Rolls-Royce stands by as 777 takes off

The engine maker remains in the slipstream of its rivals since BA's decision to shop in the US.David Bowen asks if it can afford to go its own way

THE CROWDS clustering round the new Boeing 777 at this week's Paris Airshow will be examining its engines with particular interest. The plane is smaller than the 747, but the engines are bigger - because there are only two of them. A Boeing 737 fuselage would, it is said, fit through the outer cowling of one of these monsters.

The United Airlines jet at Paris will be carrying Pratt & Whitney engines. This is not surprising. United has always had a close relationship with the Connecticut company. What is surprising is that British Airways, which is due to start flying 777s in September, has chosen General Electric GE90s over Rolls-Royce Trents. That decision was made in 1991, and the Derby company is still being buffeted by the shock waves.

British Airways insists that the reason was purely commercial. "It was a combination of operational performance and economics," a spokesman says. Some in the industry have their doubts. "There is no doubt the Rolls- Royce is a better engine than the GE90 or Pratt & Whitney 4074," one analyst says.

The Trent uses the sophisticated three-shaft system so painfully developed for the RB211, and is now the lightest but also most powerful of the big engines. GE's brand-new engine, by contrast, has run into teething problems. Last week the company admitted the engine's fan was being unexpectedly thrown out of balance by bird strikes. BA says, however, that it is still expecting its 777s to be delivered in September.

Observers point out that BA's 1991 decision was made at a time when it was displeased with the Government for giving permission to United and American Airlines to replace the enfeebled TWA and Pan-Am at Heathrow. Though Rolls-Royce is no longer state-owned, ministers would clearly have been happier if the British flag carrier had chosen British engines.

What is clear is that the damage caused has gone well beyond the loss of BA orders. Rolls-Royce has sold 56 of the engines for the 777 (for 28 aircraft) to Cathay Pacific, Emirates, Thai International and Transbrasil airlines. General Electric has sold 78 - with 30 going to BA - while Pratt & Whitney's order book stands at 138. But Rolls-Royce keeps a stiff upper lip, pointing out that the Trent is selling well for the A330, the twin-engined Airbus, and that it is early days in the life of the engine.

It cannot help seeing, however, what the balance would have been had it won BA's business. As well as the 30 direct orders, three Japanese airlines with a combined 70 orders are thought to have switched as a result. This, one analyst says, is because they assumed BA had uncovered a terrible secret about the Trent. "There is no other country in Europe that would have allowed its flag-carrier to buy an engine from a foreign company when there was a good product available at home," he says.

Rolls-Royce will shake off the damage to its credibility when it wins a good slug of new orders. It will be a hard slog. With airline balance sheets still weak, competition between manufacturers for the handful of upcoming big jet orders will be fierce. Korean Airlines, which is buying 777s and A330s, will announce soon which engines it is buying. Rolls-Royce is not holding its breath, because South Korea is so firmly in the US sphere of influence. Other prospects include Singapore Airlines, Air India and South African Airways.

In the long run, the question must be whether Rolls-Royce can survive as an independent company. In March, it announced profits up by pounds 25m to pounds 101m, largely because it has been cutting costs fiercely: 20,000 jobs have gone in the past five years. But one City analyst comments: "Clearly the market doesn't need three major engine manufacturers - there have to be questions over it."

Rolls-Royce is the smallest and least diversified of the three big aero- engine makers. It also has to overcome the increasingly vociferous backing of Pratt & Whitney and GE by Washington in their export markets.

But the Derby-based group has one great strength: it knows what failure is, and is determined not to relive the experience. It was forced out of business in 1971 by the cost of developing the RB211 and exists now only because the Government decided to rescue it. It was refloated in 1986, and is acutely aware that it has to run very fast indeed to avoid the fate of so many once-great British names.

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