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JayinKitsap
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Sun Aug 30, 2020 6:26 am

Prior to the MAX debacle, both Pratt and GE were doing quite well, GE has like 2/3 of its Aviation revenue via CFM in JV with SMECNA.. RR is all widebody in the aviation area, and the losses on the T1000 and the A380 program were hurting. Further, the A330neo and A350 program have had significantly slower deliveries than anticipated when RR signed up to be the exclusive OEM on them. These programs cost more than anticipated to develop, along with fewer engines sold in the first decade since launch.

Now with COVID the widebody glut and very few Hours to bill PBTH costs to RR is in a difficult situation.
 
Sokes
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Sun Aug 30, 2020 8:16 am

33,1 billion assets versus 41,3 billions liabilities.

I am not too pessimistic if Trent 1000 engine troubles are really solved. Engine technology pushes the limits and RR may have been forced to sell below cost to be competitive.
But if they can build future engines without trouble they are back in the game.

Airbus, Boeing, RR:
Change of ownership is o. k., but these are not technologies any country can afford to loose.

Then there are monopoly consideration. If there are only two widebody engine manufacturers and one is only a few percent more economical, most airlines will prefer the better one. How to prevent monopolies?

Add entry into market. The Tristar was a little late, the DC 10 made most of the business. It was RR's fault, but Lockheed suffered.

As plane makers and engine makers depend so badly on each other, I'm not sure they should be separate companies. The risk an engine maker faces affects the plane maker just the same.

A fascinating industry that keeps attracting investors which loose their money.

My idea for duopoly rules:
The less profitable company can't give dividends.
The more profitable company can keep only as much profit as the other company, the rest has to be given to shareholders.
But then how to separate civil and defense?

Earlier planes and engines took much shorter time and much less money to develop.
Those factors don't allow for many players. From a competition view and the possibility of new players to enter the market it's getting worse, not better.
Why can't the world be a little bit more autistic?
 
DaCubbyBearBar
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Sun Aug 30, 2020 11:12 am

Revelation wrote:
So much bad news for RR in their first half results:
  • £2.8bn negative cash flow
  • £3.3bn loss on trading
  • £1.5bn losses due to bad currency hedging
  • CFO is leaving
  • Seeking to sell ITP Aero and a number of other assets
  • Closing two factories
  • 4,000 employees already left this year
  • At least 5,000 more employees to go this year
  • Engine flight hours down by 75%, impacting power by the hour revenue
  • TXWB-84 compressor blade cracking issue discovered
  • Dividends scrapped
  • Company market valuation declined by 2/3rds in one year

Problems clearly are compounding, yet my relative in Derby is still working overtime making turbine blades to keep up with demand for T1000 rebuilds. I was hoping he'd take a package but his wife is still working and he doesn't want to sit at home alone so he is going to keep working as long as he can.

Ref: https://www.telegraph.co.uk/business/20 ... 54bn-loss/
Ref: https://www.bbc.com/news/business-53929215
Ref: https://www.theguardian.com/business/20 ... s-aviation

Those are some DEVASTATING numbers!!! WOW!!! The bad news has to stop soon, doesn’t it?? I HOPE
I am me and no one else...so my opinions are mine
 
smartplane
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Sun Aug 30, 2020 11:30 am

lightsaber wrote:
2175301 wrote:
smartplane wrote:
Ignoring all other elements of RR, commercial aero engines have four revenue streams - PBTH, non-PBTH support, design / consultancy and manufacturing / new sales. The first three are intrinsically profitable, but will wither without the fourth.


I disagree. I believe that only non-PBTH support is intrinsically profitable.

PBTH is profitable only if the rates were set high enough to cover the actual cost of maintaining the engine and doing normal PIPS. I believe that the evidence is that for the B787 engines that it has fallen way short based on errors made in the design and manufacturing process. In the B787 engines case, clearly the design and manufacturing process was not profitable due to the rework needed beyond normal PBTH expectations.

We don't yet know enough about the A350 engines to know if the PBTH rates are adequately profitable long term, and we will have to see how the cracking issue develops long term before any comments can be made about design and manufacturing profitability.

We know that the design/manufacturing on the latest A380 engine order fell short - and that RR is paying substantial penalties for missing the fuel burn on those engines.

Have a great day,

RR on the 787 didn't meet warrantee. So every buyer received compensation from RR. In particular for aircraft groundings.

