Jets power Rolls-Royce to record £70bn order book

SURGING demand from airlines for new engines propelled Rolls-Royce’s order book 15 per cent higher to a record £70bn as it reported a big jump in half-year profits.

The engineering giant said orders, including a $4bn (£2.6bn) deal with Singapore Airlines to power 50 Boeing 787 Dreamliner aircraft, boosted demand for its civil engines 14 per cent to £56.7bn.

Underlying pre-tax profits leapt 34 per cent to £840m during the first six months, lifted by more work and restructuring, as shares rose to match a record high after the results beat City expectations.

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Revenues were 27 per cent higher at £7.3bn, driven by surging sales across its civil, defence, marine and energy divisions.

Orders for Trent engines for large aircraft helped the company grow its market share.

It hailed a milestone with its most efficient Trent XWB engine when it powered an Airbus A350 jumbo jet for the first time in June.It has already booked 1,400 orders for the engine, which will help reduce jet emissions by 16 per cent.

Underlying profits in its civil aerospace arm leapt 59 per cent to £486m, as engine deliveries increased 11 per cent to 346.

It won orders from carriers including Air China, Hong Kong Airlines, United Airlines and British Airways owner International Airlines Group.

Surging engine orders helped it shake off concerns about quality, despite facing an ongoing legal dispute with former employees about an alleged cover-up of poor procedures in the US. Rolls-Royce recently admitted it “clearly fell short” of the highest standards, when one of its engines disintegrated on the world’s largest passenger plane.

A final report by Australian investigators into the November 2010 incident aboard a Qantas Airbus A380 superjumbo with 440 passengers said the engine explosion – which caused the temporary grounding of 20 planes with Trent 900 engines – was caused by a poorly-built oil pipe that failed to meet design specifications.

The group’s total order book hit £69.2bn, compared with £60.1bn a year earlier, but squeezed military budgets shrunk its defence order book four per cent to £4.9bn. The group, which has major sites at Derby and Bristol and employs around 45,000 people worldwide, said a probe into alleged bribery and corruption in Indonesia and China continues.

The claims are being investigated by the Serious Fraud Office (SFO), but Rolls gave no update on what the penalties could be or when it will be concluded.

Rolls-Royce’s net cash fell £396m to £921m, and the group said a £261m increase in stock and inventory holdings was “disappointing”.