Story ID: BCLockheedMartinATM07202015
Lockheed Martin's 'Strategic Review' Targets ATM Business
By: Bill Carey
Caption: The defense contractor plans to sell or spin-off its government IT and technical services businesses, including air traffic management.
Word Count: 371
In addition to the blockbuster plan it announced on July 20 to acquire Sikorsky Aircraft, Lockheed Martin said it will undertake a strategic review of its government information technology and technical services businesses, including air traffic management (ATM), with an eye toward selling or spinning them off. That could significantly change the ATM marketplace.

Presenting the defense contractor’s second-quarter financial results, Lockheed Martin CEO Marillyn Hewson said the strategic review will be completed this year and “could result in one or more transactions” involving the targeted businesses. “There’s a number of possible scenarios,” she told analysts during a conference call.

Subject to the strategic review are five units within the company’s Information Systems and Global Solutions (IS&GS) segment—ATM, technical services, government/enterprise IT, commercial cyber security and government healthcare IT—and the technical services business of its Missiles and Fire Control segment. Those units combined represent about $6 billion in estimated 2015 annual sales and 17,000 employees.

Through its enroute automation modernization (Eram), Ocean 21 and SkyLine systems, Lockheed Martin as lead systems integrator claims to guide more than 60 percent of the world’s air traffic and 80 percent of its managed oceanic airspace. In April, the Federal Aviation Administration announced the completion of the Eram system installation at 20 centers nationwide that manage high-altitude traffic, following 13 years in development.

FAA oceanic centers in Oakland, Anchorage and Islip, N.Y., use the Ocean 21 automation system Lockheed Martin developed with Adacel Technologies and Airways Corporation of New Zealand. The company’s Skyline ATM system is an international offering used in Europe and Asia.

Hewson said Lockheed Martin’s $9 billion proposed acquisition of Sikorsky supports the company’s strategic objective of securing its core defense business. The businesses under review may fare better being spun off as independent entities to shareholders or sold outright.

“We have a proud legacy as a world leading government IT services and technical services provider,” Hewson said. “However, market dynamics and trends led us to believe that these businesses may potentially achieve greater growth, which is good for our employees, and create more value for our customers and stockholders, by operating outside of Lockheed Martin.”