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LaunchDetected
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Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Wed Nov 07, 2018 3:51 pm

This topic is not based on an actual article nor rumor, it just comes from the current state of each company and some overthinking.

Rolls-Royce plc encounters some troubles, with a lot of job cuts and technical issues. Airbus is annoyed by the delays of the engine suppliers and we know that Boeing also wants to reduce the dependency on its suppliers (some talks about the cabin furnishing activity). Airbus decided to take back the production of engine nacelles for the A320neo family.

Also it's really costly and less efficient to design an aircraft with several engine options, that's why the A350 and the A330neo are powered only by RR Trent turbofans.

RR and Airbus are also partners in the Eurofighter program.


Could a Rolls-Royce plc Aerospace business absorption by Airbus be financially plausible ? And would it be really useful ?
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Polot
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Wed Nov 07, 2018 3:58 pm

LaunchDetected wrote:

Also it's really costly and less efficient to design an aircraft with several engine options, that's why the A350 and the A330neo are powered only by RR Trent turbofans.

Not really. The A350 is single engine because GE did not want to power -1000 (as it competes with the GE exclusive 77W/77X), only the -800 and -900 with modified GENxs but Airbus only wanted them on the table if they developed the engine more and powered all three variants. RR later ended up with an exclusivity agreement on the -1000 in exchange for beefing up the Trent to form the Trent XWB 97 when Airbus wanted to beef up the -1000 in 2011ish.

The A330neo has RR engine exclusivity because RR and GE would only develop the bleed air variant for the plane if they had exclusivity. Airbus didn’t make that choice.
Last edited by Polot on Wed Nov 07, 2018 3:59 pm, edited 1 time in total.
 
kengo
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Wed Nov 07, 2018 3:59 pm

Not sure in EU but in the US, I think there is a law that forbids Boeing from buying/owning an engine maker. In this respect, if Airbus were to acquire RR, I think the US will not approve the buyout.
 
chidino
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Wed Nov 07, 2018 4:32 pm

Plus, whatever else, RR will have to soldier on in the near term; no one can make a deal until the permanent legal framework is in place (and that is as close to THAT subject as I will go)
 
Breathe
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Wed Nov 07, 2018 4:40 pm

I doubt Airbus want to expand their business into Energy & Marine power systems. RR makes more than just aircraft engines.
 
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Wed Nov 07, 2018 4:51 pm

Breathe wrote:
I doubt Airbus want to expand their business into Energy & Marine power systems. RR makes more than just aircraft engines.


My post is only about the aerospace branch of RR
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Wed Nov 07, 2018 4:57 pm

Airbus is only one partner in Eurofighter, also RR have significant interests in other engine programmes other than those powering Airbus planes, if they were taken over by Airbus the potential issues would likely be insurmountable
 
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Phosphorus
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Wed Nov 07, 2018 5:15 pm

kengo wrote:
Not sure in EU but in the US, I think there is a law that forbids Boeing from buying/owning an engine maker. In this respect, if Airbus were to acquire RR, I think the US will not approve the buyout.


You probably mean Air Mail Act of 1934, after which United Aircraft and Transport Corp. split into Boeing, United Aircraft (currently United Technologies) and United Airlines.

It does prohibit airlines to be owned by aircraft manufacturers, if they want mail revenue (apparently, THE money-spinner of the era).

I don't seem to remember a specific prohibition of airframers owning engine companies; to be exact, United Aircraft DID make airplanes and engines for them -- like Sikorsky flying boats and helicopters, powered by PW engines; Vought aircraft, powered by PW engines, etc.


Apparently, in the airliner game today, it's more convenient to keep engine and airframe manufacturing, development (and budget for it) and sales separate.
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Wed Nov 07, 2018 5:38 pm

If this is to happen, Airbus should wait till March 31, 2019 ( ref: https://www.bbc.com/news/uk-politics-32810887 ) when the price in pounds should be easier to manage...
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Wed Nov 07, 2018 5:44 pm

There are real, if subjective, limits to vertical mergers enforced by competition authorities.

https://www.marketwatch.com/story/eu-bl ... ywell-deal
 
BREECH
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Wed Nov 07, 2018 5:47 pm

kengo wrote:
Not sure in EU but in the US, I think there is a law that forbids Boeing from buying/owning an engine maker. In this respect, if Airbus were to acquire RR, I think the US will not approve the buyout.

