Rolls-Royce Holdings PLC (LSE:RR.) has received cautious backing from analysts at Citi, who believe upgrades to the Trent 1000XE engine could support future market share gains on Boeing’s 787 aircraft.
Citi noted that most 787 customers are already established operators, which implies that new engine sales will likely come from follow-on orders rather than new buyers. The broker also flagged switching costs, meaning the Trent 1000XE must outperform General Electric’s GEnx alternative to drive adoption.
Key to success will be improvements in fuel burn and durability. The original Trent 1000 was noted for high maintenance costs, an issue the XE variant aims to resolve. However, Citi warned that it will take several years for the engine’s durability to be proven in service.
“If the XE proves to be competitive, we will likely see the results next decade, not this one, and expect 20–30% is plausible,” said Citi said in a note.