Pratt & Rolls-Royce in New Relation - Analyst Blog
October 13 2011 - 3:15AM
Zacks
Pratt & Whitney, a group
company of United Technologies Corp. (UTX), and
Rolls-Royce, a global provider of the power systems, have
reorganized their participation in IAE International Aero Engines
AG (IAE). The IAE is engaged in the production of the V2500 engine
for the A320 family of aircraft.
As per the agreement made by the
companies, Rolls-Royce will sell its equity and program shares in
IAE to Pratt & Whitney for $1.5 billion. Pratt & Whitney
plans to discuss a potential offer of a part of the shares to be
acquired with MTU Aero Engines AG (MTU) and Japanese Aero Engines
Corporation (JAEC), IAE partners of Pratt & Whitney. In
addition to the agreed sales price for the next fifteen years after
the completion of the deal, Rolls-Royce will be entitled to receive
a fixed amount for each hour flown by the current installed fleet
of V2500-powered aircraft.
Though IAE will now be led by Pratt
& Whitney, JAEC and MTU, Rolls-Royce will remain responsible to
IAE and its customers. Rolls-Royce will continue to be responsible
for the production of high-pressure compressors, fan blades and
discs and also for the delivery of engineering support and final
congregation of 50% of V2500 engines. IAE was formed about thirty
years ago and since about 4,500 V2500 engines have been put in
service and approximately 2,000 are on order.
Apart from this restructuring,
Pratt & Whitney and Rolls-Royce entered into a new partnership
agreement to power future mid-size aircraft, with capacity of 120 –
230 passengers. A joint venture company will be formed in which
both the companies will have equal share and will produce new
engines for the next generation of aircraft, replacing the existing
mid-size fleet.
The completion of both the
transactions is subject to some various closing conditions,
including regulatory approvals.
United Technologies is a global
provider of high technology products and services to the building
systems and aerospace industries. The company’s growth has been
attributed to acquisitions and to the internal development of the
existing businesses. The major competitors of United Technologies
are Boeing Co. (BA), BorgWarner
Inc. (BWA), General Electric Co. (GE),
Honeywell International Inc. (HON).
We currently maintain our Neutral
rating on United Technologies, with a Zacks #3 Rank (short-term
Hold recommendation) over the next one-to-three months.
BOEING CO (BA): Free Stock Analysis Report
BORG WARNER INC (BWA): Free Stock Analysis Report
GENL ELECTRIC (GE): Free Stock Analysis Report
HONEYWELL INTL (HON): Free Stock Analysis Report
UTD TECHS CORP (UTX): Free Stock Analysis Report
Zacks Investment Research
BorgWarner (NYSE:BWA)
Historical Stock Chart
From Jun 2024 to Jul 2024
BorgWarner (NYSE:BWA)
Historical Stock Chart
From Jul 2023 to Jul 2024