As many companies and or industries are currently being forced to deal with the detrimental effects of the recession, certain sectors of the aircraft industry are performing business as usual. The constant need for newly renovated aircrafts and updated fleets, for both military and commercial purposes, keep the supply and demand of the industry more consistent than that of companies that produce products that people do not require. United Technologies Corporation is currently communicating with Goodrich Corporation; possibly attempting to create a deal where United Technologies Corporation purchases Goodrich Corporation.
United Technologies Corporation is valued at $68.6 billion and is still expanding. Two years ago the company purchased the security sector of General Electric for $1.8 billion further widening its production. The multi-billion dollar business produces Pratt and Whitney aircraft engines, Sikorsky Helicopters, and Otis Elevators. As the expansion progresses, it fills the needs of more consumers mostly in the Business-to-Business (B2B) Market.
The company, Goodrich Corporation, which United Technologies may attempt to purchase, is a member of the aircraft industry producing a wide variety of products including landing gear, interiors, and electronics. The merger of the companies would allow United Technologies Corporation to appeal to more businesses and expand both companies’ revenues and profits. Currently Goodrich Corporation is producing at a gain and made $578.7 million in profit last year. With total revenue of roughly $7 billion the company took huge leaps. Still expanding and with the market demanding products, the company expects to increase in size $1.1 billion by next year.
Astonishing figures have leaded United Technologies Corporation to desire to purchase the ever-expanding corporation, Goodrich. This expansion would provide both companies with more resources and require less outsourcing, therefore decreasing the amount of revenue leaving the corporation. Hopefully, this would lower manufacturing costs as well as increase production. Shortly after information struck the public about such an acquisition, Goodrich’s stock price rose 22% to $113 and ended at a 7% increase at $92.89. This movement in the stock market shows that interest in the companies are high and that many speculate that the companies will prosper, either as separate or single entities.
I find it interesting that stock prices of such a large corporation have the ability to vary with such large increments. Speculation may play a large roll in the aviation industry. If United Technologies Corporation purchases Goodrich Corporation; revenues should increase resulting in a rise in stock price.
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