PBTH is normally incredibly profitable. The issue is the 75% drop in revenue due to so many grounded widebodies.

Part of this is airlines are in extreame cash conservation mode. Any thing that saves today's cash is being done. If that means parking PBTH and running out if green time on other engines (and then parking them), so be it. RR has a big problem in that many (most?) customers cannot afford overhauls.

Look at all the RR customers in bankruptcy: GoL, LATAM, Virgin, Avianca, and Norwegian.

PBTH is what makes RR worth investing in. But first RR needs international travel back up.

PBTH is what is needed on leased aircraft. Until those stop being returned and instead return to service, revenue will be down.

A fair assumption RR engines on the 787, after unforeseen maintenance, parts and whole engine replacement costs, together with labour and other recompense, won't be profitable.

Most of the compensation is non-cash, contingent, with expiry dates, which given the soft demand for new WB aircraft will crystallise at a discount, and in some cases, possibly not at all.

RR PBTH is more flexible than GE & PW in respect to low and non-use, though not sufficient for COVID. RR has been nimble in tweaking their low use offering (perhaps motivated by Airbus), to encourage operators to use RR-powered fleets ahead of those with other engine brands.
 
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Faro
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Sun Aug 30, 2020 12:29 pm

Revelation wrote:
So much bad news for RR in their first half results:
  • £2.8bn negative cash flow
  • £3.3bn loss on trading
  • £1.5bn losses due to bad currency hedging



So how much:

- Cash resources, including unused credit facilities; and
- Capital

do they have left?...that is the acid-test question...


Faro
The chalice not my son
 
brilondon
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Sun Aug 30, 2020 12:33 pm

tidaholmarn wrote:
Clearly RR is the best engine in the world. However when brexit is final so is RR. U.K:s economy will fall over the cliff and COVID19 is just the trigger.


It's not that clear. The problems with 787 and now the A350 issues demonstrate incompetence which needs to be addressed in short term although currently the demand for new aircraft is flat and so is the demand for new engines.
Rush forever Closer To My Heart
 
Luftymatt
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Sun Aug 30, 2020 1:09 pm

tidaholmarn wrote:
Clearly RR is the best engine in the world. However when brexit is final so is RR. U.K:s economy will fall over the cliff and COVID19 is just the trigger.


What exactly has Brexit got to do the current situation RR find themselves in? At the moment they're in a mess of their own making, Brexit or no. Using your logic someone else could say that the reason they're in financial trouble, is because we are in the EU.

Yeah, thanks for your unfounded speculation there.
chase the sun
 
Noshow
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Sun Aug 30, 2020 1:19 pm

They have sites both on the continent and in the UK (and outside). Obviously with the end of the common market this will create frictions like RR engine certifications are now being transferred to continental EASA country registries already to keep them "within" the EU.
 
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Revelation
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Sun Aug 30, 2020 1:26 pm

FrenchPotatoEye wrote:
MIflyer12 wrote:
FrenchPotatoEye wrote:
UK got will not renationalise

They don't have the money.


Sure they do. Every country with its own currency and Central Bank can create money. The U.S. Federal Reserve 'made' $2.3 Trillion in less than four months. GBP 10 Billion to nationalize Rolls would have no meaningful impact on UK debt to GDP.

https://www.brookings.edu/blog/up-front ... us-crisis/


USA economy and population much bigger than the uk and can recoup costs better.

Rr liabilities are much much the grater than its net worth/cap-ex.

It also has the rubbish credit ratings. Can they borrororow more cheaply? Answer is no.

RR is in major trouble

They are spending tens of billions of pounds to build a rail line between London and Birmingham, they can afford to peel off a few billion pounds and save RR, IMO.
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spinotter
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Mon Aug 31, 2020 6:58 am

Revelation wrote:
FrenchPotatoEye wrote:
MIflyer12 wrote:

Sure they do. Every country with its own currency and Central Bank can create money. The U.S. Federal Reserve 'made' $2.3 Trillion in less than four months. GBP 10 Billion to nationalize Rolls would have no meaningful impact on UK debt to GDP.

https://www.brookings.edu/blog/up-front ... us-crisis/


USA economy and population much bigger than the uk and can recoup costs better.

Rr liabilities are much much the grater than its net worth/cap-ex.

It also has the rubbish credit ratings. Can they borrororow more cheaply? Answer is no.

