UPDATE 1-Rolls-Royce and UTC abandon aero engine partnership

Thu Sep 19, 2013 11:59am EDT

LONDON, Sept 19 (Reuters) - British aero engine maker Rolls-Royce and United Technologies Corp have abandoned plans to form a partnership to develop engines for mid-size aircraft, the two firms said on Thursday.

In October 2011 Rolls and U.S. engine maker Pratt & Whitney, a unit of UTC, announced plans to form a partnership to develop engines for 120-230 seat passenger aircraft that in future years would replace new, revamped versions of the Airbus A320 and Boeing 737 narrow-body planes.

However, on Thursday the two firms said following discussions, they had decided not to proceed with the partnership "because of the current regulatory environment".

"The two companies entered into the venture in good faith but there are very few players in this area of the market and UTC and Rolls-Royce felt competition bodies in a number of jurisdictions would have made moving ahead with the partnership complicated," said a source close to the two firms.

Pratt and Rolls planned to hold an equal share in the venture, which was intended to study geared turbofan and open rotor technology along with other types of engine configurations.

When the tie up was announced, analysts believed the move had resolved a spat between the two companies who are the dominant players in the market for aircraft engines along with General Electric.

"Rolls-Royce 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," the British company said.

Rolls-Royce shares in London closed 1.5 percent higher at 1111.5 pence, while UTX stock in New York was 1 percent higher at $112.1 by 1545 GMT.

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