14 September 2021

Babcock, Rolls-Royce to sell stakes in AirTanker asset joint venture

by Marc Selinger

A UK Royal Air Force A330 tanker owned by AirTanker Holdings Ltd prepares to refuel a Tornado strike aircraft. (Airbus)

UK engineering company Babcock International and British engine manufacturer Rolls-Royce have agreed to divest their minority stakes in the AirTanker Holdings Ltd joint venture, which owns a fleet of Airbus A330 Multi Role Tanker Transport (MRTT) aircraft for the UK's Royal Air Force (RAF), Babcock and Rolls-Royce announced on 13 September.

UK private equity firm Equitix Investment Management will buy Babcock's 15.4% share for GBP126 million (USD174.3 million) and Rolls-Royce's 23.1% share for GBP189 million, joining Airbus and Thales as owners of AirTanker Holdings. The deals are expected to close by the end of the first quarter of calendar year 2022 after receiving regulatory approvals.

Both transactions are part of broader efforts by Babcock and Rolls-Royce to divest non-core businesses and generate proceeds to reduce debt. Babcock and Rolls-Royce want to raise a total of at least GBP400 million and GBP2 billion, respectively.

Babcock and Rolls-Royce will keep their 23.5% stakes in the AirTanker Services Ltd joint venture, which operates and maintains the MRTT fleet. Airbus and Thales are also owners. Cobham Group divested its 13% stake last year.

Under a 27-year contract signed in 2008, the AirTanker consortium, which is based in Oxfordshire, England, delivers and supports 14 MRTT aircraft. Nine planes make up the RAF's “core fleet”; the other five can be used by the RAF or by other customers. The MRTT is called ‘Voyager' while in RAF service.

UK engineering company Babcock International and British engine manufacturer Rolls-Royce have agreed...

Jane's Find unrivaled intelligence, consultancy and advertising solutions to the defence and national security sectors.