RR is in major trouble

They are spending tens of billions of pounds to build a rail line between London and Birmingham, they can afford to peel off a few billion pounds and save RR, IMO.


The UK should have built high-speed lines decades ago like France, Germany, Spain, and Italy have done. Late comers pay more.

HS2 will bring great benefits to millions of ordinary British travelers. What has Rolls-Royce ever done for anyone except its shareholders and management?
 
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keesje
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Mon Aug 31, 2020 11:25 am

Amazing loss, red flags all around. Luckily their biggest competitor GE is in no position to benefit. Also amazingly PW might come out victoriously. Most people expect NB to recover first. GENX, GE9X and Trent power aircraft (A330, 787, A350, 777) are taking the biggest hits while domestic, regional markets will start to recover first. Embraer E2, Airbus A220 and A320 are on the PW GTF, while the loser (MAX) is exclusively GE/CFM.

10-20 Years ago we were discussing PW probably leaving the civil aviation market, while GE seemed untouchable and RR also boosted strong platform presence and aftermarket coverage.

Image
2014 forecast, https://www.compositesworld.com/article ... -2014-2023

How things changed..
"Never mistake motion for action." Ernest Hemingway
 
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Faro
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Mon Aug 31, 2020 11:52 am

Sokes wrote:
33,1 billion assets versus 41,3 billions liabilities.




That would mean they are bankrupt and living on some form of undertaking of financial support from a third-party...where do these figures come from?...are they consolidated or for the holding company stand-alone?...


Faro
The chalice not my son
 
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lightsaber
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Mon Aug 31, 2020 1:30 pm

Faro wrote:
Sokes wrote:
33,1 billion assets versus 41,3 billions liabilities.




That would mean they are bankrupt and living on some form of undertaking of financial support from a third-party...where do these figures come from?...are they consolidated or for the holding company stand-alone?...


Faro


If cash flow is able to service the debts, RR is underwater, but not bankrupt. A company is often undervalued for its IP.

That said, it make RR a difficult takeover target.

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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Mon Aug 31, 2020 1:39 pm

spinotter wrote:
Revelation wrote:
They are spending tens of billions of pounds to build a rail line between London and Birmingham, they can afford to peel off a few billion pounds and save RR, IMO.

The UK should have built high-speed lines decades ago like France, Germany, Spain, and Italy have done. Late comers pay more.

HS2 will bring great benefits to millions of ordinary British travelers. What has Rolls-Royce ever done for anyone except its shareholders and management?

A large percentage of Brits won't ever need to go from London to Birmingham by rail so will never set foot on HS2. A large percentage over the years have taken holidays on an aircraft powered by RR, given they were/are on BA's L1011, 747, 757, 767, 777A, 787, A350, etc. Same for VS.

UK's post-WWII rail strategy is very interesting, but a topic for a non-av thread, IMO.
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Wake now, discover that you are the song that the morning brings
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Noshow
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Mon Aug 31, 2020 1:42 pm

Looking at the big picture it seems remarkable how during "fat years" with unheard of production rates and sales, both GE and RR could come into trouble? They must have earned tons and tons. What went wrong? Wouldn't they need all money to invest in super high bypass engines for upcoming big programs?
 
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Mon Aug 31, 2020 1:49 pm

Noshow wrote:
Looking at the big picture it seems remarkable how during "fat years" with unheard of production rates and sales, both GE and RR could come into trouble? They must have earned tons and tons. What went wrong?

Corporations aren't banks. They don't sit on cash they earn in good times, they find ways to distribute it to shareholders. If they sit on too much cash they become takeover targets because another company can swap shares or sell junk bonds to buy them out and get a bundle of actual cash in return. I suppose a wave of corporate reform should have come along and fixed this, but too many people make too much money doing all the underlying financial and legal grifting so it'll never change. This leaves us with many boom to bust to boom cycles, but all the grifters make money on the way up and the way down so they see it as a positive not a negative.

lightsaber wrote:
If cash flow is able to service the debts, RR is underwater, but not bankrupt. A company is often undervalued for its IP.

That said, it make RR a difficult takeover target.

Yep, good point. Too much cash and you're a takeover target. Lots of debt but paying it back is a 'normal' business these days, especially given low interest rates. Too much debt means risk which means financing charges get out of hand and leaves you vulnerable in a down turn, like the one we have right now.
Wake up to find out that you are the eyes of the world
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Wake now, discover that you are the song that the morning brings
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Breathe
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Mon Aug 31, 2020 2:24 pm

Revelation wrote:
spinotter wrote:
Revelation wrote:
They are spending tens of billions of pounds to build a rail line between London and Birmingham, they can afford to peel off a few billion pounds and save RR, IMO.

