Rolls-Royce sees demand for a new mid-market jet

Engine maker Rolls-Royce (RR.L) believes there is a market for a new mid-priced jet such as the one Boeing (BA.N) is currently exploring and would consider working with Boeing on it, an executive said on Friday.

Boeing is studying a gap in the market between narrow-body jets and long-haul aircraft for a potential new airplane that could seat 220 to 260 passengers.

“There is clearly a market, the question is how do you serve it?” Eric Schulz, president of civil aerospace at Rolls-Royce, told journalists at a briefing ahead of the Paris Air Show, which starts on Monday.

He said that should Boeing decide on a mid-market jet, then Rolls-Royce as an engine maker would weigh up the opportunity.

“If there is the possibility to enter a program, we will examine it and if the conditions are right, we will,” he said.

Earlier on Friday, Rolls-Royce said it had made a good start to 2017, but the outlook for cash flow remained challenging.

The company is grappling with falling revenue from its older engines at the same time as investing in new engines.

“Our ramp up in large engine production is progressing well, reflecting the significant investments in manufacturing capability in recent years,” Chief Executive Warren East said.

Schulz said the company was increasing production of Trent engines, including the Trent XWB 84K for the A350.

“Six to seven years ago we were making 250 Trent engines a year, this year we want to manufacture more than 400 and our target is 430-450,” he said. “Eighteen months from now, we want to produce 600 Trent engines a year.”

He said the company was now making seven Trent XWB 84K engines a week and aimed to reach 10 engines a week in the first quarter of 2018.

But Rolls-Royce is still behind on the Trent 7000 program for the A330neo, with a current three-four month delay.

“We are in a phase where we can catch up some of the delay, to reach a reasonable delay of two-three months compared with what we initially expected,” he said.

He said he hoped to see the A330neo fly around the start of September.

Shares in Rolls-Royce were up 1.4 percent at 1009 GMT.

Courtesy Reuters