Rolls-Royce Secures $1.8bn Deal with Air China Amid Qantas Plane Explosion Investigation

Strategic Insights -

Air China has awarded Rolls-Royce a $1.8bn contract to supply the company with 20 jet engines, marking a significant victory for the British engineer as it rebounds from the mid-air explosion of an engine on a Qantas aircraft. The deal, which includes 10 Trent XWB engines for the Airbus A350 XWB and 10 Trent 700s for the Airbus A330, highlights Rolls-Royce's strong position in the Chinese market, where it has secured a 56% share of the large civil aircraft engine market. The contract is particularly significant, given the recent Qantas plane incident, which has raised concerns over the safety of Rolls-Royce engines.

Key Takeaways:

  • Rolls-Royce has secured a $1.8bn contract with Air China to supply 20 jet engines, including 10 Trent XWB engines for the Airbus A350 XWB and 10 Trent 700s for the Airbus A330.
  • The deal represents a 56% share of the large civil aircraft engine market in China, highlighting Rolls-Royce's dominance in the region.
  • The contract comes just a fortnight after the announcement of a $1.2bn deal with China Eastern Airlines, cementing Rolls-Royce's position in the Chinese market.
  • The engines sold to Air China are different from the Trent 900 model that caught fire on a Qantas A380 earlier this month.
  • Rolls-Royce has identified the cause of the Qantas incident, attributing it to a faulty part that caused an oil leak, which led to the "release" of a turbine disc.
  • The company is drawing up a program to correct the fault and replace part or all of its Trent 900 engines on the A380.
  • Despite identifying the cause of the incident and taking steps to correct the issue, Rolls-Royce shares have still fallen by 10% since November 4.

Statistics:

  • $1.8bn: The value of the contract awarded to Rolls-Royce by Air China.
  • 56%: The share of the large civil aircraft engine market in China secured by Rolls-Royce.
  • 10: The number of Trent XWB engines to be supplied by Rolls-Royce for the Airbus A350 XWB.
  • 10: The number of Trent 700 engines to be supplied by Rolls-Royce for the Airbus A330.
  • $1.2bn: The value of the contract awarded to Rolls-Royce by China Eastern Airlines, announced during a trip to the Far East by Prime Minister David Cameron.

Sources:

  • "Rolls-Royce wins $1.8bn Air China deal" by Graham Ruddick, The Telegraph
  • "Rolls-Royce shares fall 11/2 to 5901/2p" by The Guardian
  • "Qantas plane forced to make emergency landing after engine explosion" by The Australian
  • "Rolls-Royce identifies cause of Qantas engine explosion" by Reuters