Mark King is president of civil aerospace for UK engine manufacturer Rolls-Royce, and is at the forefront of his company's efforts to achieve an unprecendent ramp-up in production rates for its Trent family of large, three-shaft turbofans. The Trent 1000 entered service with All Nippon Airways earlier this year as the lead powerplant for the 787, while the Trent XWB for the Airbus A350 had its first flight on an A380 testbed earlier this year. Over the past decade, Rolls-Royce has seen its installed base of civil engines grow by 50% to 14,500, while its order backlog has leapt to $50 billion from just $10 billion over the same period. Service contracts - which typically run for more than 10 years - now account for 60% of civil revenues, generating 3,000 shop visits per year for Rolls-Royce overhaul facilities. King talks to Flight Daily News about Rolls-Royce's market strategy, proposed joint venture with Pratt & Whitney for future narrowbody engines and pending exit as a shareholder from the International Aero Engines consortium.
Are you still confident about maintaining Rolls-Royce's strong growth rates in the face of the European debt crisis and a potential softening of economic growth in markets such as China and India?
Our growth at the moment is really quite significant, despite some of the decisions that we have made in the market. If there is a signifcant financial dislocation in Europe then I don't think anybody can predict what the impact will be, and we certainly won't be immune from that. We don't need very significant global growth to go through a very significant growth ourselves, as a result of the position we have on a number of very strategic programmes and the visibility we have on our orderbook. If you're looking for growth, look at Rolls-Royce because that's what you're going to see. We're going to deliver 2,000 Trent engines just in the next five years. No-one else has a [Trent XWB] engine like we have now, which is a generation ahead of those engines that are entering service on the 787.
Are you worried about the ability of the banks and leasing companies to continue to finance deliveries of the aircraft already in the firm backlog?
It's always on our mind. Equally, I think people have forecast problems before and they haven't manifested themselves because the banks and the leasing companies are quite innovative in finding different markets from which to access capital. We're obviously watching with regard to export credit, for example, and what's happening in the eurozone because the European banks are significant financiers in aerospace. We can see scenarios where there is a reduction in financing capability, but equally we can see scenarios where it can continue. It's not something of immediate concern, but it's on our watchlist.
What impact will the ramp up in engine deliveries have on Rolls-Royce's industrial footprint and supply chain?
The global footprint of this business is going to change really significantly over the next 10 years. If you look at our deliveries in 2011 - taking the V2500 out because of the deal we've done with IAE - we delivered about 17.5 million pounds of thrust. As we go forward, we will be delivering typically about 30 million pounds of thrust each year. If that's a measure of volume, that's why our footprint has to expand. The difference between the V2500 programme that we will start to lose and the A350 programme that we will start to gain is a factor of six [measured by pounds of thrust]. We're in a great situation, because we're being asked to do more programmes than we can do, and we have options and that's why we've made the choices we have in the past few years.
What will Rolls-Royce do with the $1.5 billion proceeds from the sale of your 32.5% stake in IAE?
As a group we made an industrial engine systems acqusition last year, and we've always maintained a strong balance sheet. In some respects this disposal is of a similar magnitude, so all it's done really is to restore our balance sheet to where it was before the acquisition. So I don't think we're going to go rushing off to spend that money, but obviously if there's something that makes sense then we'll do it.
Why did Rolls-Royce take the decision to exit IAE?
The first part of this deal [with P&W] is actually the decision that we're going to work together in the future on the next generation of aircraft. The fact we then decided to restructure IAE really falls from that, because what we want is for Pratt & Whitney to be as successful as they possibly can be with their geared turbofan on the [Airbus] A320neo. The best way it is going to be successful there is to be able to go to market with a common face between the V2500 and the geared turbofan. That's in our interest because this new venture we've agreed where we're going to work together on geared solutions will benefit from the geared turbofan creating a strong market presence. There is an alignment throughout this that the primary decision we've taken is that we want to work together and it's going to be on geared solutions.
Why did it not make sense to offer a geared turbofan solution for the A320neo using IAE as the route to market?
We could not make the business case for investing our resources in an engine for the Neo. People often ask me how long I think the Neo will last and when it will be replaced? No-one has ever asked me when I think the 787 or A350 will be replaced. It's right at the heart of our philosophy that when we do a major investment in a new engine we prefer to do it for a new aircraft that's going to be around for a long, long period of time. We do absolutely want to be part of whatever is the next generation aircraft which we think can be designed around something quite spectacular in terms of a new engine.
Why do you believe that geared solutions are the right way to go for future engines?
We were working already on a geared solution, in the open rotor. We had already recognised that as bypass ratios get very big you have no choice but to put a gearbox between the fan and the turbine that's driving it. There is clearly some synergy between the geared turbofan and open rotor and really it's just a question about how bypass ratios increase and at what point you decide to take the casing off and actually open the rotor.
What are the next steps in your co-operation with Pratt & Whitney?
We can't do anything yet with Pratt & Whitney until we have regulatory approval, but once we have that our intent would be to sit down with them and agree what is our technology roadmap to be ready for that next-generation single-aisle sometime in the next decade.
Given the industrial delays that hampered the A380 and 787 programmes, how concerned are you about the potential impact of further delays to the A350 programme?
If a programme goes to the right, I think we've demonstrated in the past that we can deal with it because we're diverse across a number of programmes now. It's not a disaster for us. Our philosophy is simply that if it goes to the right, it isn't going to be because of us.
How much long-term damage did the 2010 uncontained failure of a Trent 900 powering a Qantas A380 do to Rolls-Royce's reputation in the marketplace?
I wish the Qantas incident hadn't happened, clearly. That was not good for our reputation at all. But equally, since that incident we've had three more engine orders for the A380. I don't see customers not buying Rolls-Royce equipment or them showing a lack of confidence in Rolls-Royce. Fundamentally, most of our customers are very knowledgeable about the industry and understand these sorts of issues and have given us credit for the way we've managed it.
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