The future belongs to the bold

This piece first appeared as a Comment in the 2 July issue of Flight International

When Pratt & Whitney and Sikorsky parent United Technologies closed its $18 million deal to buy Goodrich last year, it set out a basket of business units for sale – partly to satisfy competition authorities, and partly to pull in some cash to offset the cost.

The most storied name put on the block was ­Rocketdyne. Despite its history as builder of engines for the Moon rockets, Space Shuttle and current US rocket types, the business proved difficult to sell.

As UTC said at the time, Rocketdyne is a good ­business, but without a visible US space policy there is no real growth in it. Aerojet must think otherwise, or it wouldn’t have stumped up $550 million – more than its own market capitalisation.

For now, what Aerojet has bought is a revenue stream that will hopefully justify the outlay. Further on it envisions a mix of its own technology and Rocketdyne’s powering it into the lead in a defence market dominated by hypersonic missiles. If flight at Mach 4-6 proves practical then Aerojet may have turned a coup, but transformative acquisitions are always risky.

The implications go far beyond Aerojet. For sure, many other companies reliant on tight US defence spending are also having to consider risks that probably wouldn’t have passed corporate muster during the ­pre-crisis gravy years. The future belongs to the bold – assuming they don’t crash and burn.

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