Trent Opportunity

Rolls-Royce PLC
25 July 2000


ROLLS-ROYCE FORECASTS US$200 BILLION TRENT OPPORTUNITY:
CORPORATE AND REGIONAL MARKET REMAINS ROBUST


Rolls-Royce plc delivered an upbeat forecast at the Farnborough air show
today, predicting continued strong demand for its aero engines across all
sectors of the civil market. 

This included an anticipated requirement for more than 20,000 engines during
the next 20 years in the segment covered by its high-thrust Trent series. The
company estimates the potential value of that business at US$200 billion.

John Cheffins, Managing Director - Airlines, said: 'The new generation of
widebody aircraft makes up almost half the civil market. This week's agreement
with Boeing to offer the Trent 600 for developments of the 747 and 767 means
that the Trent family is now accessing 90 per cent of this sector. 

'The use of shared advanced technologies within this engine series is a key to
cost-effective development. Airframers want us on their new products, and so
do their customers.'

Since 1997 Trent engines have won more than 80 per cent of new customer
business on the latest widebody airliners. The engine family currently spans a
range of thrusts from 53,000lb to 95,000lb with designed-in flexibility for
further expansion. 

Opportunities in the large engines sector are part of a wider 20-year civil
aerospace market forecast by Rolls-Royce for 100-seat aircraft and above which
predicts an overall requirement for 48,000 installed and spare engines to
power nearly 19,000 new aircraft. The value of the potential engine business
is US$337 billion. The Rolls-Royce share of the civil aerospace market has
averaged more than 30 per cent over the past three years. 

With worldwide growth in passenger traffic estimated at five per cent per
year, Mr Cheffins singled out Asia Pacific as the region likely to display the
most rapid expansion. 'With concerns over Asia Pacific economies now largely
put to rest, a return to long-term growth is evident. Rolls-Royce estimates
the region's growth will be 7.7 per cent a year. We also believe that services
within China will grow at twice the world average.' 

Mr Cheffins reported that the Trent 500 for the ultra-long range Airbus
Industrie A340-500/-600 was now at the halfway point of its flying test bed
programme and remained on course for certification in December. A total of
seven development engines have completed 1,700 test hours since the first
Trent 500 ran at the end of May last year. 

The Trent 500 will enter service with Virgin Atlantic on the A340-600,
followed by Air Canada on the -500 version, both in 2002. It will be
certificated at 60,000lb thrust but will operate at 53,000lb on the A340-500
and 56,000lb on the larger capacity A340-600. 

Preliminary design has been completed on the Trent 900 which is being offered
for the A3XX super-jumbo, due to begin service with airlines in 2005. The
engine will feature a 110 inch diameter 'swept' fan and core systems drawn
from Trent family lineage. 


Certification will be at 80,000lb thrust, giving a comfortable margin for
further development. Initial in-service ratings will cover 68,000 - 75,000lb
thrust. By entry into service in 2005 the Trent 900 will draw on the
experience of an estimated 15 million flight hours accumulated by earlier
models.   

Rolls-Royce confirmed the signing of an agreement with Boeing to offer the new
Trent 600 variant for future developments of Boeing 747 and 767 aircraft,
subject to launch conditions being met. An identical engine will power both
aircraft types. 

With a thrust band of 68,000 - 72,000lb, the Trent 600 will incorporate a
'swept' 102 inch diameter fan - the first departure from the standard 97.5 and
110 inch diameters used in other Trent variants. 

Rolls-Royce has reached agreement with Airbus Industrie to formally offer the
Trent 700 on the new A330-100 twinjet due to enter service in 2003. A de-rated
58,000lb thrust version of today's Trent 700, which powers the current A330,
is being discussed for the new medium haul version of the 250-seat airliner.
The engine's standard 68,000 and 72,000lb thrusts would be available for
longer range versions of the aircraft.

The Trent engine family as a whole has completed more than two million hours
in service. Trent 700s were delivered to nine new A330 customers last year and
have won over 50 per cent of new business on that aircraft since 1997. During
the same period the Trent 800 has been selected to power Boeing 777s for
American Airlines, Delta Air Lines, British Airways and
El Al. 

Reviewing the Indianapolis-based Rolls-Royce engine programmes for regional
airlines and corporate aircraft, Carmen Lloyd, President - Corporate and
Regional Airlines, described the market as 'extremely robust' with total
engine business worth US$60 billion anticipated on corporate and regional
aircraft over the next 20 years.  

'We are seeing steady increases in aircraft production coupled with strong
order patterns in the US and Europe and growing market activity in Asia,
especially in China. We are positioned extremely well with Embraer in the 30
and 50 seat markets with the AE 3007.   

