Rolls-Royce and Pratt & Whitney announce new partnership to develop next generation engines
Rolls-Royce and Pratt & Whitney announced (12-Oct-2011) a new partnership to develop next generation engines to power future mid-size aircraft (120–230 seats) and restructuring of their International Airline Engine (IAE) collaboration. These transactions are subject to various closing conditions including regulatory approvals.
- Rolls-Royce and Pratt & Whitney will each hold an equal share in the JV focusing on high bypass ratio geared turbofan technology to develop new engines for the next generation of aircraft that will replace the existing mid-size fleet. The 20-year forecast for the segment is worldwide demand for around 20,000 new aircraft (or nearly 45,000 engines). The JV will also collaborate on future studies for next generation propulsion systems, including advanced geared engines, open rotor technology and other advanced configurations;
- The new JV will build on the IAE partnership between Pratt & Whitney and Rolls-Royce. Japanese Aero Engine Corporation (JAEC) and MTU Aero Engines (MTU), partners of IAE and the PurePower PW1100G-JM programme for the Airbus A320neo, also intend to join the new collaboration.
Restructuring of IAE participation:
- Rolls-Royce and Pratt & Whitney will restructure their participation in IAE, which produces the V2500 engine for the A320 family. Rolls-Royce will sell its equity and programme shares in IAE to Pratt & Whitney for USD1.5 billion and in addition receive an agreed payment for each hour flown by the current installed fleet of V2500-powered aircraft for 15 years from completion of the transaction;
- IAE will continue to deliver engines and customer support without interruption. Rolls-Royce remains committed to IAE and its customers and will continue to be responsible for the manufacture of high-pressure compressors, fan blades and discs as well as the provision of engineering support and final assembly of 50% of V2500 engines;
- In addition, Rolls-Royce will make a modest financial investment in the PurePower PW1100G-JM engine programme.
Financial implications for Rolls-Royce:
- These transactions are not expected to have a significant impact on Rolls-Royce's 2011 trading performance nor the financial guidance provided for 2011. The restructuring the involvement in IAE will produce a number of important effects on trading performance, including net cash proceeds of circa USD1.5 billion – subject to some working capital adjustments – and improvements in the trading performance over coming years. The cash proceeds will be retained for general corporate purposes;
- The effect of these transactions on Rolls-Royce's Civil Aerospace unit will be to improve trading profitability over the next few years, with the full year improvement in operating profits expected to be more than GBP140 million in the first year, with a slowly diminishing contribution in successive years depending on the utilisation of the current V2500 fleet. Overall the majority of value to Rolls-Royce will be derived from flight hour payments due over the next 15 years. [more - original PR]