Emirates, Rolls-Royce in $9.2 billion deal

Emirates, Rolls-Royce in $9.2 billion deal

Trent 900 engines to power airline’s 50 Airbus A380s entering into service in 2016.

By Muzaffar Rizvi - Business News Editor

Published: Sat 18 Apr 2015, 2:03 AM

Last updated: Thu 25 Jun 2015, 7:21 PM

Chief Executive Officer of Rolls-Royce John Rishton (L) and President of Emirates Airlines Tim Clark shake hands after addressing a press conference in central London on April 17, 2015. Dubai

Dubai — Emirates on Friday announced a historic $9.2 billion (€8.7 billion) engine deal with Rolls-Royce for Trent 900 engines and a long-term TotalCare package.

Announcing the deal at a joint Press conference in London, attended by Emirates president Sir Tim Clark and Rolls-Royce chief executive John Rishton, the Dubai-based airline said the engines will be used to power its 50 superjumbos ordered at the Dubai Airshow in 2013. The airline will buy 200 Trent 900 engines plus spares for the four-engine aircraft that would enter service from 2016.

It is the first time the Gulf carrier has ordered Rolls-Royce engines for its double-decker aircraft fleet, the rest of which is powered by Engine Alliance, a joint venture of General Electric and Pratt & Whitney. The UK-based Rolls-Royce is the world’s second-largest maker of aircraft engines after Fairfield, Connecticut-based GE. Its shares rose 2.1 per cent to 1001 pence in early trading on London Stock Exchange.

The $9.2 billion engine deal to Rolls-Royce is a major blow to US-based Engine Alliance that is powering Emirates’ first 90 double-decker planes. British Airways, Deutsche Lufthansa and Qantas Airways Ltd are among other leading customers using Rolls-Royce Trent 900 engines in superjumbos.

“Today’s announcement is significant not only because it cements the partnership between Emirates and Rolls-Royce, but also because of the large and sustained economic impact that this will have on aviation manufacturing in the UK and Europe,” Sir Tim Clark said.

Saj Ahmad, chief analyst at London-based StrategicAero Research, said the deal will bolster Rolls Royce’s backlog for several years, especially since it was hit hard by Emirates’ cancellation of 70 Rolls Royce-powered Airbus A350s last summer.

“It’s a massive shot in the arm for Rolls Royce, especially when you consider just how poor the A380 has been in securing new orders,” Ahmad told Khaleej Times.

The engine deal, which is the largest ever for Rolls-Royce, and one of the largest ever export orders for a UK based company, is part of Emirates’ ongoing investment into the UK and Europe. It will further support trade ties between the UK and the UAE, building on the estimated $13.4 billion of bilateral trade recorded in 2013.

Rishton, said the success of Emirates over the last 30 years has been extraordinary.

“Rolls-Royce has been proud to have been part of this success, powering Emirates aircraft since 1996. We are delighted that Emirates has again placed its trust in our technology, with the biggest order in our history,” he said.

Referring to Frontier Economics report, Emirate said in a statement that its investment in the Airbus A380 programme has had a significant impact on the UK and wider European economies. The report identified that in 2013-14 Emirates’ investment in the A380 created 7,000 UK jobs, equating to a $630 million GDP contribution. Across the EU, Emirates’ 140 A380 orders are estimated to have supported 41,000 jobs, equivalent to a massive $3.6 billion GDP.

“As the largest customer and operator of Airbus A380s, Emirates order for Rolls Royce engines brings a new engine type under Emirates growing A380 fleet. The airline will be able to further diversify its engineering talent with yet another new engine type under its belt too,” Ahmad said.

“Even though Emirates today is still taking deliveries of the GE-PW Alliance GP7200 engines on its current A380s, Emirates’ huge A380 fleet benefits from operational economies of scale and therefore introducing a new engine type to the fleet will not detrimentally impact either its cost base or operational efficiency,” he said.

Fabrice Brégier, Airbus president and chief executive, said this year Airbus is celebrating the 10th anniversary year of the A380’s first flight.

“We would like to congratulate Emirates for continuing to place the A380 at the centre of their future growth plans. This is exactly what this remarkable aircraft was designed for; helping leading worldwide airlines such as Emirates to develop and grow profitably,” said Brégier.


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