Rolls-Royce upbeat on services growth opportunities

Rolls-Royce said at Farnborough that it expected the proportion of revenues earned through service agreements would increase significantly in the medium term.

Speaking at the Farnborough Air Show, Mike Terrett, President, Civil Aerospace, said, "Our business is moving naturally into a different phase. We continue to see more demand for our range of customer support services and we expect to grow earnings from these sources, which last year represented 35 per cent of our £3.4 billion civil aerospace income."

Service menus, under the brand name Total Care, offer airlines a wide choice of options ranging from the latest predictive maintenance tools to spares provisioning, access to a world-wide repair and overhaul network, and engine leasing. Approximately 45 per cent of current Rolls-Royce production engines are covered by Total Care, while 25 per cent of the company's corporate jet engine fleet is handled by equivalent CorporateCare contracts.

The company repeated its view, issued last October in the wake of the terrorist attacks, that civil aerospace faced a difficult business climate in 2002 and 2003, but that orders for new engines were likely to rise in 2004 and beyond. Rolls-Royce will produce around 900 civil engines this year, 30 per cent less than in 2001.

Mike Terrett added: "We are the clear world number two in engines for large and regional aircraft, and the number one supplier for business jets. Of the 9,000 Rolls-Royce engines in airline service, 60 per cent were delivered in the past six years. With an average age of eight years, this is the industry's youngest fleet - an ideal profile for long-term service agreements."

"Rolls-Royce has successfully developed six new engine types and completed four major product developments in the past eight years involving programmes for corporate jets, regional aircraft and large airliners," said Terrett. "Our record for delivering programmes on time and to specification is second to none, and as our installed base continues to grow, we will see increasing benefits from the maturing fleet."

REF XQQEE XQQAR XQQCR