ISC - CFHM - IHCC

First of all, we are all here as part of SNECMA's birthday celebrations. Rolls-Royce and SNECMA, through early member companies, have had a long relationship, which began with a license build of the Bristol Jupiter in 1922. Since then there have been partnership on the Hercules in '49, the Olympus 593 for Concorde in 1962, and the M45 in 1975. Additionally, since 1957, both companies have been part of the Tyne consortium providing power for the Breguet Atlantic and Transall aircraft.

In more recent years, we have conducted joint research on powerplants for a future SST - the next generation fighter, advanced composite materials and advanced aero-engine component manufacturing techniques.

I am therefore very pleased to congratulate SNECMA, a fellow European company, on its 50th birthday and the French aero-engine industry on its centenary.

Rolls-Royce has also had a very long history, having designed and manufactured aero-engines since 1906. The Rolls-Royce of today has broader interests than just aerospace, with the production of a wide range of power systems. About 40% of the annual turnover is industrial power systems covering gas turbines for electrical generation, gas pumping and marine propulsion, as well as steam turbines, marine diesels, and nuclear power.

Aerospace is still the largest sector of Rolls-Royce's activities, covering over 60% of the business. We supply gas turbines for a broad range of civil and military aircraft, from advanced military combat engines to the largest certificated commercial turbofan, the Trent .

Luckily, in both the industrial power and aerospace sectors, we are in growth markets which hopefully will have counter-cyclical business cycles.

There is also synergy in the technology between the sectors, which we are exploiting. With the purchase of the Allison Engine Company, we not only strengthened our position in North America with an on-shore manufacturing base, but added a complementary range of modern engines with no product overlap. Allison has brought us a substantial penetration on the military transport and helicopter engine market, as well as some small commercial engines.

Rolls-Royce has by far the widest range of modern commercial engines. Eight types of turbofans, from 2,000 pounds to 100,000 pounds of thrust, and a commercial turboprop at around 6,000 shaft horsepower.

We now have over 50,000 military and commercial engines in service.

Rolls-Royce's commercial engine strategy is based on increasing the number of applications with our engines. Over 15 years we have moved from becoming a niche player with four aircraft types in production, and some of these shortly to cease manufacture, to about 25 different types of commercial aircraft.

Secondly, we needed to increase our market share. Over the last few years we have taken 64 new customers for our large commercial engines. Our market share of new orders has grown to around 20 to 25% annually.

Lastly, we needed to ensure we became increasingly customer-focused with the prime aim of giving the customer what he wants - safety, reliability and integrity at low cost. With the current major challenge for today's airlines, being to reduce cost to survive and prosper, we had to make sure we only added technology that gave a direct benefit to the operator.

The major concept change for Rolls-Royce came in the 1960s with the launch of the RB211-22B for the Lockheed Tristar. All Rolls-Royce engines above 37,000 pounds of thrust are based on the original design concept of this engine. It established the three-shaft concept. Now, with a common engine architecture and a common technology base, we can use the 60 million hours of operational experience across the whole range of our large engines to benefit each member of the family. We have been able to mix-and-match between the various modules of the engine, so that engines of different thrust can be produced without going to whole new engine development programs. New features can be added to all members of the family. The unique wide-chord fan is now on all our engines and has been in service for over 10 years. And in that time, it has demonstrated its operational effects of being extremely resistant to foreign object damage.

Like all the high bypass engines of its generation, the -22B on entry into service was traumatic for the airlines. This experience had a significant effect on the way we proceeded, besides making the airlines very efficient at managing a poor performing engine. We became dedicated to customer support and committed to continuously improve the engine. Such early unreliability and the development of the engine in service was unacceptable. By continuous development of the product, the -22B has now become almost as reliable as the newer members of the family.

The second generation -524 in the Boeing 747 benefited from the experience with the -22B showing a much lower shop visit rate and earlier maturity. Third-generation engines like the -535-E4 in the Boeing 757 and the -524 GNH in the 747-400 have shown a further step change improvements in reliability setting new industry standards.