'Rolls-Royce is playing a significant role in the growth of the regional
airlines, a fact illustrated by engine orders totalling more than US$1.5
billion for the sector announced so far this year. We anticipate several more
order announcements during Farnborough.'

Rolls-Royce products have a 37 per cent market share in the regional airlines
sector.

On the Embraer 30 to 50 seat regional jet series, for which the AE 3007 is the
exclusive powerplant, recent orders have included Mesa's purchase of 100 ERJ
145s and the conversion of 86 aircraft options to firm orders by Continental
Express, who also signed a US$700 million fleet hour agreement covering
maintenance of 400 engines over the next ten years.

The AE3007 engine family has accumulated 1.6 million flight hours and is
averaging more than 100,000 hours a month. The entire AE engine family,
including military derivatives, has surpassed 2.5 million flight hours.

'The bottom line for our regional airline business is that we are part of a
great market with a tremendous customer base, and we are looking forward to
continued success in both traditional and emerging markets,' added Mr Lloyd.

Meanwhile, Rolls-Royce announced today that it will power a new business
aircraft by Embraer, the ECJ 135.  The launch order for 25 firm aircraft and
25 options from Swift Aviation Services, Inc. of Arizona, is worth up to
US$160 million in new engine business.


Referring to the AE 3007-powered Cessna Citation X, Mr Lloyd described the
combination as 'a very good fit for the fractional aircraft ownership market.'


'Rolls-Royce has a strong ongoing relationship with Executive Jet. We have
recently signed a 'Power by the Hour' engine maintenance agreement extension
worth US$103 million. This means that all Rolls-Royce powered aircraft
operated or managed by Executive Jet are now covered under long-term engine
maintenance contracts.'

At the smaller end of the corporate market, the Williams-Rolls FJ44 has been
selected by Cessna for the Citation CJ1 and CJ2. The first CJ1, which is an
upgraded version of the FJ44-powered CitationJet, was delivered this Spring. 

The larger CJ2, with a backlog of nearly 150 aircraft, will begin customer
deliveries in the fourth quarter of this year. The FJ44 also powers the
Raytheon Premier 1, now in flight test, and the Sino-Swearingen SJ30-2,
currently in development. 

Outlining the healthy outlook for Rolls-Royce engine programmes in Germany, Dr
Klaus Nittinger, Chairman, Rolls-Royce Deutschland, said Rolls-Royce continued
to see strong demand for BR700 series engines. Approximately 220 are scheduled
to be delivered this year, 50 more than the total for 1999.  Deliveries in
2001 are expected to reach 240. The recently expanded assembly hall in
Dahlewitz near Berlin has the capacity to produce 300 engines a year.  

There are currently 1,066 BR700s on firm order, with the 232 already in
service fast approaching 160,000 flight hours. 

Aerolineas de Baleares of Spain, Impulse in Australia, and Bangkok Airways are
among the latest operators to select the BR715-powered Boeing 717. Firm and
option orders for Boeing 717s stand at almost 300 aircraft.

'In the last five years, the Boeing 717 has received around one third of all
firm orders placed for aircraft in the 100-seat market. Operators are
realising that the BR715 is the most efficient, cleanest and quietest engine
in its class - the premier powerplant for this market sector,' said 
Dr Nittinger.

The Pembroke Group, which is 50 per cent owned by Rolls-Royce, has recently
extended its commitment to the Boeing 717 by increasing its orders to 25
aircraft, with a further 25 on option. 

In response to market interest, Boeing is evaluating smaller versions of the
BR715-powered Boeing 717 in configurations ranging from 70 to 86 passengers. 

The BR710 is proving an ideal powerplant for large cabin, long-range business
jets. A total of 54 aircraft have been delivered to operators in all parts of
the world since entry into service in July 1999. 

In April this year, Gulfstream rolled out its 100th GV, over 80 of which are
already in service. Also powered by the BR710, the GV has accumulated nearly
105,000 flight hours and has been ordered by corporate, government, fractional
and other operators worldwide.

Meanwhile, a development of the Tay has been selected to power the next
generation of GIV aircraft. The engine will feature FADEC and other
improvements which will enhance both operating efficiency and economic
performance. 


Commenting on the progress of the 'Engine 3E 2010' initiative which is
targeting major advances in operating efficiency and environmental
performance, Dr Nittinger said the first phase of the programme had produced
encouraging results. 

'A BR700 core engine with a staged combustion chamber delivered a 25 per cent
reduction in NOx compared with current BR700 combustor performance, which
itself is at industry-leading levels. The use of advanced compressor design
resulted in weight reductions of more than 25 per cent as well as fuel
savings. Initial elements of the technology programme have already proved
themselves in the BR715 engine.'


For all Rolls-Royce news and images at Farnborough 2000, visit our website:
www.rolls-royce.com

For more information please contact:
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Farnborough International Air Show
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