Rolls-Royce in record $9.2-bn aircraft engine deal with Emirates
18 April 2015
The world's second-biggest manufacturer of aero-engines Rolls-Royce Holding Plc has won its largest ever order, worth $9.2-billion, to supply advanced aircraft engines to Dubai's Emirates Airline, the leading carrier in the Middle East.
Under the deal, Rolls-Royce will provide Trent 900 engines and its 'TotalCare' service package to Emirates to power its 50 Airbus A380 wide-body, four-engine superjumbo aircraft that will enter service from 2016.
The transaction will give a big boost to the British engine maker struggling to improve its profit margins through performance improvement and restructuring, which is expected shed around 2,600 jobs.
Rolls-Royce chief executive officer John Rishton commented, ''We are delighted that Emirates has again placed its trust in our technology, with the biggest order in our history.
Emirates president Tim Clark said, ''Today's announcement is significant not only because it cements the partnership between Emirates and Rolls-Royce, but also because of the significant economic impact that this will have on aviation manufacturing in the UK and Europe.''
Rolls-Royce's commitment to continual improvements in the economic and operational performance of the Trent 900 engine has been the decisive factor in its selection for the A380s, Clark said.
The Trent 900, first used in an A380 in 2007 currently powers over 70 aircraft run by eight airlines. The engines are claimed to be the most fuel efficient over its lifetime.
According to Rolls-Royce, the engines have more than half of the market share on A380 aircraft.
This is Emirates' first order for the Rolls-Royce engines for its A380 aircraft. Other aircraft of the fleet are powered by Engine Alliance, a joint venture between General Electric and Pratt & Whitney.
It is expected that the current selection would lead to more orders from the airline for the Rolls-Royce engines.
Emirates, the leading customer of Airbus' A380 aircraft with 140 orders, said it may order more planes if Airbus goes ahead with a revamp of the model with Rolls-Royce Trent XWB engine.
London-based Rolls-Royce is a power systems company engaged in aerospace, defence, energy, marine and nuclear.
The company manufactures aero-engines, helicopters, systems for offshore oil and gas and naval vessels, and power systems. It has customers in more than 120 countries and employs over 54,000 people.
The company's aero engines power Airbus A350 and Boeing 787 Dreamliner aircraft.
For the year ended 2014, its revenue dropped 6 per cent to £14.6 billion while profits before tax, after two profit warnings, fell 8 per cent to £1.6 billion,. This year's outlook doesn't seem better as the company expects profit to drop up to 13 per cent.
But, on the positive side, the order book, which stood at £74 billion as at the end of December, continues to break all records, with the growth driven by the civil aerospace division.
Despite the big order, the engine maker said the 2,600 planned cuts would still go ahead.