On the Record with MIKE TERRETT, MANAGING DIRECTOR-COMMERCIAL, ROLLS-ROYCE
"If you go to the gym on a regular basis, you're likely to
stay fit."
So says Mike Terrett, managing director of Rolls-Royce Commercial,
of the company's ability to develop new Trent engines. "On
time and at cost," he notes, adding that his competitors don't
go to the gym so often.
Continuing development of the Trent (the 500 entered service with
Virgin Airways on the A340-500/600 last summer and now has almost
50,000 hours in service; the 900 for the A380 is already on test)
means that Rolls is close to having the technology needed to offer
an engine on the new 7E7. "We're working very closely with
Boeing to meet the technical requirements, the life-cycle costs
and a challenging step change in performance," he told Show
News.
The Trent 900, featuring an advanced swept fan and a contra-rotating
high-pressure spool, has already run at 88,000 pounds thrust, exceeding
the power needed for entry into service on the A380. Some of its
technology may well find its way into the engine for the 7E7, as
will features from the parallel AMPLE technology development program
currently under way at Rolls-Royce.
Terrett believes Rolls-Royce has built a solid foundation for
the future with a growing installed base of engines (10,000 commercial
engines of all types) on a fleet that averages just 8.2 years old.
"This young and growing fleet is consistent with our market
share of 35% across all sectors, and the aftermarket is strong,"
he said. And he noted that in difficult times for the airline business
it is the younger aircraft that are flown more: Rolls-Royce hours
flown rose 7% last year, while hours flown by the industry dipped
2%.
In larger engines for widebodies Terrett claims Rolls is the leader,
too, with 1,670 Trent engines ordered by 40 customers. Rolls is
still ahead on the Boeing 777, although its share as declining as
airlines order the new 777-300ER and 200LR models powered exclusively
by the rival GE90-115B.
Airlines are increasingly turning to the manufacturers for maintenance.
Rolls-Royce took $1.6 billion worth of long term Total Care contracts
on the Trent 500 last year and another $1.6 billion on other engine
models. Nearly two-thirds of the Trent fleet is now signed-up, and
90% of the AE3007 engines that power the smaller Embraer regional
jet. Together, the aftermarket now represents some 44% of Rolls-Royce's
$9.4 billion annual revenues, and the proportion is similar in the
commercial engine business, Terrett noted.
Despite the victories, 2002 was a difficult year for Rolls-Royce,
which saw profits plunge 46% to $415 million from $770 million the
prior year largely due to the crisis in the commercial aviation
industry. "We continue to work with our customers," says
Terrett. "We have experienced a number of deferrals as opposed
to cancellations" as the crisis continues with SARS, which
is severely impacting some of its Asian customers such as Cathay
and Singapore Airlines.
A major development at Rolls is its agreement with Lufthansa Technik
to set up a joint engine MRO venture, a move intended to reinforce
the role of both players in the aero engine aftermarket sector.
The 50-50 venture, dubbed N3 Engine Overhaul Services, aims to supply
a full range of engine support services for the Trent 500/700/900
family to customers in Europe, Africa and the Americas. Lufthansa
and Rolls plan to invest more than $107 million in the new company,
which is expected to begin operation by the end of 2007, when a
significant number of Rolls-Royce's latest generation engines will
be scheduled for major overhaul.
The venture cements a relationship with Lufthansa in which the
airline has chosen the Trent for its new widebody fleet of Airbus
A330s, A340s and A380s. Lufthansa was traditionally a GE stronghold,
"so this is a pretty important message," says Terrett.
