UK engineering giant Rolls-Royce expects its civil aero-engine fleet to grow sharply by the end of the decade, with a record number of customers locked into lucrative long-term maintenance and repair agreements.
The expansion in market share in the commercial aviation sector and the resulting growth in the aftermarket were key themes to emerge from the company’s AGM and the recent Paris Air Show, Rolls-Royce told its shareholders in a quarterly update on trading.
Based on last year’s level of deliveries, Rolls-Royce believes the civil engine fleet will increase by 40 per cent over the next five years, with half coming under long-term service agreements, representing an 80 per cent increase since 2004. The predictions offer further evidence that the group’s strategy of securing a profit stream from its engines for their lifetime — rather than simply selling them to customers and waving goodbye to them at the factory gate — is paying dividends.
The company reported significant progress during the second quarter across all four of its global markets — civil aerospace, defence, marine and energy.
Air China selected the Trent 700 to power its new fleet of A330s in a deal worth $800m (£456m), including a service agreement, while Hong Kong-based Dragonair and Middle East Airlines signed maintenance deals for 11 years and six years respectively. Rolls-Royce now has over 450 aircraft under corporate flight-hour agreements, with contracts exceeding $900m.
In the marine sector, the group has established its first University Technology Centre in Norway to conduct research programmes. This has been set up to provide a better understanding of the operating environment of marine vessels and their propulsion and manoeuvring systems.
Rolls-Royce will also design a new generation of coastguard vessels for the Royal Danish Navy for surveillance and law enforcement duties.
In defence, Rolls was boosted by the news that the GE/Rolls- Royce Fighter Engine Team’s (FET) F136 programme has completed the first phase of testing for the Joint Strike Fighter. A full system development and demonstration contract, worth around $1bn to Rolls-Royce, is expected to be awarded next month, the company said.
In the energy sector, Rolls- Royce and Total E&P — which operates oil fields including Alwyn North and Dunbar — has signed a multi-million dollar deal for the technical support of key equipment in service on the off-shore platforms operated by Total. ExxonMobil has also awarded Rolls-Royce a contract for two gas turbine packages for the East Area additional oil recovery project located 20 miles off Nigeria’s coast. The Rolls-Royce equipment will be used in conjunction with a gas expander to recover natural gas liquids from the multiple reservoirs in the East Area fields.