There is one in EU but in the US it's different. In the US creating a monopoly isn't against the law. What's against the law is using it to gain illegal advantages. So Boeing can buy PW or GE or whatever they want. But if they then force to buy only those engines, that would be illegal. So if Boeing buys GE, they won't be able to offer GE ONLY engines on, for example, 777.

That's my understanding and I may be wrong.
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BREECH
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Wed Nov 07, 2018 5:54 pm

LaunchDetected wrote:
Could a Rolls-Royce plc Aerospace business absorption by Airbus be financially plausible ? And would it be really useful ?

That would be detrimental to both companies actually. Rolls-Royce uses their aircraft turbines for marine propulsion (LM2500 is it?). If the company is split, that cooperation will be lost or made more difficult. For Airbus it's not a good scenario. They'll need to finance Rolls-Royce R&D instead of simply issuing a RFP and waiting for suppliers to turn up. And don't forget about their other business endeavors - ATR and Bombardier. Both have PW engines.

In my humble opinion, it'd create more headaches than real advantages. HOWEVER, Airbus is known to work against the odds and seemingly against the logic, and win, so I wouldn't be surprised if something like that happened in future.
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JayinKitsap
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Wed Nov 07, 2018 6:12 pm

Once a company is a division or owned in a JV where a parent company uses the division's products, the division usually loses all of its former customers outside of the parent. The parent would also have a hard time getting competitors product on their own product. A good example is Spirit, once a division of Boeing. Now being separate they are doing a decent amount of work for Airbus and others, but Boeing is their largest customer.

If Airbus bought RR, then it would cause problems on the A320 series with both CFM and PW.

Unless RR gets its act together fast, it will need a major investor to infuse a LOT of capitol. As Revelation noted, that investor will appear sometime after March 2019.
 
bigjku
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Wed Nov 07, 2018 6:45 pm

JayinKitsap wrote:
Once a company is a division or owned in a JV where a parent company uses the division's products, the division usually loses all of its former customers outside of the parent. The parent would also have a hard time getting competitors product on their own product. A good example is Spirit, once a division of Boeing. Now being separate they are doing a decent amount of work for Airbus and others, but Boeing is their largest customer.

If Airbus bought RR, then it would cause problems on the A320 series with both CFM and PW.

Unless RR gets its act together fast, it will need a major investor to infuse a LOT of capitol. As Revelation noted, that investor will appear sometime after March 2019.


That investor will be the British government just like it was last time. Has a company ever been sunk twice by the same basic product (RB211 and it’s children)?
 
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Thu Nov 08, 2018 6:07 am

JayinKitsap wrote:
If Airbus bought RR, then it would cause problems on the A320 series with both CFM and PW.


If Airbus bought RR, they may have to buy PW, too, and drop CFM & GE from their engine palette.

That would cause quite a lot of problems, and might make sense only if it is an emergency measure to secure deliveries under the threat of an immediate bankruptcy of the engine manufacturers. (And in any case they will soon face a Big Problem with engine and other component manufacturers that is not solvabe by a mere acquisition.)
 
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Thu Nov 08, 2018 6:29 am

Airbus couldn't buy RR in its entirety and it wouldn't make sense as RR deals with so many different programmes, most of which have no bearing on Airbus.

If they do come to a situation where RR is in trouble, Airbus could look at securing their own supply interests by acquiring the most relevant programmes, such as the Trent XWB line as it is the only engine on the A350. And in such an instance, I don't think it would affect their relationships with other engine makers.
 
sierra3tango
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Thu Nov 08, 2018 8:00 am

Don't think this is a 'goer'.

The British Government held (still does I think) a 'Golden Share' in RR and BAe with special rights for national strategic interests. This share gives the Government the right to limit a single 'foreign' investor to a maximum holding of 15% of the total register.

What constitutes 'foreign' both before and after 29th March 19 - not too sure.

Do recall, when some years back, there were discussions about a merger of BAe & Airbus defence interests, the British Government only agreed on the basis that it would be headquartered in London, Frau Merkel said 'nein' and that was that.
 
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Thu Nov 08, 2018 4:43 pm

sierra3tango wrote:
Don't think this is a 'goer'.

