FlightGlobal.com
Home
Premium
Archive
Video
Images
Forum
Atlas
Blogs
Jobs
Shop
RSS
Email Newsletters
You are in:
Home
Aviation History
1995
1995 - 2617.PDF
BUSINESS Rolls-Royce quietly confident KEVIN OTOOLE/LONDON AFTER THREE years spent re shaping the business, there is growing confidence within Rolls- Royce that die company is now poised for an upturn in its lacklustre financial performance. Chairman Sir Ralph Robins says that the group's extensive restruc turing programme, launched at die start of 1993, is nearing an end and that die benefits should start to show dirough on the bottom line next year. The restructuring has seen R-R shed more than 7,000 aerospace jobs and close seven plants. The total aerospace workforce now stands at 22,200 — down from 36,500 just five years ago. A more immediate benefit to die company has come from the dra matic fall-off in research and devel opment costs as die heavy spend on the Trent programme draws to a close. Robins admits that a large part of die profits improvement posted for die first half of 1995 stemmed from die tail-off in research spending, which was down by £28 million ($43.5 million). That helped die group's aero space division to turn in pre-tax profits of £34 million, having achieved little more than break even in die first half of 1994. The group is expecting to continue die improvement into the second half of die year. Robins dismisses criticism that R-R overstretched itself with die launch of die Trent into die over crowded big turbofan market, and categorically denies speculation in die UK media tiiat the group has R-R's tnrbofan line-up holds promise of increased market stakes, says Robins (right) been forced into alliance talks with Pratt & Whitney. "It's absolute rubbish. We're not talking to P&W," he says, adding that die diree big-fan programmes are simply too far advanced to con template mergers. Widi no immediate prospect of a new large-engine launch from any of die major manufacturers, the next opportunity for alliance talks could be more than a decade away, he believes. "I believe that we'll make money out of die Trent, but we don't expect to turn to positive cash on the programme for 12 years," says Robins. Trent deliveries are already beginning to improve die group's mix of civil engine deliveries, pegged at a total of around 400 units a year. Delivery of some 40-50 Trents in 1996 would represent around 30% of die value of this business. Robins believes diat a full recov ery in civil markets is still at least a year away, but as it does return he argues that R-R is on track to achieve the 30% share it targeted almost a decade ago at the start of its expansion. "We are now at 25% and we've come from 8%," he says. R-R's occasionally painful strug gle into the big league of engine sales has also been storing up a wealth of spares business, most of which the group has yet to realise. Robins says diat it has taken longer than expected for the boom in engine sales (up from only 100 a year in the mid-1980s) to translate into spares markets, but adds diat diere are signs of a pick-up in work forTaysandRB211-535s. Spares business should account for a lucrative 30% of sales, but has been running at no more than 2 5 %. The group's military business is also beginning to rebound, on the back of programmes such as the Hawk and Eurofighter. The group expects to see deliveries climb to around 100 units in 1996, up from a ow point of half diat volume in 1994 and 1995. The acquisition of Allison, finalised in March, is expected to strengthen the group in US defence markets, providing an on-shore manufacturing base and a place on key pro grammes. "We have a good track record in the US but we've never been on the major programmes," says Robins. Senior-level talks have already taken place over die possibility of supplying US Army McDonnell Douglas Apaches with the RTM- 322 engine, following the engine's selection on the airframe for the UK attack helicopter order. Robins says that the talks are still prelimi nary, but adds that "...now it is a possibility, before it was not". Allison has proved its worth after only three months within die group by contributing a £12 million oper ating profit on sales of£105 million to the first half result. J Japan's MITI raises request for state aerospace funding JAPAN'S POWERFU1 Ministry I of International Trade and Industry (MITI) is asking for a rise of nearly 8.6% in state aerospace funding for 1996 to help support the country's collaborative pro grammes. MITI's request asks for nearly ¥12 billion ($120 million), against ¥10.8 billion allocated for the cur rent year. Much of the increase is accounted for by the ¥4 billion to support international collaboration. Some ¥883 million in new fund ing is being requested to help underwrite the deal recendy nego tiated by Ishikawajima-Harima Heavy Industries for a 30% stake in General Electric's planned growth CF34-8C engine. Japanese involvement in the engine is being expanded to include Kawasaki (Flight International, 6-12 September, P6). Among the larger items includ ed in MITI's proposed budget is ¥2.9 billion to continue support of Japan's 20% share of the Boeing 777's structure. Funds will go mainly towards development of die stretch 777-300's fuselage by Mitsubishi, Kawasaki and Fuji. MITI is seeking a further ¥2.2 billion for Japan Aircraft Develop ment to continue studies into die YS-X regional aircraft. J 24 FLIGHT INTERNATIONAL 13 - 19 September 1995
Sign up to
Flight Digital Magazine
Flight Print Magazine
Airline Business Magazine
E-newsletters
RSS
Events
