Honey, i shrunk the business

opinion

by Alasdair Whyte

July 6, 2026

Apart from the new orange on invoices, customers will continue to deal with the same people and see little change.

Honeywell has always been great at guerilla marketing. Before major business jet shows, the company would sneak into local hotels and add its red logo to the thermostat in each room. It guaranteed that Honeywell was the first thing you saw in the morning and the last thing at night.

But now it will need to redo them all. Honeywell Aerospace has been spun out from the rest of the conglomerate – which is now called Honeywell Technologies. Shareholders got one Honeywell Aerospace share for every two Honeywell Technologies shares.

“Today marks the start of a new era for Honeywell Aerospace,” said Jim Currier, president and CEO of Honeywell Aerospace. “As an independent aerospace and defence company, we are fully dedicated to our mission to protect and advance the promise of flight to create a safer, more connected world. We are poised to deliver significant value for our customers and shareholders by leveraging a best-in-class operating system to expand our leading market positions, investing in our supply base and innovation to drive profitable growth, and pursuing disciplined capital allocation backed by a strong balance sheet.”

While Currier – who has been in aerospace at the company for almost 20 years – has welcomed the spin-off, it only happened because of an activist investor, Elliott Investment Management. Elliott, which invested $5bn in the company, argued that having aviation as part of a conglomerate structure no longer made sense.

Honeywell Aerospace has forecasted compound organic sales growth of about 6% each year with earnings rising by 9%.

Investment bank Jefferies (in its report titled Honey, I Shrank the Portfolio – which we have plagiarised), says: “Margins are primarily driven by a favourable mix shift toward high-margin aftermarket services, alongside operational efficiency gains from supply chain investments, productivity improvements and the Honeywell operating system. Profitability is partially offset by ongoing R&D investment, standalone public company costs and external pressures such as raw materials, inflation and supply chain constraints.”

Apart from the new orange on invoices, customers will continue to deal with the same people and see little change. Analysts have broadly welcomed the move.

“While this overdue spin-out from Honeywell is in our view a quality asset, we think the stock will perform in line with the broader aerospace and defence sector,” said Robert Stallard, partner at Vertical Research Partners, an independent equity research firm.

Vertical Research estimates that about 20% of Honeywell Aerospace’s revenues come from business aviation – 24% of its sales come from business jet aftermarket sales and 10% from selling equipment to business jet manufacturers. It contrasts this with General Dynamics (25%) and Textron (23%). Embraer gets about 30% of its sales from its Executive Jets business.

Stallard added: “Honeywell has a higher weighting to the bizjet aftermarket than many of its peers, and we think this area is likely to grow at a more subdued rate, particularly compared to large engines.”

It turns out it wasn’t guerilla marketing at all. Honeywell spun out its thermostat business in 2018.

But if any manufacturer is feeling inspired to replicate Honeywell’s air show stunt, now is the time to buy a minibar fridge company.