Rolls-Royce sells equity in Airbus engine collaboration for £960m
AERO engine manufacturer Rolls-Royce has completed the restructuring of its participation in International Aero Engines (IAE) Collaboration, which produces the V2500 engine for the Airbus A320 family of aircraft.
Rolls-Royce has sold its equity and programme shares in the IAE Collaboration to fellow engine producer Pratt & Whitney, which is owned by NYSE-listed United Technologies Corporation, for $1.5bn (£960m).
In addition to the consideration, which will be subject to working capital adjustments, Rolls-Royce will also receive an agreed payment for each hour flown by the current installed fleet of V2500-powered aircraft for the next 15 years.
Rolls-Royce said it remained committed to IAE and its customers and would continue to be an essential supplier, retaining responsibility 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.
As well as restructuring its participation in IAE, in October last year Rolls-Royce and Pratt & Whitney also announced the formation of a new engine collaboration to power future mid-size aircraft, which is subject to separate regulatory approvals.
IAE partners, Japanese Aero Engines Corporation (JAEC) and MTU Aero Engines (MTU), have now agreed to join the new venture.
“This collaboration will draw on the most advanced technology from these world-class companies to drive enhanced performance for this fast growing segment in which worldwide demand for around 20,000 new aircraft (or nearly 45,000 engines) is predicted over the next 20 years,” said Rolls-Royce in a statement.
The IAE collaboration is expected to improve Rolls-Royce’s Civil Aerospace division’s operating profit by more than £140m in the first 12 months after closing. Thereafter, a slowly diminishing improvement is expected in successive years, depending on the utilisation of the current V2500 fleet.
Further detail will be provided at the Rolls-Royce Half-yearly results briefing on July 26, 2012.
