By Dan Catchpole
June 3 (Reuters) - Honeywell Aerospace told investors on Wednesday that it expects to book $6.5 billion in adjusted earnings by 2030, fueled by strong demand from jetmakers and defense customers, along with a sharper focus after its split from Honeywell International later this month.
To get there, the aircraft engine, parts and defense systems maker, which will trade as HONA after the separation on June 29, will prioritize investing in its capacity, as well as its supply chain, rather
than emphasizing dividends or share buybacks, Honeywell Aerospace CEO Jim Currier told Reuters in an interview.
"We have so much to make that just driving capital allocation into factories, suppliers, the business itself is going to provide a tremendous (return on investment capital) that's going to drive the organic growth of the business," he said.
Honeywell Aerospace follows GE Aerospace in conglomerate breakups, betting that leaner, more focused companies can perform better. In 2025, industrial conglomerate Honeywell unveiled plans to create three independent companies focused on automation, aerospace and advanced materials. The spinoffs are expected to be completed this year.
"All of the distractions that occur as part of a conglomerate are eliminated," Currier said.
While part of Honeywell International, there was a "lack of synergies that exist between aerospace and the rest of the portfolio (and) you don't see a lot of that efficiency gain by being a part of this industrial conglomerate," he said.
A March agreement with the Pentagon, RTX and Lockheed Martin to increase precision-guided missiles and munitions production is evidence of how being leaner lets Honeywell Aerospace move faster, Currier said.
The agreement requires a $500 million investment by the company. Before the breakup, "that would have been a very difficult thing to do as part of an industrial conglomerate, (but) we were able to get that deal done in record time," he said.
The company expects 7% to 9% sales growth this year, earnings before interest and taxes of $4.6 billion to $4.7 billion and free cash flow in the second half of the year of $1 billion to $1.5 billion.
Through the end of the decade, the company expects sales to grow by 6% to 8% each year, with more than $4 billion in free cash flow by 2030. That is driven by growing demand from commercial planemakers, the aftermarket sector, defense and space. Honeywell Aerospace's backlog has grown to $19 billion, up 20% from a year earlier.
Supply chain problems hurt key products, including engines, during the first quarter of the year, but those were short-term issues, Currier said.
Investors and analysts are eager to learn more about Honeywell Aerospace's strategy for supply chain management. Jefferies investment analyst Sheila Kahyaoglu said in a May 31 research note that there is concern that the company could get less favorable treatment from critical suppliers, including castings and forgings suppliers.
The company's investment levels have also trailed those of its competitors, including RTX, she noted.
Honeywell Aerospace plans to invest in its suppliers, as well as its own capacity, Currier said.
"If I need to buy equipment for suppliers, smaller suppliers that are providing critical components for us, we will go ahead and do that as well, where necessary and where required," he said. "So, when I think of capital deployment, it's not just within our own four walls."
Like others, the company is watching for potential supply chain bottlenecks in castings, forgings, bearings, specialty materials, coatings and complex machining.
Last month, people on the company's marketing team came into Currier's office at its Phoenix, Arizona, headquarters, with a sample golf shirt with the Honeywell Aerospace logo and the words "established in 2026."
Currier laid the shirt out on his conference table.
"That's when it really hit me ... this is a brand-new aerospace and defense company, you know, out from underneath Honeywell, and so, it actually gave me some goosebumps," Currier said.
(Reporting by Dan Catchpole in Seattle; Editing by Thomas Derpinghaus)
