Rolls-Royce is set to land £700m Virgin engine order

ROLLS-Royce is close to landing a £700m deal to power planes for Virgin Atlantic.

The aerospace giant is set to win the engine deal as part of a £2.9bn order that Virgin looks likely to sign for 12 Airbus A3501000. This plane uses twin Rolls-Royce Trent XWB Turbofan engines.

Sources say European plane maker Airbus is in the running with America’s Boeing for the Virgin order, but negotiations have come to a head and an announcement is expected on June 8, barring any hitches.

Both aircraft makers have been pitching for the contract to build 12 planes for Virgin Atlantic.

They will replace its ageing fleet of jumbo jets and will be used to fly families on holidays to the US and the Caribbean, mainly from Gatwick airport.

The other option for Virgin was the Boeing 777 that uses engines made by the US firm General Electric. Sources say Airbus is likely to clinch the order but warned there is still everything to play for.

One source said: ‘These aircraft deals typically go to the wire with makers returning with improved offers right up until the last minute.’

Rolls would benefit from providing 24 engines in total, which is two per plane.

These have a book value of almost £500m, but it is expected a service contract could bump up the value to £700m.

The contract to service the engines throughout their lifespan can be almost as valuable as their initial cost.

It works in a similar way to car servicing. In its accounts, Rolls typically also gets the first six years of a service contract in the first year an engine order is made.

A spokesman for Virgin Atlantic said: ‘We are currently evaluating our future fleet requirements to ensure that any new aircraft we introduce will provide the best possible outcome for our customers and our business.

‘We have not yet confirmed our decision but we will provide an update as soon as we can.’

Airbus said: ‘We never comment about negotiations.’

Rolls-Royce also declined to comment.