Rolls-Royce Holdings PLC (LSE:RR.) saw its shares advance 2.75% on Tuesday after the US Army awarded its Future Long-Range Assault Aircraft (FLRAA) to Textron's Bell V-280 Valor helicopter which is powered by two AE 1107F engines provided by the British engineer.
The programme, worth up to $1.3bn, is meant to replace the Black Hawk utility helicopters (2,000 aircraft) and Apache attack helicopters (1,200 aircraft), and first delivery is expected in 2030.
FLRAA prototypes from Bell are due to be in service by 2025. The initial contract obligation is $232mln, with a ceiling of $1.3bn if options beyond the initial contract are exercised.
The initial phase allows the Army to continue preliminary design and then get to the design, development and delivery of virtual prototypes.
"We are honoured that the US Army has selected the Bell V-280 Valor as its next-generation assault aircraft," said Scott C. Donnelly, Textron’s chairman and chief executive officer in a statement.
Broker Jefferies said in a research note that for Rolls-Royce, this win represents a "significant" long-term boost for the defence division.
"Indeed, Rolls-Royce stated in its 2021 annual report that a win from Textron would secure a market of over 5,000 engines for Rolls-Royce, with decades of production," the Jefferies analysts wrote.
"We estimate that the total value of the V-280 program for Rolls-Royce could reach up to $5bn to $6bn in production and $6bn to $7bn in services assuming 5,000 installed engines are delivered," they added.