Factors including insufficient investment and over-focus on shareholder returns weakened Honeywell’s once-mighty aerospace business over recent years, say some aerospace analysts.
Which is why analysts think parent Honeywell’s just-announced decision to spin its aerospace division into a new standalone company could be a recipe for a turnaround.
“A smaller, more-focused business will… get more-dedicated investment, and decisions will be more focused around the aerospace product lines,” says Alex Krutz, aerospace analyst with Patriot Industrial Partners. “This should be a good move for both Honeywell aerospace and its customers.”
Richard Aboulafia, analyst with AeroDynamic Advisory, says Honeywell “badly under-invested in aerospace for years”.
“It was falling behind its major competitors in terms of customer satisfaction, new-technology investment and many other key areas. Being a standalone business might give the aerospace unit a strong chance at recovery, if they get the right leadership,” he says.
Honeywell on 6 February revealed its intention to divest its automation and aerospace businesses into two separate publicly traded companies in the second half of 2026 – a move similar to that completed several years ago be General Electric.
The changes will split Honeywell into three standalone entities – the third being its advanced materials division.
“Honeywell has clearly under-performed the market in the last year,” says Janes Capital Partners managing director Stephen Perry. “From Wall Street’s perspective, conglomerates are out. There are few synergies among the three business units, which raises the question, why are they even together – other than the fact that they just are?”
Honeywell says its standalone aerospace company will become “one of the largest publicly traded, pure-play aerospace suppliers”, with a “simplified strategic focus” and improved “financial flexibility, to pursue distinct organic growth”.
“Aerospace required far more attention on capital expansion, supply chain transformation, electrification,” says Honeywell chief executive Vimal Kapur.
Kevin Michaels, also an analyst with AeroDynamic, thinks Honeywell in recent decades suffered from the same ills that affected Boeing.
He says that thirty years ago Honeywell was a roaring success – “an absolute force to be reckoned with” – landing large contracts to supply components for jets including the 737NG and 777.
But after being acquired in 1999 by AlliedSignal, Honeywell’s leaders “started focusing on quarterly earnings, and not investing in the long haul… Boeing went down this path”, Michaels says. “It’s pretty shocking… what’s happened.”
He notes that in 2007 Honeywell’s aerospace business generated $12 billion in revenue. Since then, the broader aerospace industry grew by leaps and bounds. But not Honeywell aerospace, which generated $13.5 billion in 2024 revenue.
“They are near the bottom of every customer satisfaction rating… They are not investing in the future,” says Michaels. “It is what happens with shareholders first.”
Honeywell “may have taken their eye off their core aerospace and defence franchises, focusing on [electric vertical take-off and landing aircraft], which may take years – if not decades – to reach any level of maturity and scale”, adds Janes’ Perry. “Honeywell is not particularly well loved by all of its customers and has a reputation among some for being slow, bureaucratic and expensive”.
Struggles aside, Honeywell’s products are still found on 90% of the world’s aircraft, the company says. Its offerings include auxiliary power units, engines, environmental control systems, wheels, brakes and avionics.
“To some degree, it has been overly reliant on its past glory and legacy status,” says Perry.
George Ferguson, analysts with Bloomberg Intelligence, says Honeywell’s current form makes estimating the value of the aerospace business difficult.
That division “has its own needs from an investment perspective. So, being to utilise the cash generated inside that business for aerospace, and not run the risk of subsidising other businesses, is a positive,” Ferguson says. “I think it’s a good move.”
