© Rolls-Royce plc 2008 Legal Information

Civil aerospace

The civil aerospace business powers over 30 types of commercial aircraft from business jets to the largest widebody airliners. A fleet of over 12,000 engines is in service.

The business has performed strongly, increasing underlying revenue by three per cent and underlying profit before financing by nine per cent despite the headwinds of a further weakening of the US dollar and increased unit costs. Flying hours continued to grow at approximately five per cent, with services revenues representing 63 per cent of underlying sales. The Rolls-Royce TotalCare^® and CorporateCare^® service products were again chosen by the vast majority of new operators.

The business continued to benefit from its strong position on new programmes and its broad portfolio, as orders for new aircraft and engines rose to unprecedented levels. The total order book for civil aerospace was £35.9 billion, with record orders for Trent engines in the widebody sector and for V2500 engines in the single-aisle market.

Orders for Trent engines covered all six variants, contributing to an overall total of 1,182. Emerging markets, including South America, China, Russia and India, accounted for 17 per cent of Trent orders while 45 per cent were won in our established markets in the US, Europe and Asia.

Significant milestones were reached by the Trent engine family this year. The Airbus A380 successfully entered service in November with Singapore Airlines, powered by the Trent 900 as its launch engine. In July, the first Boeing 787 was rolled out with its launch engine, the Trent 1000, which received Federal Aviation Authority and Joint Aviation Authority certification as scheduled in August.

The 787 aircraft will enter service with All Nippon Airlines and continues to sell well, with the firm order book for Trent 1000 engines exceeding 600 engines at the end of 2007.

The Trent family continues to attract strong demand. The Trent is the only engine currently available for the Airbus A350XWB, for which Airbus received approximately 300 orders during 2007. An upgraded version of the Trent 700 will enter service in 2009, and during 2007, almost 70 per cent of customers who ordered the Airbus A330 chose the Trent 700, representing business to us of US$3.8 billion.

International Aero Engines (IAE), in which Rolls-Royce is a major shareholder, certified its Select One upgrade of the successful V2500 engine on time in December. The improved engine saw another record year for new orders, reflecting the competitive advantage achieved by its low fuel consumption and maintenance cost benefits. More than 660 IAE V2500 engines were selected to power over 300 Airbus A320 family aircraft during 2007, including a follow-on order from US Airways for 78 V2500 powered aircraft.

The Group's leadership in the business jet sector was reinforced by Dassault's selection of a new Rolls-Royce engine to power its next generation, super mid-sized business jet. Our business jet sector continued to perform strongly with almost 400 engines delivered for corporate and regional applications to Bombardier, Cessna, Embraer and Gulfstream.

In October, the Group announced plans to invest in two significant new facilities to help meet growth. A new facility in Singapore, to be completed in 2009, will provide Rolls-Royce with a dual-sourcing capability for the assembly and test of large civil engines, including future new versions of the Trent engine. In addition, a new facility in Virginia, US, will assemble and test the new engine for the Dassault programme.

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