Quarterly news update from Rolls-Royce: Second Quarter Review, 2007

Tuesday, 3 July 2007

In the second quarter of 2007, Rolls-Royce continued to demonstrate the benefits of the breadth and balance of its portfolio of power systems and services. The Group’s investment in technology and capability has led to new programmes and orders being announced across all its businesses.

The global customer base increased significantly with new customers for Rolls-Royce programmes from a wide range of regions, including the Middle East, US, Europe and Asia.

Sir John Rose, Chief Executive of Rolls-Royce, said: “This has been an encouraging quarter for the Group. The Paris air show highlighted the strength of our products and service portfolio in the aerospace sector. Our investment in technology has also contributed to continuing market success in the energy and marine sectors.”

The Group’s marine business saw the launch of the first of the UK Royal Navy’s Astute class of submarines featuring the new long-life nuclear core developed by Rolls-Royce. This core will be capable of providing power for the ship’s entire service life of over 25 years without the need to refuel. Rolls-Royce also won two major offshore contracts for its UT Designs for offshore vessels, including its largest ever order for offshore vessels worth £83 million from OSM Schiffahrt, a German-Norwegian joint venture.

The breadth of the product portfolio was also evident in the energy sector: the Trent 60 won its first order in Latin America, the Bergen gas engine range achieved a record order book, and more RB211s were ordered for gas compression.

In June, Rolls-Royce announced major developments in two aerospace sectors in which the Group is already the market leader. A new engine, developed through the Rolls-Royce technology acquisition programme, was selected by Dassault Aviation to power its new super mid-size Falcon business jet. This ground-breaking selection marked the first partnership between the companies in the business jet market, in which Rolls-Royce has a 34 per cent market share.

In the military transport aircraft sector, where Rolls-Royce is also the market leader, the AE 2100D2-powered C-27J Spartan was selected as the new cargo aircraft for the US Army and Air Force. This engine is from the AE Common Core family, which powers seven different aircraft platforms, including transporters, unmanned air vehicles, regional jets, seaplanes and surveillance aircraft.

Three members of the Trent engine series featured in major announcements.

The Trent XWB, the sixth member of the series, received the largest-ever single order for Rolls-Royce. It will power 80 Airbus A350 XWB aircraft for Qatar Airways, with a TotalCare® long-term agreement, and a total value of $5.6bn at list prices.

The Trent XWB will also power 22 A350 XWB aircraft for US Airways, a new customer for the Trent, 20 A350 XWB aircraft for Kingfisher and 12 for Alafco. Singapore Airlines, which already has four members of the Trent series in service or on order, signed an agreement for 20 A350 XWB aircraft to be powered by the Trent XWB, with a 12-year TotalCare agreement.

On June 19, the Trent 1000 for the Boeing 787 Dreamliner made its maiden flight on the Rolls-Royce flying test bed in Waco, Texas. During June, the engine was selected by Avianca, the first Trent customer in Latin America, CIT and flyglobespan to power their Boeing 787s.

The Trent 700, which is being upgraded with newer Trent technology, has achieved a 94 per cent market share on the newly-launched Airbus A330 Freighter, in addition to winning orders from AirAsia X in Malaysia, Aeroflot in Russia, Aercap in the Netherlands, Avianca and CIT for new A330 passenger aircraft. The Trent 700 market share now stands at 48 per cent. Kingfisher and Etihad ordered a total of nine A340s powered by the Trent 500.

Rolls-Royce reported that the total value of business announced during the Paris air show was $15.1 billion at list prices.

Business highlights:

Civil Aerospace

  • The Trent 1000, launch engine for the Boeing 787 Dreamliner, is reaching the final stages of its certification programme, following its successful maiden flight. The engine has a few key tests to complete as part of the certification programme, which remains on track following successful major tests such as bird strike and fan blade containment. The company has also delivered the first ship set of flight test engines to Boeing for installation on the first 787 aircraft ahead of roll-out on July 8.
  • Customers for the Trent 700-powered Airbus A330 freighter are Guggenheim Aviation Partners, which has ordered engines for six aircraft, Avion Aircraft Trading with for eight aircraft and Intrepid Aviation Group, which has ordered 17 firm freighters, with options on a further three.
  • US leasing company, CIT Aerospace, has placed orders for three different variants of the Rolls-Royce Trent family, covering a total fleet of up to 23 new aircraft, including the latest two versions. The company selected the Trent 700 to power four firm and seven option Airbus A330s, the Trent 1000 for up to five Boeing 787s, and the Trent XWB for seven Airbus A350 XWBs. Total value of these orders is $860 million.
  • British Airways has placed a follow-on order for Trent 800 engines to power up to eight additional Boeing 777s, an agreement worth $320 million for the installed engines. An extension to the airline’s existing TotalCare long-term services agreement will cover these additional engines once they enter into service.
  • The V2500, produced by International Aero Engines, in which Rolls-Royce is a senior partner, received orders from six customers for 250 engines during the period, with a value to Rolls-Royce of more than $1.1 billion.


