Market Commentary

L3Harris Is Offloading Its Aviation Solutions Business

Aisha Khan
29 Nov 2023 · 2 minutes read

As disclosed on November 27, L3Harris Technologies (LHX:US) is offloading its commercial aviation solutions business. The business would be purchased by the private equity firm TJC L.P. in a transaction valued at $800 million. 

Founded in 1895, the aerospace and defense contractor was known under the name ‘Harris Corporation’ which it changed to its present identity in 2019. L3Harris reported that this million-dollar sale of its aviation business would be used to repay the company’s debt. 

"Aligned with our capital allocation priorities, we plan to use the proceeds from this transaction to repay debt, which will accelerate our timeline to reach our debt leverage objective," the company added in the statement. 

In its last quarterly report, disclosed on October 26, L3Harris reported successfully directing the majority of its Free Cash Flow towards repaying debt. As of September 30, 2023, the company's total debt stood at $13.5 billion. This indicates the amount of money the company owes to creditors. Furthermore, L3Harris distributed $216 million in cash to its shareholders in the form of dividends in this quarter.

The aforementioned agreement consists of a $700 million cash payment upfront and an additional $100 million contingent on meeting specific financial performance goals for both the current year and 2024. L3Harris's commercial aviation solutions sector provides services such as pilot training, flight data analytics, avionics, and advanced air mobility products. The division employs approximately 1,450 individuals.

Earlier this year, Representative Daniel S. Goldman traded LHX stock on three occasions. He initially purchased up to $50,000 worth of shares on January 31, less than a month after joining office. He later bought $15,000 worth more in early March, before finally selling on July 12, as per a filing that listed 502 other issuers. His final sale was valued between $50,000 and $100,000. 

Another Congress member who sold LHX was Rep. Abigail Spanberger. She reported a sale valued up to $15,000 on March 2. In the disclosure, it was detailed that the Representative’s spouse received a grant of restricted stock units (RSUs) from L3Harris Technologies, Inc. on February 28, 2020, as a component of their compensation package under the Harris Corporation 2015 Equity Incentive Plan. The granted RSUs became fully owned by the spouse (or vested) on February 28, 2023, and were allocated to them on March 1, 2023, with the official transaction occurring at the earliest opportunity after March 2, 2023.