The restructuring of UTC's participation with Rolls-Royce in International Aero Engines (IAE) is a significant milestone.
In a deal that is described as ‘win-win’ for both parties, Rolls-Royce will sell its shares in IAE to Pratt & Whitney for $1.bn.
In addition to the cash, Rolls-Royce will receive an agreed payment for each hour flown by the current installed fleet of V2500-powered aircraft for fifteen years from completion of the transaction.
Pratt & Whitney intends to discuss a possible offer of a portion of the shares with its IAE partners MTU Aero Engines AG (MTU) and Japanese Aero Engines Corporation (JAEC).
Since its creation almost thirty years ago IAE has become a major force in international aviation with around 4,500 V2500 engines in service and approximately 2,000 on order.
However the deal does not end the collaboration between the two engine giants.
Pratt & Whitney and Rolls-Royce have formed a new partnership to power future mid-size aircraft.
They will establish a joint venture company, in which each will hold an equal share, to develop new engines for the next generation of aircraft that will replace the existing mid-size fleet.
This is a 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.
The new venture will focus on high-bypass ratio geared turbofan technology.
In addition, the partners will collaborate on future studies for next generation propulsion systems, including advanced geared engines, open rotor technology and other advanced configurations.