Rolls-Royce’s primary aftermarket revenue streams, transitioning between several legacy platforms and just-introduced next-generation models, are receiving special attention to help bridge the gap between current-generation widebodies and their newer competitors.
The OEM’s new initiatives fall into several categories. It has rolled out more flexible long-term-agreement packages, for instance, mixing in more used material, customized workscopes and engine-swap options that allow operators to customize MRO spending to desired remaining in-service life. It is also focusing on transitions, delivering support to help entice new operators to snap up available aircraft. The reason: Keeping more of them in service longer will help smooth out any aftermarket-revenue bumps on the road as the newer models rack up hours and cycles on their way to shop visits.
The XWB and Trent 1000, powering the Airbus A350 and Boeing 787, respectively, are just ramping up to fleet sizes and utilization levels that will eventually deliver years of steady service-related returns. The Trent 700, while nearing the end of its new-delivery phase as Airbus A330ceo production is phased out, is still in its prime as an MRO-revenue generator and is seen as a key bridge to shop visits for the newer-generation engines.
Trent 800s, available on Boeing 777-200s and -300s (but not the -300ERs, which are powered exclusively by GE90s), are seeing steadily lower utilization. Part of this trend is linked to airline fleet strategy; the last Trent 800-powered aircraft were delivered seven years ago, and the OEM delivered a total of just 171 engines in 2001-08. (Trent 700s, by contrast, were produced at a rate of more than 180 per year as recently as 2014, and Rolls delivered 47 in the first half of 2017.)
With its legacy widebody platforms, particularly the older 777s, facing competition from upgraded versions as well as next-generation twins, Rolls saw an opportunity to help ensure mid-life Trent-powered aircraft coming off lease would attract new operators. Last year, it established a dedicated transition team to support the handover of aircraft between operators.
Early returns show the move is paying off, particularly for Trent-powered 777s, which saw their availability swell following the 2015 bankruptcy of Transaero Airlines and capacity cuts at several carriers. After four total 777 transitions in 2015, 13 Trent-powered 777s changed hands last year, and two more changed liveries in the first half of 2017.
Last year also saw Rolls’s expanded long-term care offerings adopted by the first Trent 800 customer, when Delta Air Lines signed on for SelectCare in December. Designed to fill the gap between the more costly TotalCare and more uncertain transactional time-and-materials service, SelectCare allows operators to specify workscopes across a set number of shop visits. While it locks in cost-certainty, expenditures are largely tied to shop-visit timing, meaning some of the cash-flow burden shifts back to the operator compared to TotalCare’s comprehensive-support, fixed-payments approach.
Aviation Week’s Commercial Fleet and MRO forecast projects the Trent 800 in-service fleet at 376 engines at the end of 2017. The forecast sees relative stability during the next five years, with the fleet rising slightly before falling to 364 by 2022.
The timing of overhauls means notable variations in MRO revenue demand projections, however. American Airlines and Singapore Airlines were each expected to conduct about 20 overhauls between the beginning of 2017 and early 2018, Aviation Week’s MRO Prospector forecasts. American’s Rolls-powered 777 fleet numbers 47—all of them -200ERs—with an average age of 17 years. Singapore has 21 Trent-powered 777-200s and five 777-300s. The average ages are 15 and 14 years, respectively.
British Airways (BA), which operates 19 Trent-powered 777-200s, is the only other carrier with a projected double-digit Trent 800 overhaul workload before 2019. BA’s Trent-powered 777s average just more than 15 years of age; the fleet was expected to undergo 10 engine shop visits this year.
Trent 800 MRO revenue is expected to total about $343 million in 2017 before jumping to nearly $517 million in 2018, MRO Prospector calculates. Projected shop-visit timing explains the large one-year variation. It will fall to $477 million in 2019 before a slight rise to $502 million in 2020. In 2021, it will settle back down to $389 million. The five-year total amounts to $2.2 billion, with an annual average of about $446 million.
The figures, while impressive, are a drop in the bucket for the company’s civil engine aftermarket. Rolls reported £3.7 billion ($4.6 billion) in total civil aftermarket revenue in 2016, 1% lower than in 2015. Its 2017 first-half civil aftermarket totaled £2.0 billion, bolstered by an 18% jump in spending on in-production engines. Out-of-production models, including the Trent 800, saw revenue decline 3%.
In-service engines will continue to grow as the fleets ramp up quickly. After delivering a record 357 large civil engines in 2016, Rolls handed over 209 in the first half of this year and projects a full-year delivery total of about 500.