Rolls-Royce warned this month that U.S. and European defense cuts
mean that a decade of profit growth will come to an end this year,
sending its shares sharply down and providing added incentive to
refocus investor attention on the company's longer-term prospects.
Soaring demand for more fuel-efficient engines for aircraft made by
Europe's largest aerospace group Airbus <AIR.PA> and its U.S. rival
Boeing <BA.N> has helped Rolls-Royce's civil aerospace division,
which generates about half of its sales, to drive the company's
strong run over the past decade.
That appetite shows no signs of slowing. Over the next 20 years the
world will need to double its fleet of aircraft as cities expand and
Asia's increasingly affluent middle class takes to the skies, Airbus
forecast in September, adding that airlines, leasing companies and
cargo operators would need a total of 29,226 new passenger and
freighter jets worth $4.4 trillion.
Rolls-Royce, a major British exporter founded in 1884, has responded
with Wednesday's unveiling of the new Advance and Ultrafan engines.
The Advance could be ready to enter service by 2020, it said,
bringing efficiency improvements of up to 6 percent on its Trent WXB
engine, which will be powering planes later this year.
At its headquarters in Derby, central England, Rolls-Royce unveiled
the lightweight Advance's carbon-titanium fan blades, suspended from
the roof of one of the huge kerosene-smelling hangars scattered
around the vast site. The blades will be attached to a core smaller
than the Trent model's before the engine is put through its paces
over the coming years.
Among the tests to be conducted is the simulated bird strike, in
which dozens of frozen birds are fired at the blades at high speeds
to assess the durability of this crucial engine component.
The Ultrafan engine, which differs from the Advance in that it will
incorporate a gear system, could be ready to be attached to aircraft
by 2025 and is expected to be about 10 percent more efficient than
the Trent XWB.
Rolls-Royce, which describes the Trent XWB as the world's most
efficient engine to date, said it is confident of demand for its new
products from Airbus and Boeing.
[to top of second column]
"To some degree we've already started these conversations with the
air-framers as part of our normal discussions around future
requirements," Simon Carlisle, executive vice-president of strategy
and future technology, told reporters.
The world's second-largest manufacturer of aircraft engines of all
sizes, behind U.S. group General Electric <GE.N>, said that its
civil aerospace business could also seek further growth by utilizing
its large-engine know-how to move into supplying medium-sized
In the meantime, Rolls is aiming to exploit additional opportunities
with its biggest civil aerospace customer, Airbus. "We are having
very live discussions with them." said Eric Schulz, head of civil
large engine operations.
"If Airbus decides to go for a re-engine of the A330 or A380
(passenger jets), we will be here to support," he added, referring
to the possibility that the French company could seek different
engines for existing aircraft.
Schulz also said that an ongoing investigation by Britain's
anti-fraud watchdog into Rolls-Royce's dealings in Asia has not
"Our customers are confident that the management of this company has
the right level of ethics, has the right level of processes and
governance in place," he said.
(Editing by Brenda Goh and David
[© 2014 Thomson Reuters. All rights
Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.