Battered Rolls-Royce lifted by £1.3 billion contract wins

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A fortnight on from its third profit warning in less than 18 months, the FTSE 100 giant said it had been selected by Saudi Arabian airline SAUDIA to provide engine maintenance and servicing for its Trent 700 engines on 20 A330 aircraft in a long-term deal worth $1.3 billion.       

It has also completed a tie-up with International AirFinance Corporation to provide Trent 700 engines for 20 of the same planes in a separate $930 million win.

Eric Schulz, president of Rolls Royce’s Civil Large Engines unit, said: “We welcome our customer’s continued confidence in the Trent 700 as the best solution for fuel  burn, emissions and noise performance as well as delivering unrivalled reliability for Middle  East operations.”

Rolls Royce shares edged up 4p to 784p having been hit by the profit warning on July 6, which came just two days after Warren East replaced John Rishton as its chief executive.

At the time, the company blamed weak oil prices and lower engine demand — stemming largely from Airbus’s decision in February to cut production of its long-haul A330 workhorses — for the latest downgrade, in which it cut forecasts for 2015 and warned of further headwinds in 2016.

That rounded off an eventful 18-month period for the group, which has seen it hit by a number of setbacks, including jobs cuts — 2600 of which were announced last November to end what analysts described as an “annus horribilis”.  Rolls is also being investigated by the Serious Fraud Office over allegations of corruption in Indonesia and China, and was dragged into a bribery scandal involving Brazil’s state oil producer Petrobras in February amid allegations that it had used backhanders to win a contract worth $100 million (£64 million). Rolls denies the allegations.

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July 21, 2015 |
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