Success in the Americas – How Rolls-Royce Investments are Redefining the Customer Base

Transcript

Mike:My name is Mike Ryan, and I'm the Vice President of Sales for the Americas at Rolls-Royce. In this role, I maintain responsibility for all sales campaigns across our region, which includes all of North and Latin America. Today I will talk briefly about the many investments Rolls-Royce is making in its civil business the advances these have fueled, and how each of these are helping to redefine our customer base in the region with some recent examples of success, many of which I have witnessed firsthand. I'd like to begin by looking backward, however. Any discussion around our investments in the future needs to begin with our transformation. Over the past 4 years, our financial turnaround has been extraordinary. Emerging from the pandemic, we were a stagnating company. Our profitability lagged the competition and we were saddled with mountains of debt. It is not an exaggeration to say that we were fighting for our survival. The idea of forward-looking strategic investments felt out of reach. Since then, a combination of stronger flying hours, and relentless focus on reducing costs, driving efficiency, improving working capital, and growing margins has delivered a step change in our financial performance. From 2022 to 2025, our revenues are up 58%. Our operating margins are up over 1,200 basis points. Our free cash flow is up nearly 6.5 times. And our leverage position has improved, moving from £3.3bn of net debt to £1.9bn of net cash. It has put us on a more solid financial footing, and there's no question we are a stronger, more resilient company. Our improved cash generation and strengthened balance sheet have provided additional scope for investment in research and development, service expansion, and and modernization initiatives in line with our long-term ambitions. In fact, we have more than doubled our capital expenditure since 2022, from £405 million to more than £1 billion in 2025 alone. These investments have funded a variety of enhancements to our product and service portfolio, including improvements in engine durability and time on wing, reducing operational disruption, advances in fuel efficiency, reducing operating costs, and growth in MRO capacity and capability, improving our ability to support our fleets in service. It is a multi-pronged approach to increasing resilience and building competitiveness, making engines easier to maintain, cheaper to operate, and faster to repair. In our market, where aircraft routinely reach service lives of 25 to 30 years, this is particularly important. One of our primary areas of investment has been improvements to engine durability. Our Time on Wing program now targets more than a 100% increase in durability across our in-production Trent engines by the end of 2027. To date, we have delivered more than half of this improvement, including durability enhancements for the Trent XWB97, which powers the A350-1000 and A350 freighter. We made significant progress through material, component, and cyclic engine testing in 2025 and remain on track for completion by the end of 2027. These enhancements will double time on wing in harsh operations and deliver a 50% increase for benign environments. To prove this out, we are testing 7 development engines with new hardware this year, following thousands of cycles and hundreds of borescope inspections last year. Time on wing improvements for the Trent 1000 on the 787 and its sister engine on the A330neo family. Last June, the Trent 1000 XE Phase 1 high-pressure turbine blade improvement was certified and is now being installed on new and in-service engines. We then followed up the Phase 1 blade rollout with certification of the Phase 2 blade in February. These new blades deliver 40% more cooling flow, reduced shroud weight, and feature improved coatings together with an updated combustion system. Fuel spray nozzles, and electronic engine controller software, these advancements will deliver a 300% increase in time on wing. We have kicked off the process to incorporate this upgrade into new and in-service engines. To date, over 85% of the Trent 7000 fleet and over 40% of the Trent 1000 fleet has been rolled. We expect the full fleet to be completed by the end of 2027. Our investments are not limited to our latest programs either. We are continually seeking to improve the time on wing of all of our engines. For instance, we delivered durability enhancements for the Trent 900 engine on the A380, which will yield a time on wing improvement of up to 30%. At the same time we are improving engine durability, We are making advances in fuel efficiency. The recently introduced Trent XWB-84EP entered service last summer. The EP builds on the success of the best wide-body engine in production by delivering a nearly 2% reduction in fuel burn, cutting airlines' fuel bills by nearly $500,000 per aircraft per year without any impact to durability or reliability. As important as our product improvements are, they are only one piece of the puzzle for our customers. Equally important are our services. To deliver world-class support, we need a world-class network. Our care network underpins all of our products and services. New aircraft orders and increases in flying hours have driven increased demand for shop visits, pushing capacity levels and growing pressure in the MRO network. To address this, we are proactively investing in our MRO network to significantly enhance capacity by 2030. Together with our partners, we are investing more than £750 million across our network. This has funded a 50,000 square meter capacity increase at Sasol, Our joint venture with Singapore Airlines, which will support growth in overhauls and component repair. A nearly 60% ramp-up in engine output