Just a few days before the first flight of the Airbus A350-1000, powered by Rolls-Royce Trent XWB-97 engines, the British engine-maker gave investors an update on its ongoing restructuring programme launched one year ago in November 2015. The stated objectives are to simplify the organisation, drive operational excellence and reduce cost, positioning the company for long-term profitable growth. The company said at the time it expected to achieve annual incremental gross cost savings of £150-200m.
In the latest update, Chief executive Warren East said that the transformation programme was well on track and that cost savings were now expected to be at the top end of the £150-200m target range, including an estimated £50m in 2016 and $90-120m in 2017. He underlined the savings already achieved from streamlining at senior management level (600 reduction in headcount). He said the outlook for 2016 was unchanged.
He described the near-term market outlook as “mixed”, with continuing strong demand for large engines – though widebody deliveries are currently outpacing new orders – but further declines in demand in the business aviation sector. On the aftermarket side, the company said its installed widebody engine base is expected to double, to more than 7,000 engines by 2025. East said the defence outlook was positive overall, supported by good aftermarket opportunities.
Rolls-Royce announced in August that it was replacing all Trent 1000 intermediate pressure turbine blades with a new design due to fatigue cracking issues first noted by All Nippon Airways. A total of 169 Boeing 787s are powered by Trent 1000 engines. The recent investor presentation indicated that the company is aiming for an 80% reduction in turnaround time for blade replacement shop visits.