Rolls-Royce Wins Emirates Engine Deal Worth $9.2 Billion

Rolls-Royce Wins Emirates Engine Deal Worth $9.2 Billion

Rolls-Royce won a massive $9.2 billion contract to supply Emirates Airlines with engines for the airline’s new Airbus A380 aircrafts.  Emirates ordered 50 four-engine Airbus A380 aircrafts back in 2013 and have chosen to go with 217 of Rolls-Royce’s Trent 900 turbines to supply their new fleet. Previous customers of the second largest engine maker in the world, Royce has supplied the Trent 900 to British Airways, Deutsche Lufthansa Ag, and Qantas Airways Ltd.

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Rolls-Royce: New deal a swipe at top engine maker, GE, and Emirates considers Boeing order

While the United Kingdom’s Rolls-Royce was able to secure the Emirates contract, GE’s Pratt Whitney engine making division is the largest supplier in the world and certainly represents a blow to GE, which cut 2,600 jobs last year mostly in its engines department.  However, Emirates is reported shopping around for a new fleet of aircraft, after scrapping a contact with Airbus to supply the airline with 70 A350s, a deal that would have brought in $16 billion for Airbus.  Emirates is reportedly considering the Airbus A350 and the Boeing 787-9 and 10 models as potential aircraft to supply its fleet.  The new deal for aircraft fleet is certainly going to be another round of competition between GE and Rolls-Royce, as they compete for the engine contacts of the new planes.

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Airbus’s planned upgrades of plane models, engine makers could benefit from new contracts

Airbus is reportedly considering upgrading its flagship A380 plane to a more fuel efficient model that would require less fuel to fly.  The new model, A380neo, is still in consideration, but if the upgrades are offered, Rolls-Royce and GE could have a bundle of new engine contracts to compete over.  However, Fabrice Bregier, CEO of Airbus, recently said that the company was still deciding on whether or not to offer the A380neo upgrades due to financial rewards “not necessarily as attractive”.

Overall, Rolls-Royce may have won this round with the $9.2 billion deal with Emirates, but there are still potentially numerous contracts out there if the A380neo concept is approved.  This will create a very enticing business environment for both Rolls-Royce and GE, as the new planes will need to be equipped with new, more efficient engines.  Potential deals out there are in the tens of billion in potential revenue for engine makers, a boom for the industry.

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