The British Government held (still does I think) a 'Golden Share' in RR and BAe with special rights for national strategic interests. This share gives the Government the right to limit a single 'foreign' investor to a maximum holding of 15% of the total register.

What constitutes 'foreign' both before and after 29th March 19 - not too sure.

Do recall, when some years back, there were discussions about a merger of BAe & Airbus defence interests, the British Government only agreed on the basis that it would be headquartered in London, Frau Merkel said 'nein' and that was that.

Golden shares were ruled illegal by the EJC in 2003:

https://en.wikipedia.org/wiki/Golden_share
 
uta999
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Thu Nov 08, 2018 4:57 pm

If problems with the Trent (RB211-MK2) continue long term or get much worse, I can see RR going under (again). Not sure the UK government would be in any position to help this time around. It could be that each division is sold off privately to foreign companies in those fields, marine, aero-engine, energy etc. I am sure they would want to keep the name alive though in some form.

The rest of UK aerospace/aviation has long disappeared, so RR won't be any different.
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Breathe
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Thu Nov 08, 2018 5:20 pm

uta999 wrote:
The rest of UK aerospace/aviation has long disappeared, so RR won't be any different.

If you're referring to being UK owned, then yes I would agree with you. On the other hand, there are still a huge amount of aerospace/aviation businesses based in the UK, they are just foreign owned now.
 
UltimoTiger777
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Thu Nov 08, 2018 5:45 pm

Breathe wrote:
Golden shares were ruled illegal by the EJC in 2003:

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


Since Rolls Royce are involved with defence projects in the UK, wouldn't that make the golden share legal? I thought that was one of the exceptions where they were allowed?
 
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Thu Nov 08, 2018 6:27 pm

LaunchDetected wrote:
This topic is not based on an actual article nor rumor, it just comes from the current state of each company and some overthinking.

Rolls-Royce plc encounters some troubles, with a lot of job cuts and technical issues. Airbus is annoyed by the delays of the engine suppliers and we know that Boeing also wants to reduce the dependency on its suppliers (some talks about the cabin furnishing activity). Airbus decided to take back the production of engine nacelles for the A320neo family.

Also it's really costly and less efficient to design an aircraft with several engine options, that's why the A350 and the A330neo are powered only by RR Trent turbofans.

RR and Airbus are also partners in the Eurofighter program.


Could a Rolls-Royce plc Aerospace business absorption by Airbus be financially plausible ? And would it be really useful ?

your premise is wrong!!
Airbus is powered by Rolls because GE can't by agreement with Boeing sell GE Engines For Airbus. GE wanted to be the exclusive engine on all Boeing airplanes and they got that agreement. However? Since they Are the exclusive engine on Boeings? They can't sell any engines TO Airbus... it seemed like a good Idea at the time and I'm sure GE has benefitted from the deal. But until Pratt gets a handle on their GTF anfine and upscales it for an Intercontinental Application? Airbus is stuck with Rolls and if Airbus buys Rolls? I would doubt they will be installed on any Boeing airplane as an alternative..
 
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Thu Nov 08, 2018 6:33 pm

The merger would be a shocker, but not something impossible to do.
 
B8887
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Thu Nov 08, 2018 6:48 pm

This will not happen. Although truly inseparable from one another, both benefit from each other being independent.

Airframers like A and B are not metal tube makers. They make extremely high tech stuff that requires billions in R&D plus enormous production means.

Same for RR in a completely other line of business.

I once read something about tire manufacturers and auto makers. How come they manage to remain independent?

The answers are similar. Goodyear does not make rubber rings. They also manufacture very high tech stuff.

I think this is pretty much it.

Plus other reasons also mentioned.

Kind regards.

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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Thu Nov 08, 2018 7:10 pm

JayinKitsap wrote:
Once a company is a division or owned in a JV where a parent company uses the division's products, the division usually loses all of its former customers outside of the parent. The parent would also have a hard time getting competitors product on their own product. A good example is Spirit, once a division of Boeing. Now being separate they are doing a decent amount of work for Airbus and others, but Boeing is their largest customer.

If Airbus bought RR, then it would cause problems on the A320 series with both CFM and PW.

Unless RR gets its act together fast, it will need a major investor to infuse a LOT of capitol. As Revelation noted, that investor will appear sometime after March 2019.

Not necessarily. For example a division of UTC makes FADACs for competitor engines and does well. Then Airbus bought a FADAC vendor which requires UTC to set up further firewalls.