The UK should have built high-speed lines decades ago like France, Germany, Spain, and Italy have done. Late comers pay more.

HS2 will bring great benefits to millions of ordinary British travelers. What has Rolls-Royce ever done for anyone except its shareholders and management?

A large percentage of Brits won't ever need to go from London to Birmingham by rail so will never set foot on HS2. A large percentage over the years have taken holidays on an aircraft powered by RR, given they were/are on BA's L1011, 747, 757, 767, 777A, 787, A350, etc. Same for VS.

UK's post-WWII rail strategy is very interesting, but a topic for a non-av thread, IMO.

I believe that HS2 is meant to connect to the existing network (perhaps on phase 2), so passengers from other parts of the country will get some benefit from it when its built. As you say though, many people in the UK have benefited from flying on planes with RR engines.
 
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lightsaber
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Mon Aug 31, 2020 2:58 pm

The liability increase:

"This partly reflects big swings in the value of currency derivatives, rather than the underlying health of the business."

https://www.washingtonpost.com/business ... story.html

Ouch. Not good when the CFO jumps ship...

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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Mon Aug 31, 2020 3:04 pm

lightsaber wrote:
The liability increase:

"This partly reflects big swings in the value of currency derivatives, rather than the underlying health of the business."

https://www.washingtonpost.com/business ... story.html

Ouch. Not good when the CFO jumps ship...

Lightsaber

I would have phrased it "This partly reflects big swings in the value of currency derivatives, in addition to the underlying health of the business."

Aviation just isn't a healthy business right now, unfortunately.
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lightsaber
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Mon Aug 31, 2020 4:01 pm

Revelation wrote:
lightsaber wrote:
The liability increase:

"This partly reflects big swings in the value of currency derivatives, rather than the underlying health of the business."

https://www.washingtonpost.com/business ... story.html

Ouch. Not good when the CFO jumps ship...

Lightsaber

I would have phrased it "This partly reflects big swings in the value of currency derivatives, in addition to the underlying health of the business."

Aviation just isn't a healthy business right now, unfortunately.

I agree it is not a healthy business. I have friends who manage at business supporting LAX or other local airports and revenue is way down. My neighbor does luggage carts. Instead of printing money... losing money. Another friend lost her job, so she took the kids and moved in with grandma (house sold).

But RR has a great portfolio. The Txwb and T1000 have high future revenue potential on PBTH.

RR took the risk on revenue variability. I fully admit I thought they were brilliant, pre-Covid19. PBTH used to be a very certain revenue source.

Lightsaber
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Sokes
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Mon Aug 31, 2020 4:17 pm

Faro wrote:
Sokes wrote:
33,1 billion assets versus 41,3 billions liabilities.




That would mean they are bankrupt and living on some form of undertaking of financial support from a third-party...where do these figures come from?...are they consolidated or for the holding company stand-alone?...


Faro

2020 half year results.
What do you mean with consolidated? Does RR have lot of joint ventures?
I suppose Britain belongs to the countries where negative equity is allowed.
Why can't the world be a little bit more autistic?
 
JonesNL
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Mon Aug 31, 2020 5:54 pm

Revelation wrote:
lightsaber wrote:
The liability increase:

"This partly reflects big swings in the value of currency derivatives, rather than the underlying health of the business."

https://www.washingtonpost.com/business ... story.html

Ouch. Not good when the CFO jumps ship...

Lightsaber

I would have phrased it "This partly reflects big swings in the value of currency derivatives, in addition to the underlying health of the business."

Aviation just isn't a healthy business right now, unfortunately.

Was aviation ever an healthy business? It was growing 10% a year, yet a lot of players were making big losses. Investments are high, returns are low and risks and volatility was para out. And I am talking about pre-covid. Oems have been going bankrupt since the nemesis of the sector. Even the ones that have outperformed peers are making billion dollar gambles that do not pay out or are filled with project over runs (A380, 787).

A friend of mine who works in aviation said that he believes the sector has enormous sex appeal that keeps it running and not much else...
 
