Engine manufacturer Rolls-Royce has stressed the continued importance of business aviation to the UK firm, despite falling demand in the segment contributing around £50 million ($77 million) to an expected £300 million profit "headwind" in 2016.
The bulk of this total will come from its commercial airliner Trent 700 programme, with weaker demand in the regional jet aftermarket also contributing – but the charge also illustrates the problems R-R is experiencing in business aviation.
Not only has R-R been hit by the falling production rates of Bombardier's flagship Global 5000 and 6000 – which are powered by the BR710A2-20 – but it has also been losing market share to its rivals in the lucrative large-cabin sector.
Dassault, for example, selected Snecma as engine supplier on its new wide-cabin 5X, despite Rolls-Royce holding that position early on in the design phase. Most recently, it also lost out to Pratt & Whitney Canada to supply the powerplant for Gulfstream’s new G500 and G600 – despite Rolls-Royce having been the preferred engine provider for the US airframer for a number of years.
“We will see a reduction [in future volumes] clearly because of the fact that we have not won a number of key platforms over the last few years,” said R-R's chief finance officer David Smith, during a 6 July investor call.
The company remains “very confident” about the business jet market, he continues, and the sector “is very important” to its strategy going forward. “We are in a very strong position and are still investing in technology and making sure we have the right routes to market for these products in the future,” he says.
Richard Evans, senior consultant at Flightglobal's Ascend consultancy, says the decline in the sector is a concern for the company. "It had always had a very good chunk of the top end – think back and it had 100% of the large business jet market," he says.
"But now its not going to be there in the future, and that's the area of the market that's been growing the fastest. Everybody will be concerned they have lost their dominance at the top end," he adds.
Source: FlightGlobal.com
