Rolls-Royce update: IAE stake sale and new joint venture.

Rolls-Royce @ 688p, +62p, (+9.9%)

Rolls-Royce flying high in the clouds today on the back of last nights announcement that they are being bought out of their 32.5% stake in the IAE venture for around $1.5bn however they will also continue to profit from flying time for the existing installed base of V2500 engines flying on A320 wings.

This is likely to see future contributions to profits with an estimated £140m in the first year but this contribution is expected to slide over the next 15 years as the fleet ages and replacement aircraft and engines come through.

In the same announcement, Rolls-Royce announced details of a new joint venture with Pratt & Whitney to produce engines for the 120 -230 seat passenger aircraft which serves to fill in a sizeable hole for me as an investor if Rolls-Royce didn't have a presence in this sector of the market which over the next 20 years is expected to require around 45,000 engines and be worth around $2 trillion (Boeing announce 737 MAX for 2017.).

Elsewhere, Rolls-Royce also announced a $99.9 m contract to provide support on the Adour engined T-45 Trainer aircraft used by the US Navy.

This came hot on the heels of news that the company had also taken its first order for its Environship concept for which the company "will design and provide integrated power and propulsion systems for two technologically advanced cargo vessels, which have been purchased by Norwegian transportation company, Nor Lines AS."

Lots of good news then which when you take into account the first delivery of the 787 to All Nippon Airways should have analysts reaching for their eraser and black inked pens particularly when the company is actively giving profit guidance so explicitly.

Related article links:

- www.rolls-royce.com: Rolls-Royce and Pratt & Whitney announce new partnership to develop next generation engines for mid-size aircraft and restructuring of IAE collaboration

- www.rolls-royce.com: Rolls-Royce awarded $99.9 million contract for US Navy T-45 Trainer engine support

- www.rolls-royce.com: Rolls-Royce wins first order for award-winning Environship
- www.sharecast.com: Broker snap: Evolution keeps buy rating on Rolls-Royce

Earlier posts:

- Boeing announce 737 MAX for 2017.

- Boeing 737 update: upgrade announcement due soon?

- Paris Air Show: Review