x Abu Dhabi, UAEThursday 18 January 2018

Rolls powers up $2.2bn deal

Emirates selects Rolls-Royce for a long term engine maintenance deal.

The latest service contract brings the entire Rolls-Royce powered fleet of 128 aircraft at Emirates under the same arrangement.
The latest service contract brings the entire Rolls-Royce powered fleet of 128 aircraft at Emirates under the same arrangement.

Rolls-Royce, the aircraft engine maker, has sealed a US$2.2 billion (Dh8.07bn) servicing contract with Emirates Airline, its second deal in three months with the Dubai carrier.

The work will cover Emirates's entire fleet of 70 Airbus A350 aircraft due for delivery later this decade, and comes as engine makers increasingly look to after-market sales and maintenance support to increase revenues.

It will also provide a boost to the British company after its civil aerospace division reported a 20 per cent fall in profits for last year compared with 2009, in part due to last November's Trent 900 engine failure on a Qantas Airways Airbus A380.

The latest contract brings the entire Rolls-Royce powered fleet of 128 aircraft at Emirates under the same arrangement, the airline said.

The "contract with Rolls-Royce is an important step in ensuring our A350 engines' life-cycle cost is managed effectively," said Tim Clark, the president of Emirates.

Rolls-Royce said its long-term service agreements help to minimise financial risk to customers and enhance engine performance and reliability, allowing operators to concentrate on their core businesses.

The Middle East is a fast-growing market for aircraft and jet engine servicing, with three airlines - Emirates, Etihad Airways and Qatar Airways - expecting to receive $110bn worth of new aircraft this decade. Forecasts for aircraft maintenance in the Middle East show the market doubling to almost US$5bn by 2020.

The contract for the A350 engines comes months after Rolls-Royce won a $1.2bn contract with Emirates for maintenance of Trent 700 engines powering 27 Airbus A330s and Trent 800 engines powering 21 Boeing 777s.

Rolls-Royce, the world's second-largest jet engine maker, experienced two high-profile engine mishaps last year including the "uncontained disc failure" - an engine failure in which the fan blades blow out - on November 4 on the Qantas flight.

That event and its related costs totalled £56 million (Dh328.9m), Rolls-Royce said. The company foresees "a modest level of additional costs" this year associated with the failure and the follow-up efforts to resolve outstanding issues.

The incident "generated considerable scrutiny of the aircraft and engine programme", Rolls-Royce said. "The costs provided for this failure, including incremental service and support costs, non-contracted settlements to all affected customers and the impact on the group's operational activity totalled £56m," it said.

"Uncontained disc failures happen with a frequency of about once a year on the world's large civil aircraft fleet.

"However, this was the first time an event of this nature had occurred on a large civil Rolls-Royce engine since 1994."

In addition to the Qantas blowout, in August a Trent 1000 engine built for the Boeing 787 Dreamliner failed during testing.

"We are now investigating in detail and have made good progress in understanding the issue," a company executive said at the time. "A modification is already in place for later engines."

Although profits dropped last year, Rolls-Royce's civil aerospace division saw revenues climb 10 per cent over 2009, to £4.9bn, helped by its long-term servicing contracts and the delivery of 846 engines.

Its order book totals £48.5bn, including 5,100 engines. Last year, the engine maker received orders worth £7.5bn.

Rolls-Royce employs 39,000 staff in 50 countries, including the UAE, where it has offices in Dubai and plans to set up an office in Abu Dhabi.



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