Rolls-Royce lands £6bn engine deal as Emirates turns away from the US

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The aircraft engine maker Rolls-Royce is celebrating its largest-ever contract win, worth £6.1bn, after the Emirates airline switched its allegiance from American companies.

The deal to supply 220 engines for 50 A380 planes will secure jobs at four big Rolls-Royce factories – in Bristol, Sunderland, Derby and Inchinnan, Scotland – but the manufacturer said that 2,600 jobs would still have to be cut from its commercial aerospace division, which it is restructuring.

Despite the deal, which will come as something of a relief to Rolls-Royce after a year of profit warnings and problems, the shares closed down 0.15 per cent at 978.5p.

The Dubai-based Emirates will take delivery of the first planes with new engines in 2016, having previously used General Electric and Pratt & Whitney engines on its existing 90-strong fleet of double- decker planes.

Sir Tim Clark, president of Emirates, said that Rolls-Royce had won the competition to provide new engines after demonstrating its commitment to continually improving its Trent 900 engine, and especially its fuel efficiency.

John Rishton, chief executive of Rolls-Royce, said: “It is often said nothing is made in Britain any more, and we hope that this will dispel that myth.”

The decision confirms the Trent 900 as the preferred engine to power the Airbus A380, with Rolls-Royce now supplying engines to 50 per cent of the aircraft now flying. It also suggests that Rolls- Royce could become the sole engine supplier for the next generation of A380 superjumbos, as the industry expects the European aircraft maker to opt for a single engine maker in future.

There was also praise for British skills and engineering from Sir Tim, who said that UK engineering is a powerhouse and that Rolls-Royce “is the pinnacle as far as we are concerned”.

Both Sir Tim and Mr Rishton insisted that there had been no political intervention or assistance to help secure the landmark contract, which is thought to be the largest commercial deal between the UK and the United Arab Emirates.

However, the contract win is a boost to the Coalition’s efforts to champion manufacturing, and the Emirates president called it “a testament to the British Government’s export initiatives”.”

Rolls-Royce is in the midst of cutting staff in its commercial aerospace unit with a view to saving £120m over the next two years, followed by annual savings of £80m. The UK and the US will take the brunt of the 2,600 departures.

The company has said the overlap in the development of its Trent 1000 engine for Boeing’s delayed 787 Dreamliner and its Trent XWB for Airbus’s A350 meant that the number of engineers it employed was unusually high, because it was unable to shift workers between projects as one wound down and the other ramped up.

The Emirates contract fills a gap in the flow of new orders at Rolls-Royce and means that the company will finally begin to fully utilise some of the extra capacity it installed.

Due to flagging aircraft orders in the wake of the financial crisis, anticipated demand for new aeroplanes and engines has been slower to materialise than was originally envisaged by Rolls-Royce.

The company’s Singapore facility is capable of producing 250 engines a year, but last year produced only 40. More than 80 per cent of the Trent engine is made in the UK, but final assembly is carried out at the Singapore factory.

Rolls-Royce continues to be investigated by the Serious Fraud Office over allegations of corruption in Indonesia and China.