ScottB
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Mon Aug 31, 2020 9:26 pm

keesje wrote:
Amazing loss, red flags all around. Luckily their biggest competitor GE is in no position to benefit. Also amazingly PW might come out victoriously. Most people expect NB to recover first. GENX, GE9X and Trent power aircraft (A330, 787, A350, 777) are taking the biggest hits while domestic, regional markets will start to recover first. Embraer E2, Airbus A220 and A320 are on the PW GTF, while the loser (MAX) is exclusively GE/CFM.


Well, it's a bit dishonest to say "A320 are on the PW GTF, while the loser (MAX) is exclusively GE/CFM" when just over half the disclosed engine choices for A32Xneo are for CFM LEAP. The E2 program is struggling with only 173 orders nearly a decade after launch. A220 still doesn't make money and it's not clear Airbus will have the resources to shovel in even more cash to support jobs which are largely in North America -- especially if they might have to find capital to prop up RR.
 
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spinotter
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Mon Aug 31, 2020 9:38 pm

Breathe wrote:
Revelation wrote:
spinotter wrote:
The UK should have built high-speed lines decades ago like France, Germany, Spain, and Italy have done. Late comers pay more.

HS2 will bring great benefits to millions of ordinary British travelers. What has Rolls-Royce ever done for anyone except its shareholders and management?

A large percentage of Brits won't ever need to go from London to Birmingham by rail so will never set foot on HS2. A large percentage over the years have taken holidays on an aircraft powered by RR, given they were/are on BA's L1011, 747, 757, 767, 777A, 787, A350, etc. Same for VS.

UK's post-WWII rail strategy is very interesting, but a topic for a non-av thread, IMO.

I believe that HS2 is meant to connect to the existing network (perhaps on phase 2), so passengers from other parts of the country will get some benefit from it when its built. As you say though, many people in the UK have benefited from flying on planes with RR engines.


There are other jet engine manufacturers beside RR, but only one chance to build HS2, connecting, in addition to Birmingham, to Liverpool, Manchester, Glasgow, Sheffield, Leeds, Humberside, and Edinburgh, and everything in between.. Much more useful for the UK than RR.
 
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Mon Aug 31, 2020 10:00 pm

"TXWB-84 compressor blade cracking issue discovered"!!!
 
TMccrury
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Mon Aug 31, 2020 11:00 pm

One of the plants that is closing is about 30 minutes or less from my house here in the Richmond, VA area. There are 300 or so folks that will be without work. It is a sad day.
 
ScottB
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Tue Sep 01, 2020 2:43 am

spinotter wrote:
There are other jet engine manufacturers beside RR, but only one chance to build HS2, connecting, in addition to Birmingham, to Liverpool, Manchester, Glasgow, Sheffield, Leeds, Humberside, and Edinburgh, and everything in between.. Much more useful for the UK than RR.


That's a rather simplistic way to look at the matter, and not entirely accurate, either. There is basically one other manufacturer with a current-generation product in the widebody segment and the maintenance of the necessary engineering talent and good-paying manufacturing jobs are also very important to the UK.

And with the cost of HS2 rising well above £50 billion a rescue of RR would likely be less expensive.
 
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FrenchPotatoEye
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Tue Sep 01, 2020 9:42 am

Hs2 is the infrastructure project.

RR is not.

Rr will not be saved by the govt, otherwise other firms would want the same.

Rr may have to tap into capital markets with its poorer credit rating. It has useded up a lot of cash so far in 2020.
 
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Dano1977
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Tue Sep 01, 2020 9:52 am

I may have missed this in the thread or could be completely wrong...

But doesn't HM Govt still hold a "Golden Share" in RR, to stop any hostile take over to protect RR nuclear business falling into the wrong hands?

RR will not fail, the Chancellor will find the money to bail it out/nationalise it if the worst case scenario comes to fruition
The average EU official - he has the organising ability of the Italians, the flexibility of the Germans and the modesty of the French. And that's topped up by the imagination of the Belgians, the generosity of the Dutch.
 
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Faro
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Tue Sep 01, 2020 10:59 am

Sokes wrote:
Faro wrote:
Sokes wrote:
33,1 billion assets versus 41,3 billions liabilities.




That would mean they are bankrupt and living on some form of undertaking of financial support from a third-party...where do these figures come from?...are they consolidated or for the holding company stand-alone?...


Faro

2020 half year results.
What do you mean with consolidated? Does RR have lot of joint ventures?
I suppose Britain belongs to the countries where negative equity is allowed.



