For an industry that treats engine names like family heirlooms, few moves make as loud a statement as the decision to put “Rocketdyne” back on the door while revamping who owns the factory floor.
L3Harris Technologies has formed an agreement with AE Industrial Partners to sell a 60% interest in its Space Propulsion and Power Systems business to AE for $845 million, while retaining an ownership stake of 40%. The transaction is subject to regulatory approvals and customary conditions and is expected to close in the second half of 2026. In practical terms, the deal puts a big chunk of the control in a new operational arrangement: a specialized investor is in control of business, but a major prime is still at the table as a strategic partner.
The assets involved range from advanced rocket engines, to in-space propulsion, to spacecraft power technologies. Among the best-known programs is the RL10 upper stage engine family, which has long been embedded in U.S. launch infrastructure and is currently linked to United Launch Alliance’s Vulcan. The same business also covers in-space electric propulsion hardware power systems used throughout civil, commercial, and exploration missions. L3Harris has framed the divestiture as an alignment of the portfolio-that the change in ownership will move some of the space hardware lines to a model that can better emphasize production modernization and commercial scale, and have the parent company focus on other areas.
The portion that remains behind is also telling. The RS-25 program – engines for the Space Launch System core stage of the shuttle successor currently being designed by Laser stretching known internationally as the Space Shuttle – has been wholly owned and controlled by L3Harris allowing for continuity of a line with long standing contractual obligations, a mission carefully controlled by mission requirements. In late 2025, the company noted progress relative to manufacturing modernization of RS-25, with a test at Stennis by the National Aeronautics and Space Administration, during which a 500 second firing of the engine was performed achieving technology with 111% rated power. L3Harris also said that the new RS-25 configuration employs techniques like 3D printing that make production 30 percent cheaper than its previous engines, which further drives the company’s decision to keep the program going while reshaping those in the propulsion sector.
AE Industrial’s plan is to restore the Rocketdyne name for the acquired business – a clear bet that there’s still commercial yardstick in tying heritage to the long-cycle contracts for propulsion systems. “Rocketdyne is more than just a company, it is the birthplace of U.S. rocket propulsion,” AE Industrial managing partner Kirk Konert said. “This transaction will not only modernize and give new life to a pioneer of space and national defense technology, but it will also create a new hybrid model of agile collaboration, combining the stability and power of a national defense prime with the innovation of a specialized investor. By taking the historic engine – the RL10 – and applying modern manufacturing discipline, we will honor its design while revolutionizing the production line.”
That manufacturing emphasis is important because propulsion isn’t just a design problem; propulsion is a repeatability problem. Upper stage engines occupy a sweet-spot between thorough performance, quality assurance burden and schedule sensitivity, with production rates becoming more influenced by launch frequency. The RL10’s reputation is inextricably linked to the reliability of its ability to be delivered, integrated and re-qualified as vehicle configurations evolve. AE Industrial’s portfolio supplies context here: it already has positions across the space supply chain, which includes Firefly Aerospace, Redwire Space, and York Space Systems, forming potential supply chain pathways for shared industrial practices and for supplier leverage, without altering the fact that propulsion programs continue to be governed by stringent certification and mission assurance and customer configuration control.
On the technology front, both parties have expressed interest in propelling future technology, including nuclear-enabled technologies, even as near-term revenue is driven by mature engines and existing spacecraft power product. L3Harris executives have publicly billed nuclear systems as being on the brink of readiness, with Kristin Houston saying, “We are finally at the cusp for both nuclear electric propulsion and nuclear thermal propulsion,” and adding, “These solutions can be matured and be ready for flight in the next five years.”
The most immediate bridge between today’s production lines and tomorrow’s mission architectures may be in the area of high-power electric propulsion, one to which the divested business has visible hardware footprints. In 2025, L3Harris expects to deliver three Advanced Electric Propulsion System thrusters toNASA for final testing enroute to integration into Gateway’s Power and Propulsion Element, and characterizes AEPS as the most powerful electric propulsion ever flown, based on three 12-kilowatt Hall thrusters. That sort of flight-anchored program can frequently be a reference point for what a reorganized propulsion business can credibly scale up: not only engine assemblies, but also power processing, thermal management and long-duration acceptance testing disciplines that electric systems require.
The deal also comes with a financial snapshot, which gives a hint as to why ownership structure is being revisited. L3Harris has led us to believe that the propulsion business will have $2.8 to $2.9 billion of revenue in 2025, which is about 12% year-over-year, a big business that can be a standalone platform company. For private equity, that size may warrant dedicated modernization capital and a production throughput, supply chain resilience, and management model focused on program capture. For L3Harris, maintaining a minority stake within the firm offers upside and influence without necessarily taking operator focus for a wide range of propulsion options.
In the background is a familiar industrial tension: propulsion and space power are in the intersection of a civil exploration, commercial launch and long term technology bet, but they’re also in competition internally for investment dollars against nearer term priorities in other business lines. Splitting ownership does not take that tension away, but merely gives it (or takes it, rather) away from one or a few individuals and give it to another one or a few. What changes is who is accountable for execution on the shop floor-and how quickly manufacturing “discipline” translates into engines and thrusters delivered on time, with qualification paperwork that satisfies both legacy program expectations and newer, higher-cadence space markets.