Rolls May Face Rethink On Engine Strategy
Rolls-Royce faces a potential costly rethink of its strategy for the next spin-off of the Trent engine family as Airbus considers the design of the A350 and dust settles from the Qantas engine blowout.
The decision it makes could set the tone for the engine market in the next decade -- with implications for a broader conflict between Airbus and Boeing.
The Trent XWB is the latest and physically largest member of the Rolls engine family which powers the world's biggest jets.
With a fan wider than Concorde's fuselage and built to devour more than a tonne of air every second, the engine claims to be among the most powerful and flexible in civil aviation.
Rolls and Airbus say it is an all-rounder capable of powering all three variants of Airbus's next generation of airliner, the A350.
The twin-engined jet, due in service from 2013, comes in three sizes from the A350-800 and -900 which seat 270 and 314 respectively to the A350-1000, able to carry 350 passengers.
Rolls says the same Trent XWB will offer thrust from 75,000 pounds (slightly more than the engine used on the four-engined A380) all the way up to 93,000 pounds for the A350-1000.
But industry doubts are growing as to whether the Trent XWB can be efficiently stretched to power the A350-1000 mini-jumbo.
That will be a concern since the A350 family is meant to take on two different Boeing competitors -- the future mid-sized 787 Dreamliner and the larger 365-seat Boeing 777.
"The idea that you can cover airplanes from 250 to 350 seats, all at long range, with one type of engine is a fallacy," said Teal Group aerospace consultant Richard Aboulafia.
The largest customer of the A350, Qatar Airways, joined the chorus last week. "In my view Rolls do not really have an engine for the A350-1000," Akbar Al Baker told reporters in Paris.
Worse still for the engine's designers, the range of thrust required of the Trent XWB may be about to increase as customers push Airbus to modify a still nebulous design for the A350-1000.
"We are trying to work with Airbus. They need a bit of help on the (A350-1000)," Emirates president Tim Clark said last week. "We would like it a bit bigger, with more thrust, going further and carrying more," he told reporters in Paris.
What this means for the manufacturer is that its hopes of squeezing the A350's power needs into one cost-effective design may be slipping away, according to industry sources.
Sources say Rolls is already working on a plan B. It has "not excluded the possibility of going for two variants of the XWB," an industry source familiar with the matter said.
A Rolls spokesman said the Trent XWB "can evolve in line with aircraft requirements" and declined further comment. The company is in regular dialogue with Airbus, he added.
All this comes at a time when Rolls is dealing with the aftermath of the November 4 blowout on a Qantas A380.
"This is the sort of thing that happens when you have an engine running flat-out," according to Qatar's Al Baker.
Rolls says the investigation is focused on a component rather than a higher thrust rating chosen by Qantas to fly its A380s on long Pacific routes, which is within certified limits.
Creating a new XWB variant would cost less than the USD$1 billion needed to develop a new engine. But the costs of even relatively small changes can stack up quickly.
An engine industry executive estimated the cost of spinning off a new variant of a big power plant at around USD$400 million.
"It depends on the amount of extra thrust required. If it is a couple of thousand pounds then you could do it with control systems. If it is a significant increase you have to increase the size of the fan or alter the compressor and that can get exponentially expensive," he said, asking not to be named.
Whether Rolls would welcome these risks to support a still uncertain market future for the A350-1000 remains uncertain. Airbus has sold just 75 of the planes out of 573 A350s in total.
The potential spin-off if such a project were successful, however, could be significant for both companies. For Airbus, it could deliver a bigger knock-out to the Boeing 777 which has so far dominated the lucrative market for 300-400 seats.
Rolls' bargaining chip could be exclusivity. Although its engines are currently the only ones offered with the A350, it does not technically have exclusive rights to power the plane.
It will have to decide whether to try to follow the example of General Electric which won exclusivity on later 777s in return for boosting its GE90, the world's largest jet engine.
A big factor is guessing how Boeing will respond. Will it upgrade the 777 or hit back with a new plane?
Capturing part of that market could double the payback for Rolls, but involves shouldering risk alone. Sticking with Airbus and negotiating a monopoly deal would secure a smaller but safer market as Rolls absorbs the A380 crisis.
The second outcome would set up a neat transatlantic battle between Boeing and GE on one side against Rolls and Airbus on the other for over 1,000 sales of 350-seat planes in 20 years.
If Rolls does nothing, its fear will be that Boeing sees an opening to upgrade the 777, renew its alliance with GE and shut Rolls and Airbus out of that segment of the market altogether.
Stakes like these are often the price to play. "You have to hold on tight in this business. If you make a strategic mistake, it can cost you for 20 years," an industry executive said.