By consolidated I mean all of the RR group of companies...the main UK operational units plus all other companies they own/control plus joint ventures, etc...a big industrial group like RR would typically consist of dozens of individual companies all controlled by a central holding company...given the magnitude of the numbers, I suppose the numbers are most likely consolidated...

Yes, I suppose negative equity is allowed in the UK...in many companies it's (exceptionally) allowed if a balance sheet prepared on a liquidation-basis (marketable fair values for all assets, including IP) shows that there is still positive equity left in the company...but then it is temporary, the governing bodies must usually adopt and implement a rapid recovery plan in such circumstances...


Faro
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Faro
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Tue Sep 01, 2020 11:07 am

Dano1977 wrote:
RR will not fail, the Chancellor will find the money to bail it out/nationalise it if the worst case scenario comes to fruition




If only for the basic reason that the UK government cannot afford to have the maker of a sizable chunk of the world's civil turbine engine fleet simply die off and cease offering spares and support...that is commercially unthinkable...


Faro
Last edited by Faro on Tue Sep 01, 2020 11:26 am, edited 1 time in total.
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Noshow
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Tue Sep 01, 2020 11:11 am

Hopefully it won't be CROMAC soon.
 
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Tue Sep 01, 2020 11:25 am

I think if RR needs it, they'll get it. It's a UK powerhouse and the employment loss will be too much and there are TOO many stakeholders involved to allow RR fold. Now with that being said, i think the UK government will first allow RR to see what can be done in the private sector, whether that be via M&A or a the sale of their crucial departments (Civil) unto other entities (P&W etc) that can afford to buy if off them but of course employment remains in the UK.
 
Opus99
Posts: 1172
Joined: Thu May 30, 2019 10:51 pm

Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Tue Sep 01, 2020 11:27 am

keesje wrote:
Amazing loss, red flags all around. Luckily their biggest competitor GE is in no position to benefit. Also amazingly PW might come out victoriously. Most people expect NB to recover first. GENX, GE9X and Trent power aircraft (A330, 787, A350, 777) are taking the biggest hits while domestic, regional markets will start to recover first. Embraer E2, Airbus A220 and A320 are on the PW GTF, while the loser (MAX) is exclusively GE/CFM.

10-20 Years ago we were discussing PW probably leaving the civil aviation market, while GE seemed untouchable and RR also boosted strong platform presence and aftermarket coverage.

Image
2014 forecast, https://www.compositesworld.com/article ... -2014-2023

How things changed..

Isn't the PW option on the a320 kind of like the RR on the 787? Nobody really wants that one? I might be very wrong, i have not confirmed
 
Kiwirob
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Tue Sep 01, 2020 11:53 am

mxaxai wrote:
Francoflier wrote:
Even if that didn't materialize, many European nations and consortiums would be very interested in snapping up what is essentially the sole large engine European manufacturer, especially at a bargain. As you say, the Airbus group is quite codependent on RR for its civil aircraft branch and is also quite keen to deleverage itself from the consequences of Brexit. I could see them very interested, among others on the continent.

I don't think Airbus wants to get involved in engine development but I could see other suppliers like MTU, Leonardo or Safran pick up parts of RR. Large tech corporations like Siemens or Tata could also be an option, especially for the non-aviation parts.


MTU Friedrichshafen is a Rolls Royce company??

I personally don't see the UK govt allowing RR to fail.
 
mxaxai
Posts: 2061
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Tue Sep 01, 2020 12:22 pm

Kiwirob wrote:
MTU Friedrichshafen is a Rolls Royce company??

I personally don't see the UK govt allowing RR to fail.

MTU Friedrichshafen develops and manufactures (large) diesel engines for ships, trucks etc. The company is 100% owned by RR power systems.

MTU Aero Engines is an aviation supplier with a focus on high pressure compressors, low pressure turbines and engine casings. It's an independent company, with stocks listed in the German MDAX. The company is a member of IAE, though most of their engine parts are built for PW and GE so there isn't too much overlap with RR. They do cooperate heavily in military engines, being partners on the engines of the Tornado, Eurofighter, Tiger and A400M.
 
Sokes
Posts: 2192
Joined: Sat Mar 09, 2019 4:48 pm

Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Tue Sep 01, 2020 3:32 pm

Faro wrote:
Yes, I suppose negative equity is allowed in the UK...in many companies it's (exceptionally) allowed if a balance sheet prepared on a liquidation-basis (marketable fair values for all assets, including IP) shows that there is still positive equity left in the company...but then it is temporary, the governing bodies must usually adopt and implement a rapid recovery plan in such circumstances...


