Rolls-Royce Pads Balance Sheet With IAE Stake Sale As Trent Footprint Grows

By Ian Goold • Senior correspondent

July 8, 2012

Rolls-Royce will not be rushing to spend the proceeds from selling its 32.5-percent equity and program shares in International Aero Engines (IAE) to Pratt & Whitney (P&W), according to civil aerospace president Mark King. The $1.5 billion cash sum will be retained for general corporate purposes, said the company, which is making a “modest” financial investment in P&W’s PW1100G-JM geared turbofan (GTF) powerplant offered for the re-engined Airbus A320neo program.

The transactions will improve Rolls-Royce’s profitability in the civil aerospace sector over the next few years, with the majority of value being derived from V2500 engine flight-hour payments that the UK manufacturer will receive from IAE for 15 years. Rolls-Royce operating profits arising from restructuring of IAE are expected to be over £140 million ($217 million) in the first year, reducing slowly in successive years.

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