TWA may halt Rolls order

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The Independent Online
FEARS are growing that TWA, the troubled US airline, will cancel an order for up to 40 Airbus 330s when it emerges from Chapter 11 bankruptcy protection in a few months.

Hardest hit by the move would be Rolls-Royce, the British aero-engine manufacturer. TWA had specified that the planes were to be equipped with Rolls' new Trent engine. The order is estimated to be worth dollars 2bn to Rolls.

An industry analyst said: 'It will be a much leaner and fitter TWA that comes out of Chapter 11. TWA's managers are only going to want to pursue orders that are absolutely necessary.'

Any scrapping of the order could not come at a worse time for Rolls, which is believed to be on the point of cutting its dividend for the first time since privatisation and shedding 2,000 jobs. Results in March are expected to show a flat performance with profits close to the 1991 level of pounds 51m.

Rolls is being hit on several fronts at the moment. Defence demand is down; civil aircraft manufacturers are reporting falling production levels; the aircraft spares market is sluggish and NEI, the group's power engineering division, is struggling to maintain previous business levels.

Question marks also remain over the group's exposure to GPA, the ailing Irish leasing giant, and an order from America West, a US regional airline.

Observers reckon that in order to match the performance of its major US rivals, General Electric and Pratt & Whitney, the Derby-based company will have to cut its aero-engine workforce from 30,000 to 25,000.