Thursday, Nov 25, 2010

(This story was originally published Wednesday.)

By Jonathan Buck 


   Of DOW JONES NEWSWIRES

LONDON (Dow Jones)--Rolls-Royce Group PLC (RR.LN) is raking in new orders for commercial aircraft engines even though its reputation has been tarnished by the high-profile failure of one of its jets on an Airbus A380 aircraft.

The Derby, England, company has accumulated more than $4.2 billion in orders for new engines and maintenance since the start of the month.

Those deals include a $1.2 billion service and maintenance contract announced Wednesday with Dubai-based carrier Emirates Airlines to provide engine services for 50 of its fleet of 152 wide-bodied aircraft. The agreement covers Rolls-Royce-made Trent 700 engines powering 29 Airbus A330 aircraft and Trent 800 engines powering 21 Boeing Co. (BA) 777 aircraft.

Rolls-Royce also in November has signed engine orders worth $3 billion with China Eastern Airlines Corp. Ltd. (CEA) and Air China Ltd. during and after a U.K. trade delegation visit to China. The company, the world's second-largest maker of jet engines for commercial and military aircraft after General Electric Co. (GE), now boasts 56% of the Chinese market for large civil aero engines.

In the second half of the year to date, Rolls-Royce has booked civil aerospace orders valued at $7.5 billion, or about GBP4.74 billion. That compares with group orders in the first half worth GBP5.9 billion. The company doesn't provide monthly tallies.

"Rolls Royce don't produce bad engines," Emirates President Tim Clark told Dow Jones Newswires in Paris.

"I think there were, perhaps, issues with design and quality control ... but [the company] will sort this," he added. "The engine will get back on the wing and they'll be flying within the next month or two." Emirates' fleet of A380s is powered by engines supplied the Engine Alliance, a joint venture between GE and United Technologies Corp.'s (UTX) Pratt & Whitney unit.

This month's orders have been logged despite the failure of a Trent 900 engine on an Airbus A380 aircraft operated by Qantas Airways Ltd. (QAN.AU). Rolls-Royce said its initial findings into the Nov. 4 incident concluded that the issue was specific to the Trent 900 engine, and was confined to a particular component in the turbine area that caused an oil fire.

The incident has prompted new safety directives from U.S. and European air-safety regulators. The company has been forced to swap out for replacements 40 engines in the global fleet of A380 aircraft, the world's largest passenger plane. The A380 entered service in 2007, and currently there are 39 in operation world-wide, 21 of which are equipped with Rolls-Royce engines.

Australian airline Qantas, which grounded its fleet of six A380s following the engine blowout on a Singapore-to-Sydney flight, and plane manufacturer Airbus, a unit of European Aeronautic Defence & Space Co. NV (EAD.FR) whose delivery schedule of new planes will be delayed by additional work on the engines, have said they will seek compensation from Rolls-Royce.

At 1420 GMT, Rolls-Royce's shares were up 17 pence, or 2.8%, at 615 pence while the benchmark FTSE 100 index was up 0.9%. The stock suffered some steep losses in the days after the A380 engine blowout, but has regained some of that ground and now is off about 5% since the start of November.

-By Jonathan Buck, Dow Jones Newswires; +44 (0)207 842 9237; jonathan.buck@dowjones.com

(David Pearson in Paris contributed to this article.)

(END) Dow Jones Newswires

25-11-10 0341GMT