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Rolls Expects To Keep 30% Market Share

The aero-engine maker Rolls Royce expects to hold on to its thirty percent...

The aero-engine maker Rolls Royce expects to hold on to its thirty percent share of a shrinking global market for new commercial aircraft this year, the world's number two engine maker has said.

Orders for new aircraft are expected to drop by up to half this year compared with 2001, said Charles Cuddington, the Rolls Royce's president for civil aviation.

Boeing, Airbus and other aircraft makers won net orders for 989 jets of all types in 2001, but that was down from more than 1,900 in 2000, according to industry estimates.

?Orders have fallen this year compared to last year,? Cuddington said in an interview.

?We expect it, by the end of this year, to be about half to two-thirds of the orders that we saw before. We expect to take a share of that of about thirty percent.?

Cuddington also said there were hints that demand for engine spare parts, the biggest source of non military profits for engine makers, was starting to pick up alongside an increase in flying hours.

?Immediately after September 11th, obviously, airlines tried to not spend money, and you can only do that for so long,? he said on the sidelines of the annual World Air Transport Summit.

?In terms of airlines putting engines into overhaul shops and things like that, you can start to see that that will pick up... there are signs that that is coming back now,? he said.

Engine makers traditionally sell brand new engines cheaply but recover their costs by supplying essential parts.

Aero-engine firms' revenues dropped as spare parts deliveries nosedived after September 11th, when the hijack plane attacks on the United States plunged an industry already in disarray further into the red.

The International Air Transport Association estimates that airlines will lose some six billion dollars this year, after a disastrous 2001 during which carriers haemorrhaged nearly $12 billion on international flights alone.

The latest threat to airlines' profitability is the temptation to bring some of their 2,100 idle jetliners back into service, compounding overcapacity and pressuring fares.

The number of those planes that return to service is also a key issue in forecasting future sales by the aerospace industry.

Cuddington said he expected five hundred of the newer jets to be resurrected over the next few years, but added capacity would not derail an industry recovery that he expected in two to four years.

?We expect airlines being down in terms of revenue and profits for a couple of years, and a return to profitability then,? Cuddington said.

?That's when real ordering will start, and us poor manufacturers have to wait another year or two beyond that. We're going to be at a lower level of activity for the next maybe four years.?

But Rolls was optimistic on China's galloping aviation market and particularly about the proposed ARJ 21, a 70 to 90 seat regional jet that Chinese government owned AVIC I (China Aviation Industry Corp I) is planning to develop by 2007, Cuddington said.
Rolls is pushing its BR710 engine for the jet, which it says has a lot of thrust, suitable for high altitudes.

?Our engines operate in desert conditions, not only in Urumqi (in the western region of Xinjiang) but in the Middle East, so we have a lot of experience in that sort of operation,? he said.

Cuddington did not say whether Rolls would simply supply engines to AVIC I as a sub contractor or share in the project's risk, though he said the British firm was generally interested in transferring engine technology to its Chinese partners.

Chinese airlines would take delivery of eighteen hundred aircraft over the next two decades, he said.