Rolls-Royce splitting aerospace business

ROLLS-ROYCE yesterday announced that it was splitting its aerospace group into military and civilian businesses, rekindling speculation that it is planning to link up with Pratt & Whitney, a subsidiary of United Technology Corporation, Bloomberg reports.

Analysts said that such a move would be to develop high-thrust engines for large aircraft. General Electric has become such a powerful force in the engine business, they say, that it would make good sense for the number two and three players to form some kind of co-operative venture.

'There is definitely a case for that,' said Nick Cunningham, an aerospace analyst at Societe Generale Strauss Turnbull Securities. He said that while Rolls-Royce had given no indication of any such plan 'there has been strong speculation about some sort of co-operation on large civil engines. And splitting the civil and military engine business would make that easier'.

Martin Brodie, a spokesman for Rolls-Royce, denied that the move was linked to prospective joint ventures. 'This is something we have been looking at for some time,' he said. 'It enables us to demand a greater degree of accountability in each of the businesses.'

Pratt & Whitney could not be reached for comment.

Mr Cunningham said that Rolls already had a link with Pratt & Whitney in the medium-sized engine category. Pratt had also said that it would never again develop an entirely new engine on its own.

'Especially at the higher thrust levels, Pratt would obviously be looking for a partner in that market,' he added.