The aftermarket created by the 54,000 engines we have in service
around the world offers a significant opportunity to Rolls-Royce
and represents about 55 per cent of our total business.
Increasingly we are addressing this opportunity by taking responsibility for the management of the maintenance and associated logistics for our engines and systems, monitoring the equipment in service to deliver the system availability our customers require with predictable costs. Our strategy is to align our interests with those of our customers. This gives us an incentive to improve the reliability and extend the service intervals of our products, increasing our customers’ revenue earning potential and the operational effectiveness.
Our approach continues to find acceptance in the marketplace in each of the sectors in which we operate. TotalCare and CorporateCare business worth £1 billion was contracted in 2004, building on the success of previous years. A total of 4,300 civil engines are now under management.
We have also seen notable contract awards in other sectors of our business. The Royal Air Force has agreed a £65 million contract extension for the Spey engine which powers the Nimrod maritime reconnaissance aircraft. This is a follow-on from the successful initial contract in which all the key targets were met. Similarly, the US Department of Defense awarded Rolls-Royce a US$60 million Power By The Hour® contract for the F405-RR-401 (Adour) engines that power the US Navy’s T-45 training aircraft. This logistic support contract was developed in line with civil aerospace agreements demonstrating the value to be gained from applying commercial best practice. It is an excellent example of how Rolls-Royce is partnering with its customers and suppliers to provide customised solutions, expanding further the Group’s range of services.
In the marine sector, the Chilean Navy awarded a 20 year support contract for five gas turbine powered ships and in the energy sector the Long-Term Service Agreement portfolio has continued to grow with contracts covering £260 million of equipment.
We have a record of innovation in the service arena, including early entry into the engine leasing business and sophisticated remote diagnostic and data management services through our joint venture Data Systems & Solutions. This business now monitors over 4,000 gas turbines on behalf of Rolls-Royce and its customers. We have continued to innovate during 2004 and have brought our ‘Operations Room’ on-line as the hub for managing our TotalCare contracts. We have expanded our offerings, particularly with respect to the management of customer inventories and field maintenance, through our Component Care and On-Wing Care services.
In response to market demand we are increasing and improving our repair and overhaul capacity. £45 million is to be invested in a new state-of-the-art overhaul facility in East Kilbride, replacing the old facility. This new factory will be completed in 2006 and will enable significant productivity improvements. We also announced that the location of our N3 joint venture with Lufthansa Technik will be on a site near Erfurt in Thuringia, Germany. The facility will provide technical support and overhaul services for the Trent 500, 700 and 900 engines which power the Airbus A340-500/-600, A330 and A380 aircraft respectively.
Increasingly we are addressing this opportunity by taking responsibility for the management of the maintenance and associated logistics for our engines and systems, monitoring the equipment in service to deliver the system availability our customers require with predictable costs. Our strategy is to align our interests with those of our customers. This gives us an incentive to improve the reliability and extend the service intervals of our products, increasing our customers’ revenue earning potential and the operational effectiveness.
Our approach continues to find acceptance in the marketplace in each of the sectors in which we operate. TotalCare and CorporateCare business worth £1 billion was contracted in 2004, building on the success of previous years. A total of 4,300 civil engines are now under management.
We have also seen notable contract awards in other sectors of our business. The Royal Air Force has agreed a £65 million contract extension for the Spey engine which powers the Nimrod maritime reconnaissance aircraft. This is a follow-on from the successful initial contract in which all the key targets were met. Similarly, the US Department of Defense awarded Rolls-Royce a US$60 million Power By The Hour® contract for the F405-RR-401 (Adour) engines that power the US Navy’s T-45 training aircraft. This logistic support contract was developed in line with civil aerospace agreements demonstrating the value to be gained from applying commercial best practice. It is an excellent example of how Rolls-Royce is partnering with its customers and suppliers to provide customised solutions, expanding further the Group’s range of services.
In the marine sector, the Chilean Navy awarded a 20 year support contract for five gas turbine powered ships and in the energy sector the Long-Term Service Agreement portfolio has continued to grow with contracts covering £260 million of equipment.
We have a record of innovation in the service arena, including early entry into the engine leasing business and sophisticated remote diagnostic and data management services through our joint venture Data Systems & Solutions. This business now monitors over 4,000 gas turbines on behalf of Rolls-Royce and its customers. We have continued to innovate during 2004 and have brought our ‘Operations Room’ on-line as the hub for managing our TotalCare contracts. We have expanded our offerings, particularly with respect to the management of customer inventories and field maintenance, through our Component Care and On-Wing Care services.
In response to market demand we are increasing and improving our repair and overhaul capacity. £45 million is to be invested in a new state-of-the-art overhaul facility in East Kilbride, replacing the old facility. This new factory will be completed in 2006 and will enable significant productivity improvements. We also announced that the location of our N3 joint venture with Lufthansa Technik will be on a site near Erfurt in Thuringia, Germany. The facility will provide technical support and overhaul services for the Trent 500, 700 and 900 engines which power the Airbus A340-500/-600, A330 and A380 aircraft respectively.