Pratt & Whitney said Thursday, Oct. 13 it will pay $1.5 billion to buy Rolls-Royce's one-third stake in International Aero Engines AG, a business formed in 1983 to produce engines for the Airbus SAS 320 family of aircrafts. Existing Aero stakeholders Japanese Aero Engines Corp. and Germany's MTU Aero Engines are not part of the deal and will remain shareholders.

Westminster, U.K.-based Rolls will also receive a payment for each hour flown by the current installed fleet of engines for 15 years from the completion of the transaction.

Glastonbury, Conn.-based International Aero currently has about 4,500 engines in use. But the partnership has been marred in recent years by patent disputes between Pratt and Rolls, with the two sides suing each other last year over a new Pratt engine and questioning whether the JV would be able to come together on a new engine for next-generation aircraft.

The two sides have apparently put that dispute behind them, announcing a new joint venture that would compete to supply engines to future mid-sized planes. The companies see demand for upwards of 20,000 midsized planes, which would require about 45,000 engines, as global airlines overhaul their fleets and companies based in emerging markets look to grow.

Pratt and Rolls will hold equal shares in the new joint venture. Mark King, Rolls-Royce president of civil aerospace, in a statement said the new partnership builds "on many years of successful collaboration with Pratt & Whitney in this segment to develop advanced aero engines, which we are confident will set new standards in aviation technology, performance and fuel efficiency."

Hartford, Conn.-based UTC, which makes industrial products including Otis elevators, Carrier air conditioners and Sikorsky helicopters, has been aggressively expanding its aerospace business. The company last month agreed to buy Goodrich Corp., a maker of landing gear and other items for planes, for $18.4 billion.