Story ID: 
Rolls still bullish despite climbing jet-fuel prices
By: Julian Moxon
Caption: Given the skyrocketing price of oil, the global financial crisis and gloomy forecasts from the travel industry, one might be forgiven for anticipating a me
Word Count: 920
Given the skyrocketing price of oil, the global financial crisis and gloomy forecasts from the travel industry, one might be forgiven for anticipating a message of gloom and doom from a manufacturer of a substantial proportion of the world’s aero engines. Not so at Rolls-Royce. While admitting openly that the aviation industry is heading for a “period of uncertainty,” civil aerospace president Mark King is surprisingly bullish about the prospects for the UK company. “These are certainly interesting times, but if you stop and stare at the fundamentals it is clear the world will need larger, more fuel efficient aircraft,” he said.Older, fuel-hungry types will end up grounded and as Rolls-Royce claims the top position in powering widebodies, the future looks secure. “There are very few companies in the world which can look at future revenues as clearly as we can,” said King.  The company plans no changes to its five core strategies–to address its four global markets (civil, military, marine and energy); invest in technology and infrastructure; develop a competitive portfolio of products and services; grow market share and installed product base; and add value for customers through product-related services. “We have no intention of changing course, even with oil pushing past $140 a barrel,” said King. “There is a view that the civil aerospace industry will react negatively to the current situation. But what is the world going to need? More efficient engines. And that is what we make.”Rolls-Royce’s 2007 order book reached a record $72 billion and it produced $8 billion in revenues, $5.1 billion of which came from underlying services. The installed engine fleet of 12,000 engines is growing rapidly, the number of hours flown by Rolls-Royce engines having increased by 91 percent since 2000, when world traffic rose by 41 percent during the same period. Another key statistic cited by King is that the vast majority of widebody aircraft powered by Rolls-Royce engines are less than ten years old, while half of the world fleet is more than 20 years old. Many of the older aircraft will be grounded, and while King admits that “nobody will be immune from that,” he added. “The grounded aircraft will typically not be ours.” Engineering and technology director Colin Smith said Rolls-Royce has invested more than $22 billion on technology, capability and infrastructure in the last decade, with increasing emphasis on the company’s centers in Dahlewitz, Germany and Indianapolis, Indiana. Gross research and development expenditure in 2007 exceeded £1.6 billion ($3.15 billion), about half of which came from Rolls-Royce, the rest from publicly funded civil and military R&D programs. The company’s U.S. subsidiary has had particular success winning funding for military research contracts in that country, including the U.S. Air Force adaptive versatile engine technology (ADVENT) research program into next-generation military aerospace platforms and the highly efficient embedded turbine engine (HEETE) technology program.Core Strategies On the civil side, interest centers on the powerplant solution for the aircraft that will replace the Airbus and Boeing narrowbodies. Smith rules out the geared turbofan (GTF) chosen by Rolls-Royce’s International Aero Engines partner Pratt & Whitney as a solution to providing a “step change” in performance. “We believe a two or three shaft direct drive turbofan can perform as well as the GTF and it will be lighter and more reliable,” he said. “You have to be careful about using that phrase. The Trent XWB will burn 17 percent less fuel than the Trent 700, which entered service in 1995 powering the Airbus A330. That’s a step change.” Smith said the open rotor concept could produce a so-called step change in fuel efficiency, but admits that a balance between noise and fuel burn must be made. “With an open rotor there’s nowhere to absorb the noise. You have to get the fundamentals right.” He said the rising price of fuel may drive a compromise, “such as flying a bit slower.” Rolls-Royce is involved in several major research programs, including the latest European Clean Sky joint technology initiative, which provide funding for open rotor research. “We’ll get the technologies in the bag,” said Smith, “so that when the industry converges on a solution we’ll be ready.”The fuel crisis is having an effect on thinking for the next generation of smaller aircraft of up to 100 seats. “More and more manufacturers are looking again at turboprops,” said Smith, who points to  Rolls-Royce’s joint leadership of the new TP400-D6 turboprop powering the Airbus Military A400M airlifter as the best example of the company’s position “right at the heart of the state of the art in turboprops.” The Trent XWB remains the sole powerplant aboard the Airbus A350XWB. General Electric has proposed its GEnx for the two smaller versions, but not for the largest A350-1000 version. Smith said the design of the XWB will probably be frozen by the end of July, although recent  increases to the operating weight of the Airbus A350XWB will likely translate into a need for increases in takeoff thrust. “We have sized the fan quite conservatively,” he added. “There’s still a long way to go on this program, but we have a common bill of material for all three aircraft.” King sees Rolls-Royce’s installed civil engine fleet continuing to grow at the current average of 6.6 percent a year. “We make highly efficient ways of converting fuel to energy,” he says. “We believe we will see sustained growth in the long term. There is more resilience in our business than there has ever been.”