Faro

Interesting, I never heard that.
In Germany a company can't have less than 0% equity. But if companies do get bankrupt the assets are normally not enough to pay liabilities. I guess buildings which were already written off were sold the years before to avoid bankruptcy. In that sense the rule you described makes sense.
Why can't the world be a little bit more autistic?
 
Sokes
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Tue Sep 01, 2020 3:44 pm

Half the loss was from currency hedges.
But if the pound remains low the surplus value of British labour should be good the next years.
If there had been large gains from hedging, profit the next years would be lower.
Why can't the world be a little bit more autistic?
 
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lightsaber
Moderator
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Tue Sep 01, 2020 3:44 pm

Opus99 wrote:
keesje wrote:
Amazing loss, red flags all around. Luckily their biggest competitor GE is in no position to benefit. Also amazingly PW might come out victoriously. Most people expect NB to recover first. GENX, GE9X and Trent power aircraft (A330, 787, A350, 777) are taking the biggest hits while domestic, regional markets will start to recover first. Embraer E2, Airbus A220 and A320 are on the PW GTF, while the loser (MAX) is exclusively GE/CFM.

10-20 Years ago we were discussing PW probably leaving the civil aviation market, while GE seemed untouchable and RR also boosted strong platform presence and aftermarket coverage.

Image
2014 forecast, https://www.compositesworld.com/article ... -2014-2023

How things changed..

Isn't the PW option on the a320 kind of like the RR on the 787? Nobody really wants that one? I might be very wrong, i have not confirmed

The band for Pratt is growing. There are now 10,000 GTF engine orders & commitments. The press has beat up on Pratt for so long they miss Pratt is actually doing well enough. Ok, huge goodwill writedowns on Collins:

https://www.rtx.com/News/News-Center/20 ... 20-results

https://www.ainonline.com/sponsored-con ... try-growth

LEAP on the A320 is doing well. Latest I could find, 56%:
https://centreforaviation.com/analysis/ ... ive-401868

MTU still made a profit, so they could be in the market:
https://markets.businessinsider.com/new ... 1029460267

RR will not survive independently without government help. The UK must decide how much the subsidize RR.

So if MTU wants to buy the RR division with MTU also in the name (diesel engines), that makes sense.

I do wonder if Raytheon Technologies might buy RR. However, their recent acquisitions might have sucked up too much cash.

Lightsaber
Winter is coming.
 
JonesNL
Posts: 206
Joined: Tue Aug 06, 2019 2:40 pm

Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Tue Oct 13, 2020 9:00 am

[Slightly off topic] Seeing that Rolls Royce is practically bankrupt; is there a possibility that Airbus takes over the relevant engine programs, like Trent, Ultrafan?
Especially seeing that the whole future of their widebodies is so dependant on these current and future programs...
 
Peterwk146
Posts: 76
Joined: Sat Nov 11, 2017 8:22 am

Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Tue Oct 13, 2020 10:44 am

Noshow wrote:
All those troubles seem to have started when the Nimrod did not materialize.

I don't understand this comment - please amplify.
 
olle
Posts: 2487
Joined: Tue Feb 06, 2007 3:38 am

Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Tue Oct 13, 2020 11:21 am

JonesNL wrote:
[Slightly off topic] Seeing that Rolls Royce is practically bankrupt; is there a possibility that Airbus takes over the relevant engine programs, like Trent, Ultrafan?
Especially seeing that the whole future of their widebodies is so dependant on these current and future programs...


I see that Airbus considers RR dominance as a problem. RR practically killed the A380 even before the Covid by not offer a NEO treatment.

What will happen with Utrafan in a RR fighting for cashflow?
 
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Polot
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Tue Oct 13, 2020 12:15 pm

Peterwk146 wrote:
Noshow wrote:
All those troubles seem to have started when the Nimrod did not materialize.

I don't understand this comment - please amplify.

He is referring to the Nimrod MRA4, which was a update to the Nimrods that involved reengining them with RR BR700s, among other updates. It was ultimately canceled in 2010 due to cost overruns and delays and the UK eventually ordered P-8 Poseidons to fulfill the MRA4’s intended role.

