Rolls-Royce Holdings Plc is considering teaming up with former partner United Technologies Corp. to re-enter the market for engines for narrow-bodied aircraft and compete against General Electric Co.
“I continue to believe we need to have a partner, UTC is an obvious partner for us,” Chief Executive Officer John Rishton said at a shareholder meeting in London. “It’s certainly a possibility but no decisions have been made.”
Since Rolls-Royce left the short-haul arena four years ago, such aircraft have grown to represent about 75 percent of the aircraft engine market by volume and half by value, making it important for the London-based engine-maker to reassert itself, said Rishton, who will be succeeded as CEO by Warren East on 2 July.
Rolls-Royce sold its 32.5 percent stake in the International Aero Engines consortium it shared with UTC’s Pratt & Whitney for $1.5 billion in 2011, effectively exiting the market for narrow-bodies. While Rolls now has an orderbook that accounts for about 50 percent of wide-bodies, GE dominates smaller aircraft with about 75 percent, Rishton said.
“The issue that I am troubled by is the incumbency strength, particularly of GE,” Rishton said. “How do you break into a market that has such a dominant player in it? We need a partner to do that.”
Pratt is currently the only major competitor to the CFM International venture of GE and Paris-based Safran SA in the narrow-body sector. Navigating Rolls-Royce’s re-entry will be high on the agenda for East, as the company’s existing Trent family of wide-bodied engines approaches its development maturity.
To compete, Rolls first needs a new aircraft it can supply with engines -- one which can challenge or replace the short-haul Boeing 737 and Airbus A320 workhorses, Rishton said. That might not be before 2025, Chairman Ian Davis told shareholders.
“To get back into the market there needs to be a new platform, and there are no plans for a new platform in the foreseeable future,” Rishton said. “The earliest people talk about a 737 replacement is 2030, and even in our industry that is still quite a long time away.”