Rolls-Royce has secured capacity to delivery around 500 large engines this year, having increased output by 15% to some 355 in 2016.

It disclosed its readiness as it revealed that underlying revenues for large engine supply, centred on the Trent family, increased by 2% last year to £1.6 billion, although overall underlying civil aerospace profit more than halved to £367 million.

The production revenue rise resulted from higher volumes of Trent 900s for the Airbus A380 as well as spare Trent XWBs for the A350, partly offset by falling demand for the Trent 700s on the A330.

But service revenues for the large-engine sector fell by 4% to £2.3 billion, despite strong growth from in-production engines – growth which had offset the reduction from older powerplants.

Rolls-Royce says fewer overhauls across the out-of-production fleet meant time-and-material revenues reduced, and contract accounting effects in the service revenues were significantly lower, resulting in the overall decline. The manufacturer says large engine service revenues would have risen 2% but for the accounting effects.

Transition to the Airbus A320neo meant original equipment revenue arising from the International Aero Engines V2500 programme slipped by 10%, although service revenues were up 21% as overhaul activity increased.

The company, in its full-year financial statement, says business aviation engine sales were down 25%, a decline it had forecast as a result of market weakness and a shift to newer aircraft not fitted with its engines.

Rolls-Royce predicts that its civil aerospace arm will deliver “modest” revenue growth this year, backed by aftermarket business for large engines, but business-jet revenues will weaken further.

Near-term uncertainty is affecting production volumes and older engine service activity, the company says, but positive long-term trends “remain unchanged”.

“We continue to expect that strong widebody airframe demand – driven by the need for newer, more fuel efficient aircraft – should provide resilience to manufacturing schedules over the next few years as the industry undergoes a strong replacement cycle,” it states.

Source: Cirium Dashboard