It was obviously a big loss for RR losing out on that revenue and any money and assistance they spent with BAE Systems to help with the re-engine wasted. Development on the MRA4 has begun way back in the late 90s.
 
bennett123
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Tue Oct 13, 2020 12:24 pm

Delays is the understatement of the year, the purchase of 21 Nimrod 2000 was approved in 1996, (the clue is in the name).

By the time the whole idea was scrapped in 2010 the proposed purchase was for 9 Nimrod NRA4.

https://en.wikipedia.org/wiki/BAE_Systems_Nimrod_MRA4
 
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Phosphorus
Posts: 1059
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Tue Oct 13, 2020 12:33 pm

bennett123 wrote:
Delays is the understatement of the year, the purchase of 21 Nimrod 2000 was approved in 1996, (the clue is in the name).

By the time the whole idea was scrapped in 2010 the proposed purchase was for 9 Nimrod NRA4.

https://en.wikipedia.org/wiki/BAE_Systems_Nimrod_MRA4

That mess was well covered on this forum. Please search a post by member "astuteman" -- both the post is absolutely legendary, and the underlying debacle is eye-popping.
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lightsaber
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Tue Oct 13, 2020 1:38 pm

olle wrote:
JonesNL wrote:
[Slightly off topic] Seeing that Rolls Royce is practically bankrupt; is there a possibility that Airbus takes over the relevant engine programs, like Trent, Ultrafan?
Especially seeing that the whole future of their widebodies is so dependant on these current and future programs...


I see that Airbus considers RR dominance as a problem. RR practically killed the A380 even before the Covid by not offer a NEO treatment.

What will happen with Utrafan in a RR fighting for cashflow?

NEO costs billions if pounds (euros, dollars). It amazes me how many here would spend billions with no hope of a profit. If there was money to be made, Pratt or GE (or both again) would have offered an engine. Airbus failed to offer an attractive business case.

RR didn't have the money for an A380NEO. Unfortunately for them, it currently looks as if the A330NEO will lose money. It costs the engine supplier just as much to offer a NEO as to put the engine on a new aircraft with the sales benefits of a new design (CFRP wing, underside laminar flow, electric subsystems cutting maintenance, better predictive maintenance). NEOs benefit the airframer more than the engine vendors.

Lightsaber
Winter is coming.
 
User avatar
lightsaber
Moderator
Posts: 20603
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Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Wed Oct 14, 2020 4:39 pm

I found an interesting link on predicted fuel burn for a whole bunch of widebodies (but no A380). It helps to talk to numbers:
https://www.aircraft-commerce.com/sampl ... TOPS_A.pdf
Winter is coming.
 
Opus99
Posts: 1172
Joined: Thu May 30, 2019 10:51 pm

Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Wed Oct 14, 2020 5:11 pm

lightsaber wrote:
I found an interesting link on predicted fuel burn for a whole bunch of widebodies (but no A380). It helps to talk to numbers:
https://www.aircraft-commerce.com/sampl ... TOPS_A.pdf

Very interesting indeed. I was expecting the A350-1000 to have a much higher performance over the 777-300ER
 
RB211trent
Posts: 163
Joined: Tue Aug 22, 2017 11:35 am

Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Wed Oct 14, 2020 5:13 pm

olle wrote:
JonesNL wrote:
[Slightly off topic] Seeing that Rolls Royce is practically bankrupt; is there a possibility that Airbus takes over the relevant engine programs, like Trent, Ultrafan?
Especially seeing that the whole future of their widebodies is so dependant on these current and future programs...


I see that Airbus considers RR dominance as a problem. RR practically killed the A380 even before the Covid by not offer a NEO treatment.

What will happen with Utrafan in a RR fighting for cashflow?

Why did RR kill off the A380, neither RR or EA offered an engine for the 380NEO but you don’t seem to mention EA?
 
wingman
Posts: 4019
Joined: Thu May 27, 1999 4:25 am

Re: Rolls Royce loses £5.4bn, closing two factories, looking to sell assets

Wed Oct 14, 2020 5:32 pm

lightsaber wrote:
I found an interesting link on predicted fuel burn for a whole bunch of widebodies (but no A380). It helps to talk to numbers:
https://www.aircraft-commerce.com/sampl ... TOPS_A.pdf


I've never seen that detailed of an analysis before, thanks for posting. I guess within its ideal city pairings the 787-10 with either GE or RR is the cost efficiency champ.

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