Rolls-Royce left with £350m black hole as Japanese airline scraps Airbus order
AERO engine manufacturer Rolls-Royce has been hit with a £350m order loss after a Japanese airline cancelled a contract with aircraft supplier Airbus.
Skymark Airlines has notified Airbus that it is terminating an order for six Trent 900-powered Airbus A380 aircraft. The aircraft were due for delivery between 2014 and 2015. The airline had also selected Rolls-Royce’s TotalCare service and support agreement for the engines.
In a short statement, the engine manufacturer said it “noted” the decision.
The cancellation reduces the group’s order book by £351m, which represents 0.5% of the group’s order book of £71.4bn as of December 31, 2013.
Skymark had signed a letter of intent for the six Trent 900-powered aircraft in September 2011. In December 2012 Rolls-Royce announced that Skymark had signed a contract for the TotalCare package.
The move is a further blow to Rolls-Royce following the decision by Emirates Airline in June to pull out of a major supply contract with Airbus.
The airline cancelled an order for 70 Airbus A350 wide-body aircraft following a review of its fleet requirements.
Emirates had placed the order for 50 A350-900 and 20 A350-1000 jets in 2007, with first deliveries scheduled from 2019.
The scrapping of the order is set to leave Rolls-Royce with a £2.6bn black hole in its order book – equivalent to around 3.5% of its total pipeline.
Nevertheless, it said it remained confident that the delivery slots vacated by Emirates would be taken up by other airlines.
Demand for the Airbus A350 is said to be strong, with more than 700 aircraft and 1,400 Trent XWB engines already sold.
In May, Rolls-Royce had warned its profits for next year were likely to be flat.
Nevertheless, optimism is still high for the long term; a position reinforced after the Farnborough Air Show where Airbus announced it had selected the new Rolls-Royce Trent 7000 as the exclusive engine for the new Airbus A330neo.
