SCOTTSDALE, ARIZONA — For Honeywell Aerospace CEO Jim Currier, it’s time to show investors what his company can do as a standalone business.
“We have a purpose-built management team just solely focused on one strategy, one mission as opposed to disparate missions of a conglomerate,” Currier told CNBC at his company’s investor day.
When it’s officially spun off from its parent company later this month, Honeywell Aerospace will be aggressively pushing its advantages in avionics, engine control systems and a host of technologies from the nose to tail of commercial airplanes, business jets and military aircraft.
The hope is to accelerate growth.
As a standalone company, Honeywell Aerospace expects to generate full-year 2026 adjusted earnings before interest and taxes of $4.65 billion to $4.75 billion with free cash flow in the second half of the year of between $1 billion and $1.5 billion.
By 2030 Honeywell is targeting annual earnings of at least $6.5 billion and full-year free cash flow of at least $4 billion.
“The greatest growth for us is occurring in the commercial transport market and in defense and space,” Currier said Wednesday. “We have opportunities where we are well positioned in our products and technologies.”
Currier added Honeywell has “record” backlog orders from Airbus and Boeing.
Why separate Honeywell
As a part of Honeywell International over the last several decades, the aerospace division became one of the largest manufacturers and suppliers in the commercial and business aviation markets as well as in the defense industry.
From flight management systems in the cockpit to engine controls under the wing to the auxiliary power unit in the tail, its technology and components are in thousands of planes.
Last year the business generated profits topping $4.2 billion with margins of 24.5%.
Those results failed to impress investors, however, because they were clouded by the overall results of Honeywell, a conglomerate struggling to generate the stock returns enjoyed by the market and competing companies in the last several years.
Since June 2023, Honeywell shares have gained about 20%, compared to the S&P 500’s roughly 77% gains.
That underperformance is a primary reason Honeywell decided in 2024 to eventually break up operations into three separate companies: Solstice Advanced Materials, Honeywell Technologies and Honeywell Aerospace.
“Essentially, on the other side of the separation … each business is positioned so well for the market it serves,” Honeywell CEO Vimal Kapur told CNBC last month.
Converting aerospace skeptics
For investors, Honeywell Aerospace represents a pure play on the growth of commercial aviation and the defense industry.
That focus on aviation and defense has paid off for GE Aerospace, which has seen its stock jump about 125% since it became a standalone company in April 2024, easily outpacing the S&P 500 — up almost 45% over the same timeframe — and Honeywell, which is up almost 20%.
Currier believes Honeywell Aerospace has the team and technologies to capitalize on the expected continued demand for air travel worldwide.
The company is targeting organic annual sales growth of 6% to 8% through 2030, with annual earnings growth of 9%.
While Currier is optimistic about growing profits as a standalone company, Honeywell Aerospace has faced a number of questions about recent challenges with key suppliers during the first quarter.
The company says the temporary issues were tied to the war in the Middle East, which weighed on its engines and control systems divisions in January and February.
Since then, Honeywell Aerospace executives say the problems with some of its suppliers have been corrected.
Nonetheless, analysts will likely push Currier for a greater understanding of the state of the Honeywell Aerospace supply chain.
“Bottom line: This is an opportunity for management to convert a generally skeptical crowd of aerospace specialists,” said Wolfe Research analyst Nigel Coe in a recent note.
