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RR - Rolls-Royce


Alex.N.B

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Do you think it could be the Chinese order going to Boeing? Maybe people were expecting Airbus to win more wide body share?

 

This is probably it.  Airbus has not been trading that well either.  But Boeing has been trading poorly too.

 

I'd love to know why Lone Pine shorted the stock.  They probably did it for reasons other than TotalCare because of their typical investing time frame.

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If China + EMs + ??? go down very hard, this could hit the air travel and subsequently airplane orders and deliveries.

 

Everyone seems to be convinced that we are on air travel supercycle going up, but is that really true?

 

(I am not really in the camp that world is gonna hard land. Also FWIW for me RR is in too hard pile, so my comments here might not be worth much).

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Yeah but with the current backlog a lot of orders have to be cancelled before this is felt in production.. Even in 2008 crisis engine deliveries did not go down.

 

Over the long term (wars, 9/11, flu, volcanoes, ...) airplane passengers have grown by 4-5% and with more and more low cost airlines + more affluent asian customers I don't see a large downturn taking place.

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If China + EMs + ??? go down very hard, this could hit the air travel and subsequently airplane orders and deliveries.

 

Everyone seems to be convinced that we are on air travel supercycle going up, but is that really true?

 

(I am not really in the camp that world is gonna hard land. Also FWIW for me RR is in too hard pile, so my comments here might not be worth much).

 

Hard land would be temporary. World progress is only going one way over the long term.

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Will the fall in jet fuel prices hurt purchases of new planes?

 

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EER_EPJK_PF4_RGC_DPG&f=M

 

I think it has the opposite effect? With lower fuel price, airlines have more cashflow and are more willing to spend on capex to buy newer planes.

 

Hmm... wait, but i think these days many planes are leased from 3rd party lessors, not bought...

 

 

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Hard land would be temporary. World progress is only going one way over the long term.

 

Optimists. That's what I like.

 

Salute.

 

He does have 6 figures, possibly 7 figures worth of years to back him up though. It'll take a big one to go the other way

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The San Francisco-based firm's most recent stake is a 5.5 percent holding in British aerospace group Rolls-Royce Holdings Plc. The letter laid out ValueAct's investment thesis, which stated that Rolls-Royce's civil aerospace business may be weighing on the company but has substantial long-term value.

 

"Our core new investment (in Rolls-Royce) epitomizes a company taking maximum short-term pain, delivering an increasing number of engines at a loss, while putting in place an aftermarket revenue stream that should yield tremendous cash and profits over twenty years," the letter states.

 

ValueAct is less excited about the company's non-aerospace business, which includes a nuclear division and the manufacturing of engines for land, sea and rail. The letter gave a strong hint that ValueAct would encourage the sale of this business.

 

"We do not model much recovery in the non-aerospace business, but believe there is portfolio value for the assets," the letter said.

 

Anyone have a copy of the ValueAct letter?

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I was thinking about the history of the Wide-Body industry today and hadn't seen any numbers pulled together on deliveries. Obviously future deliveries are a key to a Rolls Royce investment.

 

So I created a spreadsheet by Airplane Model and Manufacturer by year. Thought some on the board might find it useful. See attached.

Wide_Body_Aircraft_Delivery_History.xlsx

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http://otp.investis.com/clients/uk/rolls-royce1/rns/regulatory-story.aspx?cid=171&newsid=578566

 

The number of employees will be reduced by up to 400 worldwide by the end of next year, in addition to the reduction of 600 employees previously announced in May, which was also driven by the impact of the low price of oil and subsequent fall in orders.

 

We expect the proposals will generate full year savings of £40m, with incremental benefits from 2016 onwards; most of the early savings will be invested in increased R&D activity. The cost of the programme was anticipated in the guidance provided in July, in which we set out that a further restructuring charge of up to £30m would be taken in the second half of the year. Due to the timing of actions being taken, this will now see £20m charged in 2015 and £10m taken in 2016

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I've read through this thread, the annual report, countless conference calls, googled a whole bunch, etc. and can't find an answer.  Does TotalCare's rate per hour track an inflation measure?  Anyone privy to one of these contracts?

 

I asked their IR. They said "Long term service contracts generally include contractual inflationary index clauses".

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Indeed they are, and the future 777 will have only GE engines.

 

Also, I don't really see the premise of the article. It's not like the aircraft under lease are not flying. Why would there be a glut of planes once they come off lease?

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Indeed they are, and the future 777 will have only GE engines.

 

Also, I don't really see the premise of the article. It's not like the aircraft under lease are not flying. Why would there be a glut of planes once they come off lease?

 

Yeah - I didn't understand either but thought it was a lack of knowledge. Are people not renewing lease because of no demand or because they are trading in? It was unclear to me how this would affect future aircraft builds.

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