  • The UK Ministry of Defence announced that it will proceed towards the financial and contractual closure of the Future Strategic Tanker Aircraft (FSTA) Private Finance Initiative programme with AirTanker, of which Rolls-Royce is a 20 per cent stakeholder. As well as manufacturing and supporting the Trent 700 engines for the A330s, Rolls-Royce will also be involved in the total service provision for the 27-year duration of the contract.
  • The F136 engine programme for Joint Strike Fighter continued to perform on time and to budget and is making excellent progress towards its Critical Design Review in February 2008. The US House Armed Services and Senate Armed Services Committees have both approved F136 funding for next year. Significant agreements were signed at the Paris air show with Dutch industry to introduce new lightweight materials into the F136, and with the Canadian National Laboratory on a range of technologies aimed at further enhancing the engine.
  • The latest variant of the RTM322 helicopter engine for the NH90 helicopter has undertaken its first flight in a series of trials that will demonstrate its capability in hot and high conditions. Oman will be the first customer to benefit from the new variant when it takes delivery of its first NH90.
  • Turkey announced its selection of the T800-powered A129 helicopter for its ATAK programme. The T800 is a product of LHTEC, a 50:50 joint venture company between Rolls-Royce and Honeywell.


  • Rolls-Royce UT Designs secured an £83 million order for six offshore vessels, with options for six more, and for equipment from OSM Schiffahrt. The Group also won a £50 million contract from Lewek Shipping, a subsidiary of Singapore company Ezra Holdings, to design and equip two advanced offshore ships.
  • Rolls-Royce waterjets will be used on a series of ten fast catamaran ferries ordered by Venetian Marketing Services Ltd (VMSL) for a luxury ferry service between Hong Kong locations and the new Pac On terminal being built by the Macau government to serve the Cotai Strip in Macau.


  • A Trent 60 dual fuel package has been ordered by Hidroelectrica La Higuerea S.A. in Chile for a new power plant to provide back-up power for a hydro-electric plant. This is the first South American order for the industrial Trent gas turbine.
  • New customers in Russia, Belgium and Pakistan have helped Bergen gas engines achieve a record order book of £50 million, with the newest engine in the range, the B35:40, winning the majority of the sales, with over 30 engines on order. Many of the orders are for co-generation plants, for which Rolls-Royce is the leading provider in Europe.
  • Union Gas Ltd of Ontario, Canada has ordered three RB211 gas turbine packages for use on its natural gas pipeline network. The new engines will be installed at the Dawn compressor station, alongside five existing RB211 packages.


  • The civil aerospace business continued to increase its aftermarket reach. Thai Airways International has taken out a TotalCare® long-term services agreement covering the Trent 500 engines powering its fleet of ten new-generation Airbus A340s. South African Airways has extended its Trent 500 TotalCare agreement to cover all nine A340-600s. Monarch Airlines has signed a new TotalCare contract for the RB211-535 engines that power its seven Boeing 757s.
  • A new operations room for two-shaft engines has opened at the Group’s Dahlewitz facility near Berlin. It joins similar facilities in Derby and Bristol.
  • Contracts totaling more than £100 million to support military engines were signed during the quarter. Services account for more than 50 per cent of the revenues of the Defence Aerospace business.
  • Rolls-Royce Turbomeca (RRTM) signed a Memorandum of Understanding for a repair co-operation Agreement with Air Depot Kjeller (Norway) and Patria (Finland) for the future support of the RTM322 which powers the NH90 and EH101 helicopters in the Nordic region.

Operations and technology

  • New research capabilities were launched at two British universities - a University Technology Centre (UTC) in Composites at the University of Bristol, and a specialist electrical testing facility within an existing UTC at the University of Manchester.
  • The new UTC at Bristol forms part of the University’s Advanced Composites Centre for Innovation and Science (ACCIS) and is the 28th UTC Rolls-Royce has established worldwide. It will act as a focus for composites research activity, in close collaboration with other academic bodies that have expertise in this area, including Imperial College (London), Oxford, Nottingham and Ulster, and the Rolls-Royce UTC in Dresden, Germany.
  • In Manchester, a £1million experimental test facility will assist in the development of high-technology electrical systems for aircraft, ships and energy generation. It will complement the work of a UTC established in 2004 to develop the design of electrical systems for air, sea and land vehicles operating in ‘extreme environments’ such as those experienced by planes at altitudes of 60,000ft and by ships submerged in freezing waters.

Note to news editors

The Group’s Interim Results for the first six months of 2007 will be published on July 26.

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