Rolls-Royce set to secure A380 engine order with Emirates Airline

Rolls-Royce is poised to clinch one of the biggest deals in its history, with an order for some 200 engines to power Airbus A380 superjumbos for the fast-growing Gulf carrier Emirates Airline.

The deal to supply Rolls-Royce's Trent 900 engines, due to be announced on Friday, could be worth more than $8bn at catalogue prices with service and maintenance included, although big airline customers often win large discounts.

The contract will break the stranglehold that Rolls-Royce's US rivals, General Electric and Pratt & Whitney, have had on the engines for A380s flown by Emirates, the aircraft's biggest operator .

News that Rolls-Royce has won the contract is likely to intensify speculation over the future of the A380.

Airbus has come under pressure from Emirates to agree to produce a new version of the A380 featuring more fuel-efficient engines.

Sir Tim Clark, Emirates president, has said he would like to see Rolls-Royce's XWB engine - designed for the wide-body A350 - adapted for the A380. Last month he told the Financial Times that he had set a deadline for Airbus to decide by this spring.

"This order could be morphed into a new engine for the A380 if Airbus decided to go down that route," said one person close to the subject.

However much would depend on whether the contract included conversion options, said one analyst. The details will be published on Friday.

Emirates is Airbus' largest customer for the A380, with 140 of the existing 317 orders. A total of 81 A380s are still to be delivered to Emirates.

Airbus is reluctant to re-engine the superjumbo as it has been in service less than 10 years.

The group will this year break even on the current costs of building the aircraft although it is unlikely ever to recoup the billions spent in development.

Airbus is hoping to secure more customers for the A380 before sinking more money into a new version of the aircraft. In particular it is hoping to win Chinese airlines over to the superjumbo before the end of the year.

The deal with Rolls-Royce suggested that GE and Pratt would not be willing to invest in developing a new engine for an aircraft that has been struggling to find customers, said some analysts.

For Rolls-Royce the deal will be a welcome boost after a torrid 2014 in which the UK's blue-chip industrial group angered investors with a series of profit warnings.

The news "should be well received", said Zafar Khan, analyst at Societe Generale. "They are ousting their biggest rival from the biggest customer for the aircraft, and you get value as well."

Another analyst said there was a risk that such a big order could create new uncertainty over medium term margin guidance at the group. "It might give them another excuse to abandon it," he added.

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