A two-nozzle RD-180 engine sits on display. Photo: Pratt & Whitney

Pratt & Whitney (P&W), a unit of United Technologies Corp. and Aerojet-General Corp., the aerospace and defense segment of GenCorp Inc. have announced their intention to form a new space propulsion company. P&W Space Propulsion (SP) and Aerojet have signed a letter of intent and expect to complete a definitive agreement before the end of the year, subject to government agreements and approvals.

Under the agreement currently being negotiated, Pratt & Whitney would have the majority interest in the new company, which will operate out of P&W facilities. P&W SP currently has facilities in California and Florida. Most of Aerojet's propulsion programs would be acquired by the new company in exchange for cash and a 20 percent equity interest in the new company. Aerojet's propulsion business, located in Sacramento, Calif., accounted for approximately one-third of its 1999 revenues of $615 million.

"The new company can offer improved design, development and manufacturing capabilities to our customers, resulting in greatly enhanced efficiency as well as a broader range of services at lower cost," said P&W President Louis Chenevert.

"This proposed transaction is in accordance with our stated intent to explore all possible alternatives to enhance shareholder value. We have maintained that the propulsion industry needs to consolidate in order to reduce costs and become more efficient. This has been an important strategic priority for our corporation," said Bob Wolfe, chairman and CEO of GenCorp. "This transaction, if completed, would enable us to focus in other defense industries, including space electronics. With the relocation of a number of propulsion operations from Sacramento, we will look at ways to accelerate utilization of the valuable property assets we have in Sacramento, which offer tremendous potential to contribute significantly to the economy of the region," Wolfe added.

Aerojet would continue to operate some propulsion programs in Sacramento that will not be acquired by the new company and would complete the environmental remediation of the site. The final agreement will be contingent on continuation of Aerojet's existing agreement with the U.S. government concerning the allowability of environmental remediation costs at its Sacramento facility. The transaction would not affect GenCorp's rapidly growing Aerojet Fine Chemicals business.

P&W SP employs about 1,300 people and Aerojet has 1,600 employees in Sacramento; 1,200 of those work for the space propulsion business.

P&W SP builds propulsion systems for liquid rockets and hypersonic propulsion systems in West Palm Beach, Fla. and solid rocket propulsion systems in San Jose, Calif. P&W is a unit of United Technologies Corporation, located in Hartford, Conn.

United Technologies Corporation, based in Hartford, Connecticut, provides a broad range of high technology products and support services to the building systems and aerospace industries. Those products include Pratt & Whitney aircraft engines, space propulsion systems and industrial gas turbines; Carrier heating, air conditioning and refrigeration; Otis elevator, escalator and people movers; Hamilton Sundstrand aerospace and industrial products; Sikorsky helicopters and International Fuel Cells power systems.

Aerojet is a world-class supplier in the aerospace and defense industry. Its products include missile and space propulsion systems, space electronics, and smart munitions and armaments. GenCorp is a technology-based manufacturer with leading positions in aerospace and defense, pharmaceutical fine chemicals and the automotive industry.