Defence Aerospace

Defence Aerospace
£ millions20122011Change
Order book5,1576,035-15%
Engine deliveries8648146%
Underlying revenue2,4172,2358%
Underlying OE revenue1,2311,10212%
Underlying services revenue1,1861,1335%
Underlying profit before financing4043767%
Return on sales*16.7%16.8%-0.1pp

  *   By reference to underlying profit before financing costs and tax


  • The order book contracted by 15 per cent reflecting the budgetary pressures on our major customers in Europe and North America.  The net order intake of £1.6bn (£1.8bn in 2011) includes cancellations of £0.4bn, principally the proposed cancellations of a number of contracts for C-27J aircraft, including those by the US Department of Defense (DoD). Despite the challenging environment, we continue to see opportunities both in our traditional markets and the developing economies.

    Significant orders in 2012 included:

    • US$1bn of contracts for OE and services for military transport, trainer and helicopter engines for the US Army, US Air Force, US Marine Corps and US Navy.
    • A US$315m contract from Pratt & Whitney for 17 LiftSystem sets for the F-35B STOVL variant of the Lightning II Joint Strike Fighter.
    • A £100m contract extension to maintain the engines for the UK MoD’s fleets of C-130 military transport and VC10 tanker aircraft.
    • A contract with the Royal Australian Air Force to help improve the fuel efficiency of its C-130 military transport aircraft.
  • Revenue increased by eight per cent, reflecting a 12 per cent increase in OE revenue and a five per cent increase in services revenue. However, adjusted for the non-recurrence of the £60m SDSR benefit in 2011, services revenue increased by 11 per cent. This highlights how our large installed base continues to provide services opportunities as customers seek to optimise the efficiency of their aircraft.
  • Profit increased by seven per cent. Adjusted for the SDSR benefit in 2011, profit increased by 28 per cent due to increased OE volumes and mix, growth in services, unit cost improvements and a lower R&D charge.


  • The F-35B STOVL variant of the JSF entered service with the US and the first deliveries were made to the UK MoD. This followed a successful flight test programme for the F-35B that included over 500 short take-offs and landings.
  • Engine deliveries for the first production Airbus A400M transport aircraft began in 2012 ahead of entry into service in 2013.
  • Flight testing completed successfully with the US Air Force of the Series 3.5 enhanced T56 engine. The reduced fuel consumption and reliability improvements will enable the US Air Force to operate its C130H military transport aircraft until 2040, with improved performance, reduced emissions and significant cost savings.
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