at N3, our joint venture with Lufthansa, over the next 2 years. A new Basel joint venture with Air China, which will bring capacity for 250 shop visits per year across the Trent XWB-84, Trent 1000, and Trent 700 online by the mid-2030s. A new facility with Turkish Technic to deliver an additional 200 shop visits per year across the Trent XWB-84, Trent XWB-97, and Trent 7000 programs. Full overhaul capability at Air France-KLM's Paris shop, and Trent 1000 capability at our Dolovitz MRO facility. In just 2 years, We've grown shop visit capacity by 50% from 2023, with a goal to have a capacity of around 1,500 shop visits per year from 2027. And we have grown it in a way that continues to expand choice and flexibility for our customers through an open network. However, effective MRO requires more than just overhaul facilities. In addition to our investments in infrastructure, We have developed extensive capabilities to deploy targeted work scopes and near-wing or on-wing repairs so that engines can be returned to service without the need for lengthy shop visits and with minimal operational disruption. All part of our long-term vision of delivering a capable, flexible, and resilient network to serve all customers and all fleets. So how do we measure a return on these investments? How have these outlays translated into success for Rolls-Royce globally and in the Americas specifically? We can already see that these investments are paying dividends in our region. In January, Delta Air Lines announced a deal for an additional 15 A350-900 and 16 A330-900 aircraft. Delta is a customer that has operated both products for nearly a decade with great success and doubled down on its Trent fleet in part because of its belief in the investments we are making in our products. The Trent XWB-84EP has already delivered nearly 2% better fuel burn for Delta than its baseline fleet, and our durability enhancements to the Trent 7000 are producing a step change and time on wing and operational burden reduction. In March, Atlas Air announced an order for 20 A350 freighters. Atlas is an excellent example of a customer that has always viewed its fleet in a certain way, but believed in the investments we are making to our products and services. This is a breakthrough order for us into a freight market that has long been defined Atlas's vote of confidence in the product has helped to establish the A350 freighter and Trent XWB-97 combination as a legitimate player in the cargo space. Its order is a powerful message to the industry and a catalyst for even greater market success. In April, LATAM announced an order for 3 Trent 1000-powered 787s, the first Trent 1000 order for new Dreamliners in nearly 3 years. LATAM is one of the largest Trent 1000 fleets in the world, but durability challenges led the airline to go in a different direction with its 2023 order for additional 787s. Since then, we've made significant investments in the product durability, care network capacity, and repair capabilities to support our in-service fleet All of which were critical to win back the trust of LATAM. We are fully committed to regaining customer confidence and winning back market share on the 787, and the LATAM order is an encouraging validation of our strategy and investments. It is a first but critical step in our Trent 1000 journey and a powerful message to the market about the Trent 1000XE. There are several other successes not yet public, but equally consequential for Rolls-Royce, all of which are helping to grow and redefine our customer base in the Americas. It's an impressive list of successes in a very short period, but we are not finished. We are focused on what comes next. We remain committed to reentering the narrowbody market. With single-aisle production set to double over the next 25 years, And a market worth $1.6 trillion globally, this is a truly transformational opportunity for our business. It is the single biggest growth opportunity for us over the next half century. Through our game-changing UltraFan program, we are making investments now to position ourselves for success when the opportunity arises. Our UltraFan program builds on the success of our 3-shaft Trent architecture with a geared design to maximize efficiency. The planetary gear technology is highly scalable and is being developed for both widebody and narrowbody applications. It will be 25% more fuel efficient than first-generation Trent engines and remains a traditional ducted engine family, reinforcing our belief that high bypass geared turbofans can deliver major efficiency gains without the integration and certification complexities associated with open rotor designs. In March, we unveiled our UltraFan 30 concept. This is an UltraFan demonstrator aimed squarely at the next generation of single-aisle aircraft, featuring a 20-megawatt power gearbox, a CTI fan system, with carbon titanium fan blades and composite casing and advanced manufacturing techniques including additive layer manufacturing and ceramic matrix composite materials, we anticipate up to 20% better fuel burn than engines in service today. We are also building the technology to be compatible with 100% sustainable aviation fuel from day one. Planned for ground testing in 2028, the UltraFan 30 demonstrator takes everything that we've learned in creating world-leading widebody and business aviation engines to the narrowbody market using technology from proven architectures. To conclude, Rolls-Royce is making strategic investments for the future. We are making our products more durable and efficient, and we are making our services more flexible and easier to access. And while we are already seeing what's— seeing results, we remain continually focused on what's next. Thank you for your time.

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