fire alarm, and oil refinery in Honeywell.
Honeywell Leadership bet their careers on globalization, moving jobs to India & China, cost reduction, IR&D reduction, etc.
But the Chinese stole Honeywell technologies to build C919. What???????? that was break through markets with no ROI .
But post COVID, globalization is dead!
Ukraine war has made defense business juicy but wait most of Honeywell leaders are non-us citizens, Indian employees are milking us dollars, Chinese are stealing! WHAT? COST synergies with no innovation and with negative ROI: where do we cut now?
Okay don't panic, lets merge with GE Aerospace, and find synergies! LOL
Jack welch lives on!
Possible they would split off engines now that they have viable customer funding to create a modern design. Why would GE want Honeywell? They just finished dumping other units to focus. Now they go buy the antique T55 and 131 ?
Honeywell is fishing for new businesses/markets right now. Aerospace as a whole is tied to globalization. Unwind globalization, sprinkle with telepresence and the outlook is indeed bleak. Combine this with the unwinding of oil occurring in china and Honeywell has very little growth potential outside of defense.
One possible bright spot might be urban air mobility.. but this market is VASTLY over hyped at the moment and has significant dependency on overall air travel built into the models. Urban mobility’s first use cases always include .. daily commutes and home to airport. The same two use cases impacted by those previously mentioned mega trends of remote work and deglobalization
I would agree with you and consider recent behavior (last few years) as indicative of this however the strange thing is that all of Honeywell has been operating the same way since DA's tenure. Wild speculation but could it be that Honeywell is to be broken up entirely, not just Aero?
The draconian cost cutting and the whole hierarchy heavy compensation model of millions and millions at the top then a hockey stick drop in compensation at the next level down, combined with the inexperienced risk riddled leadership and HR lackeys, has been the culture of the entire company, not just Aero. The outgoing CEO leads like he’s getting ready to divest at any minute. Squeeze, squeeze and squeeze some more.
I worked at Phoenix Engines when GE was taking over back in the day. Layoffs were draconian, but the anti-trust issues then haven't changed much now if all Aerospace is involved. Engines had to divest some engine lines, but the Europeans ki-led the deal citing too much overall control of the airframe.
From the article:
“A combined GE/Honeywell Aero asset would be comparable in size and scope to Raytheon’s Pratt and Collins Aerospace businesses, although with significantly higher margins and a superior market position in commercial aero engines.”
Planning for a merger would sure make a lot of the previous ~5 years at Honeywell Aero make sense. All of the draconian cost-cutting, absurd focus on Airbus/Boeing survey results, etc.
At some point, Honeywell Aero leadership was given a vision and a plan to "go do," and they've been trying to execute it. All us underlings aren't told the plan, but we can make some educated guesses based on the actions of leaders.
It's incredibly clear that the plan for Aero doesn't include any kind of planning for growth or innovation. Rather, the planning appears to be "cut costs as low as possible," which seems to be the first step in setting up for the best bang-for-the-buck in a merger.