Rolls-Royce Is Said to Mull China Venture for New Wide-Body Jet

(Bloomberg) -- Rolls-Royce Holdings Plc is in talks with Aero Engine Corporation of China on a possible partnership that would see the companies jointly supply engines for a new wide-body aircraft planned by China and Russia, according to people familiar with the matter.

The two companies met earlier this year on whether to cooperate on the turbine for the CR929 wide-body, said the people, who asked not to be named because the talks are still at a preliminary stage and may not result in a deal. A request for proposals for the engine has already been issued with responses due in May, at which time the prospects for the venture may change in line with the airplane maker’s specifications, the people said.

The new aircraft manufacturer formed by Commercial Aircraft Corp. of China and Russia’s United Aircraft Corp., called CRAIC, is aimed at breaking up the duopoly in wide-bodies controlled by Boeing Co. and Airbus SE and follows efforts by Comac to build its own single-aisle aircraft. That plane uses engines manufactured exclusively by CFM International, a joint venture between General Electric Co. and France’s Safran SA.

The CR929 is slated to be a 280-seat widebody jet that can fly about 12,000 kilometers (7,500 miles). In May last year, UAC Chairman Yury Slyusar told Bloomberg News in Shanghai that the new plane will need "billions of U.S. dollars" in investment and it aims delivery of the airplane to customers by 2025-2027.

China’s Ambition

Representatives for AECC couldn’t be reached for comment at their office in Beijing, while Rolls-Royce wasn’t immediately available.

Any agreement on the new engine would help China in its ambition to become a major player in aerospace manufacturing, giving it access to the complex intellectual property and design-work used to build large jet engines. It’s also a signal of how far Rolls-Royce is willing to go to secure contracts related to a future competitive aircraft.

The development of the narrowbody C919 and the widebody CR929 is at the center of President Xi Jinping’s strategy to modernize China’s manufacturing industry and compete against giants such as the U.S., Germany and Japan. As trade tensions escalated between the U.S. and China this year, the world’s No. 2 economy in April proposed 25 percent tariff on some American-made planes, including some variants of Boeing’s 737 jets.

London-based Rolls-Royce company is weighing offering an updated version of its Trent 7000 engine that is used to power the Airbus A330neo, due for first delivery this year, and is derived from the turbine powering Boeing’s 787 Dreamliner, one of the people said. The bigger and newer Trent XWB that powers the A350 dual-aisle jet uses core technology that Rolls is reluctant to share, said the person.

To contact Bloomberg News staff for this story: Dong Lyu in Beijing at dlyu3@bloomberg.net, Benjamin Katz in London at bkatz38@bloomberg.net.

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Anand Krishnamoorthy at anandk@bloomberg.net, Tara Patel, Sam Nagarajan

©2018 Bloomberg L.P.

With assistance from Dong Lyu, Benjamin Katz