Delta picks Rolls-Royce to power Boeing planes

Rolls-Royce's expanding order book was given another strong boost yesterday with the announcement that Delta Air Lines had become the first US carrier to select the British group's Trent engines to power future orders of the Boeing 777 long-range passenger jet.

Analysts estimated that if Delta, one of the world's largest airlines, decided to press ahead with possible orders for 10 of the 777-200 airliners, each powered by two Trent 800 engines, it would value the agreement with Rolls-Royce at up to $500m (pounds 313m).

The news followed Delta's landmark announcement last month of orders with Boeing for more than 600 aircraft over the next 20 years. The carrier already has a long-standing partnership with Rolls-Royce, buying the older RB211 engine to power its Boeing 757 aircraft.

Though Rolls-Royce developed the Trent engine with the 777 in mind, until now it has received most orders to power the plane from far eastern carriers. Last year Emirates, the international airline of the United Arab Emirates, signed a deal to buy 28 Trent engines. Early this year Emirates also placed a pounds 500m order for further Trents to power 16 Airbus A330 airliners.

The Delta agreement, which makes it the eighth carrier to combine Trent power technology with the 777, is likely to bolster Rolls-Royce's push to match the market share of its rival, Pratt & Whitney of the US. So far Pratt & Whitney has grabbed the lion's share of orders to power 777s with Rolls-Royce - on 32 per cent - ahead of the other main jet manufacturer, General Electric. The latest agreement means Rolls-Royce has almost 300 engine orders for the 777 alone.

News of the potential orders helped Rolls-Royce shares to gain 8p yesterday, closing at 245p. The shares were also buoyed up by rumours of an imminent deal by the company to sell its Parsons steam turbine business to Siemens, the German electrical engineering giant. Rolls-Royce is already thought to have agreed to sell Parsons to Siemens for a price tag of around pounds 30m.

Industry sources last night said the official sale announcement would not emerge until at least the end of this week. Negotiations between the two sides have dragged on much longer than expected, with unions at the plant pressing Rolls-Royce to say whether there will be any further job cuts before Parsons officially changes hands.

Doubts still hang over the future of another 400 staff at the Tyneside site, which is close to Siemen's brand new pounds 1bn micro-chip plant.

Staff numbers at Parsons have already dropped by more than 400 since Rolls-Royce put the historic business up for sale last July.