But it does complicate everything. Bids from GE and Pratt would be assumed lost or compromised. For example, Pratt tells Airbus about a lot of technology in development (to keep Airbus interested). The information flow would be reduced to a more sales presentation instead of technical deep dives. This hurts both parties.

It does complicate RR bids on Boeing aircraft severely. It wouldn't impact bids to Bombardier or Gulfstream in the least.

Is Airbus certain RR is the best choice? This could happen. I don't want it to, but I'm rational enough to see a business case.

GE is already heavily aligned to Boeing. We could see Boeing buy/merge with GE aero engines, Airbus with RR, and Pratt left to champion the competition.

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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Thu Nov 08, 2018 10:57 pm

Perhaps a JV between RR and SAFRAN?
 
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Polot
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Thu Nov 08, 2018 11:33 pm

Slug71 wrote:
Perhaps a JV between RR and SAFRAN?

I don’t see what’s in it for SAFRAN when they already have a relationship with GE.
 
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Erebus
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Thu Nov 08, 2018 11:47 pm

Polot wrote:
Slug71 wrote:
Perhaps a JV between RR and SAFRAN?

I don’t see what’s in it for SAFRAN when they already have a relationship with GE.


As far as JVs go, RR and SAFRAN already have them.

https://www.mro-network.com/manufacturi ... t-facility

There are several other collaborations between them too including helicopter engines. So, SAFRAN isn't necessarily tied to GE only.
 
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kitplane01
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Fri Nov 09, 2018 3:27 am

strfyr51 wrote:
your premise is wrong!!
Airbus is powered by Rolls because GE can't by agreement with Boeing sell GE Engines For Airbus. GE wanted to be the exclusive engine on all Boeing airplanes and they got that agreement. However? Since they Are the exclusive engine on Boeings? They can't sell any engines TO Airbus... it seemed like a good Idea at the time and I'm sure GE has benefitted from the deal. But until Pratt gets a handle on their GTF anfine and upscales it for an Intercontinental Application? Airbus is stuck with Rolls and if Airbus buys Rolls? I would doubt they will be installed on any Boeing airplane as an alternative..


I don't think so. GE is not the exclusive engine on all Boeing planes. For example, the 787 uses engines from GE or Rolls. Same with the 748-8. Boeing is talking to all three engine makers about an engine for their next plane (the NMA).
 
EBJ68
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Fri Nov 09, 2018 3:56 am

What benefits would there be that would sufficiently offset the potential problems already mentioned?
 
RandWkop
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Fri Nov 09, 2018 4:57 pm

Could Airbus give financial aid to RR without taking a stake in the company? After all their 3 wb programs rely on RR engines. It is in Airbus interest that RR doesn't fail.
 
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Fri Nov 09, 2018 6:20 pm

LaunchDetected wrote:
Breathe wrote:
I doubt Airbus want to expand their business into Energy & Marine power systems. RR makes more than just aircraft engines.


My post is only about the aerospace branch of RR


They're not isolated, though. There's a fair amount of crosstalk between the two divisions. For example, many marine gas turbines are basically just the engine cores of turbofan engines.
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cledaybuck
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Fri Nov 09, 2018 6:28 pm

lightsaber wrote:
GE is already heavily aligned to Boeing. We could see Boeing buy/merge with GE aero engines, Airbus with RR, and Pratt left to champion the competition.
Lightsaber
I find this hard to believe. Are you telling me Airbus is going to have their best selling product without their own engine on it? What about CFM, who supplies half of all A320 neo engines, is that going to be a Boeing JV? And Boeing's best selling widebody is going to have half of its engines supplied by Airbus? How is Pratt going to compete in this environment? Won't they be screaming bloody murder to regulators? It all seems way too complex to me.
 
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macsog6
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Fri Nov 09, 2018 6:39 pm

Not to mention the potential impact of Brexit if such a move actually occurs.
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smartplane
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Re: Could Rolls-Royce plc be absorbed by Airbus in a near future ?

Sat Nov 10, 2018 9:31 pm

Changes are already in play. On the air frame side, view other threads - A220, CRJ, Viking..... Engine delays are existing JV's and military.

Other than military, by the end of this decade there will only be two engine and air frame manufacturers, though using smoke and mirrors they may appear to be disconnected.

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