MTU Aero Engines and Japanese Aero Engines Corp. will join a new engine joint venture that Pratt & Whitney and Rolls-Royce are forming to serve the next-generation single-aisle market.

Rolls-Royce disclosed the German and Japanese firms would be part of the new joint venture as it also announced the completion of the divestiture of its share in International Aero Engines (IAE), the separate joint venture with Pratt & Whitney that builds the V2500 turbofan offered on the A320 in competition with the CFM International CFM56, itself developed by a joint venture between General Electric and Snecma.

Rolls-Royce is receiving $1.5 billion for its 32.5% stake in IAE; the manufacturer will continue to build components for the engine and be involved in final assembly as a supplier.

Rolls and Pratt & Whitney restructured the IAE arrangement because of Airbus’s A320NEO plans. Rolls-Royce is not involved in powering the A320NEO, offered with the Pratt & Whitney PW1100G and CFM International Leap-1A.

But that meant that CFM could offer airlines package deals on current A320s and A320NEOs, which was a handicap for the V2500 and PW1100G campaigns.

Pratt & Whitney now has more negotiating flexibility and Rolls-Royce receives a large portion of cash that has helped fund other acquisitions.

The new joint venture to be established by the former IAE partners will focus on developing engine technology for the eventual A320NEO and 737 MAX successors, as well as other offerings in that market segment.

The companies are expected to look at geared turbofan and geared open-rotor design, although the exact work packages remain to be defined.