In an unprecedented move designed to outflank General Electric and its CFM partner Snecma, Pratt & Whitney and Rolls-Royce have announced plans to form a new engine joint venture to power future mid-size aircraft based initially on the geared turbofan (GTF) configuration.

The surprising about-turn for Rolls-Royce includes a major restructuring of International Aero Engines (IAE) under which Rolls will sell its equity and program shares in IAE for $1.5 billion. The restructured IAE will enable Pratt to link its geared turbofan campaigns for the Airbus A320NEO more closely to the current IAE V2500, boosting its competitiveness against CFM’s Leap engine offering.

For its part, Airbus sees the decision by Rolls and Pratt to restructure IAE as good news and a competitive help for the A320NEO. “I think it is excellent news,” says Tom Williams, Airbus executive vice president for programs. “It will help in marketing campaigns for the NEO.”

Williams says Airbus was concerned about the split situation created with Rolls-Royce not on the NEO, but still involved in IAE. Putting Pratt in charge of the IAE is better, he says, because “it will put IAE in a very strong position.” For customers that want the standard A320 and the NEO, CFM International, the General Electric/Snecma joint venture, was able to offer package deals, now IAE can do the same. “Up to now Pratt & Whitney were at a disadvantage.”

The Pratt/Rolls announcement, which came without warning on Oct. 12, represents a massive shake-up for the commercial engine industry and comes after more than two-years of failed negotiations between Rolls and Pratt over developing the GTF as an outgrowth of the IAE family. Describing the parallel agreements as a “win-win” for both companies, Mark King, Rolls-Royce Civil Aerospace president says “it’s a very elegant solution.”

Despite appearing to fly-in the face of Rolls’s earlier negative stance on the GTF, King says the deal does not represent a “fundamental change in attitude. We like our partnership with Pratt & Whitney, and we’d like it to continue if we can. We weren’t compelled by the business case of re-engining, and we’re staying true to that principle.”

However, he adds that the inevitable growth of high bypass engines for future aircraft means that “you get to the point where you need to gear that fan. Clearly, what we are saying with the new venture is we’ll focus our joint efforts into these geared solutions. That’s the GTF for the near term, but we will look at alternative options and other geared solutions.”

Todd Kallman, Pratt & Whitney Commercial Engines & Global Services president, says the combined deal enables Rolls to continue supporting IAE while at the same time ceding commercial control to Pratt. The result, he adds, will be Pratt’s ability to be more competitive in the Airbus A320NEO re-engining market against CFM’s already successful Leap program.

In a joint statement, the two engine makers say the agreement covers the establishment of “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.” The statement also makes it clear that the focus for the initial venture will be on “high-bypass ratio geared turbofan technology,” but it adds that the venture will also “collaborate on future studies for next generation propulsion systems, including advanced geared engines, open rotor technology and other advanced configurations.”

Pratt & Whitney says it, meanwhile, intends to discuss a possible offer of a portion of Rolls’ shares with IAE partners MTU and Japanese Aero Engines Corp. (JAEC). As part of the restructuring deal Rolls-Royce will receive payment for each hour flown by the current installed fleet of V2500-powered aircraft for 15 years from completion of the transaction. Kallman adds that “we’d like to see JAEC and MTU participate in this joint venture. We’re in the early stages of talking about that.”

Rolls-Royce will remain “committed to IAE and its customers” adds the statement. Rolls will continue to be responsible 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.

The joint venture is subject to regulatory approval but “we are confident it will go through,” says a Rolls spokesman. Rolls emphasizes that although the new agreement with Pratt enables it to “modestly” financially support the ongoing development of the geared turbofan family for the A320NEO, it will not be directly involved in the development program. “It’s clear that we’re incentivized to see it (the joint venture) be successful, and we’d like to see the GTF be successful so we’re taking an investment in it,” adds King. The agreement does not extend to applications on the Bombardier CSeries, Mitsubishi MRJ or MC-21, although this latter engine will be virtually identical to the A320NEO engine. The focus of the joint venture will be on the next-generation of engines beyond these, with the GTF as the most likely starting point for the developments.

The two companies are targeting the next-generation of 120-230 passenger aircraft that will ultimately succeed the A320, A321, A320NEO, Boeing 737 Next Generation family, 737MAX, MD-80/90 and 757. Between them, they estimate this will generate a worldwide demand for around 20,000 new aircraft (or nearly 45,000 engines) over the next 20 years.

Author : By Guy Norris, Robert Wall @ AviationWeek