Rolls-Royce may
take a stake in Snecma when the French aerospace engine company is
privatized in the not-too-distant future.
Many observers have speculated that fourth-ranking Snecma would
lead consolidation in the European aero engine industry when the
French government unleashes it from state control. Snecma chairman
Jean-Paul Bechat has stated he would be interested in acquiring
fifth-ranked MTU of Germany if it were for sale, adding it to a
portfolio that last year took in Turbomeca and Hurel-Dubois. FiatAvio
and Volvo Aero are also seen as potential Snecma targets. But Rolls-Royce,
the world's second biggest aero engine company, doesn't necessarily
see it that way.
"If the price is right we're always interested," Colin
Green, president of Rolls-Royce Defense Aerospace Sector told Show
News of a possible Snecma stake. "It would make eminent sense,
but there are a number of big issues that would need to be resolved."
These revolve around Snecma's partnership with GE in the world's
most popular CFM56 airline engine, and Rolls-Royce's involvement
with Pratt & Whitney and MTU in its rival, the V2500, which
Rolls claims is now beating CFM on new sales of Airbus narrowbody
airliners. Snecma is also a partner in the GE90, which competes
with Rolls' Trent series.
On the synergy side, Rolls and Snecma are both OEM engine manufacturers
(unlike MTU), and both have a similar philosophy of partnering with
airline customers to develop their rapidly growing aftermarket and
engine services businesses.
"The U.S. involvement is an inhibitor in terms of a natural
coming together of European engine makers," says Green. But
at the same time we are most concerned that any consolidation does
not become Fortress Europe."
The last thing Rolls wants to do is upset the U.S., which is its
single largest customer worldwide. It powers the C-130 Hercules,
AV-8 Harrier, A-7 fighter, V-22 Osprey, T-45 Goshawk trainer and
P-3 Orion, and is heavily involved in the Joint Strike Fighter-potentially
the largest military program of the new century.
With Snecma, however, Rolls-Royce is partnered through Turbomeca
on two major helicopter programs just entering production, the NH90
transport (RTM322 engine) and Franco-German Tigre (MTR390), and
the Adour powerplant for the Hawk trainer. The two are major partners
on the TP400 engine for the A400M European military transport, too.
Rolls-Royce is also partnered with Snecma in a joint venture to
develop the next generation of military combat engines. "We
see this as the logical next step in terms of relationships between
the companies," Green says. "We need to be players in
that venture, and we don't want to see the French go down a different
road.
"So, you can see, the relationship with Snecma is developing
anyway."
Rolls-Royce' military business earned $215 million before interest
last year on sales of just under $2 billion. Profits are expected
to grow further as the first of 620 Eurofighters enter production
this year powered by twin EJ200s, in which Rolls-Royce has a 36%
share in actual production, as well as a 47% stake in fellow EJ200
partner ITP of Spain.
By John Morris
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