Graham Warwick/Washington DC

Consolidation of the US aerospace industry is entering a new phase, with several major players divesting non-core businesses. Northrop Grumman says it is "exploring strategic alternatives" for its commercial aerostructures business, Raytheon has sold its troubled engineering and construction business, and BFGoodrich is looking for a buyer for its polymers and chemicals unit.

Reports have identified US investment firm Carlyle Group as a potential buyer for Northrop Grumman's commercial aerostructures unit, part of its larger Integrated Systems and Aerostructures sector. The unit accounted for $1.4 billion of the company's $9 billion sales last year.

Northrop Grumman linked with Carlyle in 1992 to buy the Vought Aircraft operations of LTV, which form half of the commercial aerostructures business. It bought out Carlyle's stake in 1994. A large Boeing subcontractor, the unit produces 747 fuselage and tail sections, parts for other 7-series airliners and C-17 tail sections and nacelles, plus Gulfstream V wings.

As Boeing production rates slow, the unit's revenues are declining, while it does not fit with Northrop Grumman's electronics and information technology-oriented strategy. The acquisition of Norwegian airspace management systems firm Navia Aviation for $35 million, and a move for the bomb disposal subsidiary of the UK's Alvis, indicate the company's new direction.


BFGoodrich, meanwhile, hopes to sell its performance materials segment by year-end. The polymers and chemicals business accounted for $1.2 billion of BFG's $5.5 billion turnover last year.

Aerospace accounted for $3.6 billion of BFG's 1999 sales, boosted by the merger with Coltec. The segment has been reorganised into four operating groups: Electronic Systems and Engine and Safety Systems (both new), a combined Aerostructures and Aviation Services group, and Landing Systems. The company's Euless, Texas, landing gear facility will close.

Raytheon, similarly, has moved to focus on core activities, agreeing to sell its struggling Engineers &Constructors (RE&C) subsidiary to civil engineering firm Morrison Knudsen for $800-820 million. RE&C accounted for $2.7 billion of Raytheon's $19.8 billion turnover last year, but is beset by rising costs and project delays.

Raytheon will retain responsibility for four large, fixed-price projects that are close to completion, and partially indemnify Morrison Knudson on completion of another. The company expects to record a pre-tax loss of $250-300 million in the first quarter to cover the divestiture. Raytheon sold its flight simulation unit in January and some analysts believe the electronics giant's general aviation arm Raytheon Aircraft, could go too.

Source: Flight International