The experience gained and sometimes hard lessons learnt were continuously fed back into the design process. Typical engine on-wing life is now an excess of 10,000 hours. With the highest time on-wing engine without removal from new being over 27,000 hours. Six years of operation without removal.

The airlines demand reliability and economy. There are only two main elements affecting operating costs for an airline, upon which an engine manufacturer can act to achieve that goal - fuel and maintenance costs. With no real major difference in today's technology between the three main engine manufacturers, there will be little difference in fuel consumption between competing products. There still remains significant difference in maintenance costs, which relate to the design solutions adopted which far outweigh any small operating cost benefits due to fuel.

Today, the RB211 has matured into a highly reliable family of engines, benefiting from the derivative nature of each step in its progress. The family is renowned for its ruggedness, maintainability, performance retention and low operating costs.

Our latest product in the marketplace is the Trent , launched to meet the increased thrust requirements of the new generation of large twin-engine aircraft, the Airbus A330 and the Boeing 777.

As it is estimated that at least 50% by value of all future commercial business will be in the large wide-bodied medium- to long-haul sector, this is clearly a critically important segment of the market for all the major engine manufacturers.

As the newest member of the family, the Trent 800, already certificated at 90,000 pounds of thrust in January this year, just started its flight test program at Boeing, some 3 months early to program. It is more than twice as powerful as the first RB211 which made its maiden flight back in 1970.

Work on 95,000 pound and 98,000 pound thrust engines for future Boeing 777 applications is already under way. The Trent 700 has already entered service on the A330 with Cathay Pacific. And the Trent 800 will enter service with Thai Airways early in 1996.

The foundation stone of the Trent project philosophy throughout the design and development phase was to review past experience on the family and eliminate potential in-service problems at source in the original design. The aim has been to give customers an engine that incorporates the latest technology developments capable of improving the engine's revenue earning potential while maintaining its inherent reliability. The Trent is just another step along the RB211 development road. In concept, the Trent looks very much like any other RB211, with the increased thrust resulting from a bigger diameter fan and an up-flowed core of increased pressure ratio. While retaining the best features of the RB211, the design of the Trent has been directed to establish in a new range of engines for the new wide-bodied aircraft which will be fully competitive for the next 20 years. The success can be judged by the Trent 800 being smaller in diameter, over 3,000 pounds lighter and up to 34 inches shorter than one of its rivals, fully justifying retaining the original design concept.

Collaboration and partnerships are an essential part of the modern engine business. There are three major reasons for collaboration - market, technology and resource, both financial and physical. We anticipate, and are welling to share technology where strategically appropriate. Sharing technology seems to be an emotive subject for our US competitors.

We have tried and operate all types of collaboration, from licensing our engines to 25% of revenue-sharing partnerships on the Trent , 30% collaboration on the V2500 to a 50% joint venture with BMW in Germany . The V2500 five-nation collaboration is one of our major successes. With Rolls-Royce, Pratt & Whitney, the Japanese industry, MTU and Fiat jointly responsible for the management, marketing and in-service support of the V2500, a successful family of engines has been established.

The engine is technically excellent. It has the lowest fuel burn in its class. It is environmentally sound. Substantially exceeding all requirements and powering the quietest aircraft in its class, the MD90. It is tolerant to foreign object damage to its wide-chord fan. And with nearly 200 V2500 powered aircraft in service, it has proved itself operationally.

Application in the Airbus A320, 321 and 319, as well as the Douglas MD90 series, has led to sales of 1,500 engines to 43 customers. Where there has been a competing engine on the aircraft, the V2500 has taken the majority of the orders.

In conclusion, Rolls-Royce intends to pursue its objective of achieving at least one-third of the market. Continuing our low risk derivative philosophy, giving the customer what he wants, reliability and economy at minimum cost. We believe our ever-widening product range combined with an increasing number of successful collaborative arrangements is the way to achieve our goal.

Thank you.