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article imageRolls-Royce seeks long-term uplift with new aero engines

    Feb 26, 2014 in Business

By Sarah Young

DERBY, England (Reuters) - British engineering company Rolls-Royce <RR.L> has outlined plans designed to maintain long-term dominance in large aircraft engines, showcasing two new models that could improve efficiency by up to 10 percent.

Rolls-Royce warned this month that U.S. and European defense cuts mean that a decade of profit growth will come to an end this year, sending its shares sharply down and providing added incentive to refocus investor attention on the company's longer-term prospects.

Soaring demand for more fuel-efficient engines for aircraft made by Europe's largest aerospace group Airbus <AIR.PA> and its U.S. rival Boeing <BA.N> has helped Rolls-Royce's civil aerospace division, which generates about half of its sales, to drive the company's strong run over the past decade.

That appetite shows no signs of slowing. Over the next 20 years the world will need to double its fleet of aircraft as cities expand and Asia's increasingly affluent middle class takes to the skies, Airbus forecast in September, adding that airlines, leasing companies and cargo operators would need a total of 29,226 new passenger and freighter jets worth $4.4 trillion.

Rolls-Royce, a major British exporter founded in 1884, has responded with Wednesday's unveiling of the new Advance and Ultrafan engines.

The Advance could be ready to enter service by 2020, it said, bringing efficiency improvements of up to 6 percent on its Trent WXB engine, which will be powering planes later this year.

At its headquarters in Derby, central England, Rolls-Royce unveiled the lightweight Advance's carbon-titanium fan blades, suspended from the roof of one of the huge kerosene-smelling hangars scattered around the vast site. The blades will be attached to a core smaller than the Trent model's before the engine is put through its paces over the coming years.


Among the tests to be conducted is the simulated bird strike, in which dozens of frozen birds are fired at the blades at high speeds to assess the durability of this crucial engine component.

The Ultrafan engine, which differs from the Advance in that it will incorporate a gear system, could be ready to be attached to aircraft by 2025 and is expected to be about 10 percent more efficient than the Trent XWB.

Rolls-Royce, which describes the Trent XWB as the world's most efficient engine to date, said it is confident of demand for its new products from Airbus and Boeing.

"To some degree we've already started these conversations with the air-framers as part of our normal discussions around future requirements," Simon Carlisle, executive vice-president of strategy and future technology, told reporters.

The world's second-largest manufacturer of aircraft engines of all sizes, behind U.S. group General Electric <GE.N>, said that its civil aerospace business could also seek further growth by utilizing its large-engine know-how to move into supplying medium-sized aircraft.

In the meantime, Rolls is aiming to exploit additional opportunities with its biggest civil aerospace customer, Airbus. "We are having very live discussions with them." said Eric Schulz, head of civil large engine operations.

"If Airbus decides to go for a re-engine of the A330 or A380 (passenger jets), we will be here to support," he added, referring to the possibility that the French company could seek different engines for existing aircraft.

Schulz also said that an ongoing investigation by Britain's anti-fraud watchdog into Rolls-Royce's dealings in Asia has not affected business.

"Our customers are confident that the management of this company has the right level of ethics, has the right level of processes and governance in place," he said.

(Editing by Brenda Goh and David Goodman)

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