Pratt & Whitney, one of the operating segments of
diversified business conglomerate
United Technologies Corp.
), recently issued a statement about its intentions to
discontinue the joint venture with
Rolls Royce Holdings plc
). The strategic move is aimed to encourage fair competition in
the market amid stiff regulatory environment.
In 2011, two of the revered forces in commercial aircraft engines
had collaborated to form a joint venture to manufacture engines
that would power mid-size aircraft with a passenger capacity of
However, both the companies felt that the regulators will object
to the monopolistic market share of the joint venture and
consequently dissuaded to carry on with it. Post-split, both
Pratt & Whitney and Rolls Royce agreed to continue to invest
independently to the mid-sized aircraft market segment and
develop applications of its geared turbofan engine.
Rolls Royce is the second largest aircraft engine producer after
GE Aviation Systems, an operating unit of
General Electric Company
). Earlier this month, Rolls Royce divested its 50% stake in the
joint venture that manufactures helicopter engines. The business
was sold for €293 million ($386 million) to Turbomeca, a French
manufacturer of low- and medium-power gas turbine turbo-shaft
engines for helicopters and subsidiary of
The asset sale was part of the corporate strategy of Rolls Royce
to increase its liquidity. However, despite the joint venture
sell-off, Rolls Royce will continue with its other existing
engine manufacturing programs like the RRTM Adour engine, which
powers the BAE Systems-made Hawk and Anglo-French Jaguar jets.
Pratt & Whitney is among the world's leading suppliers of
aircraft engines for the commercial, military, business jet and
general aviation markets. Pratt & Whitney's Global Services
provides maintenance, repair and overhaul services, including the
sale of spare parts, as well as fleet management services for
large commercial engines.
Based in Hartford, Conn., the parent company United Technologies
provides high-end technology products and services to the
building systems and aerospace industries worldwide. The company
is a diversified business conglomerate serving various end
markets such as aerospace, defense and commercial construction.
The business diversification allows the company to remain
profitable amid tough economic times.
United Technologies presently has a Zacks Rank #3 (Hold).
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