Shares in Rolls-Royce jumped by 5 per cent as it announced a deal with the US Air Force which could be worth up to £1.8billion ($2.6 billion).
The London-headquartered firm has been selected to provide F-130 engines for B-52 Stratofortress bombers and they will be made at its Indiana facility. The initial £365million ($500 million) six-year deal could rise to £1.8billion ($2.6 billion) longer-term.
Shares in Rolls-Royce, which beat incumbent supplier Pratt & Whitney part of US company Raytheon, to win the contract, jumped to their highest level since June 2020.
Shares in Rolls-Royce flew by 5% as it announced a deal with the US Air Force which could be worth up to £1.8 billion ($2.6 billion)
Jefferies analyst Andy Douglas called the deal a ‘good’ win for the British engineering firm and said while it wouldn’t change numbers straightaway ‘it provides additional comfort to longer-term consensus forecasts and is a positive for sentiment.’
The Pratt engines have powered the famous B-52 aircraft, which can carry nuclear weapons, since the 1960s but will be retired by 2030.
The aircraft’s manufacturer, Boeing, will integrate the new Rolls engines, with the first due for testing by 2025.
Rolls-Royce said its F-130 engine will provide the US with ‘vastly greater fuel efficiency’ while the US said in its statement that it would also increase range and cut maintenance costs.
The new engines will allow the bombers to continue missions into the 2050s.
Rolls-Royce currently employs 6,000 people in 27 states across the US.
Recently the company has been under pressure from US-based activist shareholder Causeway Capital, which last month demanded a board shake-up.
In response, Rolls-Royce issued a robust defence of its Power Systems business amid suggestions from its biggest shareholder that the division should be sold off.
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