September 19, 2013
Rolls-Royce (R-R) and United Technologies Corp. (UTC) have scrapped their plan to form a new joint venture to produce a mid-size commercial jet engine.
The plan was developed in October 2011, in the wake of R-R’s decision to sell its share in International Aero Engines (IAE) to UTC’s Pratt & Whitney (P&W) unit. At the time, P&W wanted to increase its stake in IAE to help increase sales of its PW1100G geared turbofan on the Airbus A320NEO.
IAE produces the V2500 engine, which powers the current A320 in competition with CFM International’s CFM56.
No specific reason for the change in plans has been given. R-R says “following further discussion, and because of the current regulatory environment, the parties have agreed not to proceed with the partnership.”
The U.K.-based engine maker says it “remains fully committed to this important market segment and will continue to invest in technologies that will enable us to take advantage of opportunities as they arise.”
However, with its decision to withdraw from IAE, and the failure of the proposed teaming with P&W, R-R appears to have ceded the mid-thrust market to its rivals. Future opportunities in the market are non-existent in the short- to mid-term and, with few other options in the offing, R-R will almost certainly be forced to wait to pursue longer-term A320NEO and 737 MAX successors from Airbus and Boeing late in the next decade.
The company’s gradual withdrawal from the mid-thrust business follows its strategic decision to focus on higher-value—but smaller-volume—large engines.