Long Term Service Agreement Q & A Session

Bill Madison, Senior Vice President - LTSA New Unit Support, answers some fundamental questions

[Q] "When did Rolls-Royce first start offering LTSAs?"

[A] "Rolls-Royce took the lead in new aerospace offerings around twelve years ago and by the late 1990s we had developed our customer-facing expertise to the extent that we could present a fully-developed range of LTSA options for the energy market."

[Q] "How has the architecture and support of the agreements evolved since then?"

[A] "For the first three years or so our energy-related LTSA business was directed from the core and managed by the regions, which had responsibility for existing units in the field and for profit and loss on post-commissioning work for new engines.

In the last few years, we have refined the process of supporting engine sales with a Head of Sales, Head of Marketing and a Head of Operations working on a global basis within a new organisation holding accountability for LTSA aftermarket services."

[Q] "How are the agreements managed?"

[A] "Our contracts are executed through regional contract managers while site-based engineers, effectively project managers, control LTSA actions at a local level."

[Q] "What are the most significant agreements currently operating?"

[A] "One of the broadest scope LTSAs in our portfolio is Samarinda in Indonesia. We have achieved all that we set out to do and more, ensuring constant long-term power output that supplies half the energy needs of that area of Indonesia.

We are not just in South-East Asia; contracts range across continents. We now have LTSAs in place in the deep-water oil fields off Brazil, in the gas production fields in the North Sea, in North Africa on the Maghreb pipeline and in Qatar's North Field Dolphin project. The Rolls-Royce equipment covered includes Avon, RB211 and Trent engines."

[Q] "What are some of the major benefits to be provided by a Rolls-Royce Long Term Service Agreement?"

[A] "The big plus factor for customers is the way that the LTSA gives them a very clear view of what everything costs. It helps them budget accurately and understand what they will need in the future. It means no surprises.

Customers now get the additional benefit of a single focal point at Rolls-Royce, someone who's championing their project. We work with the customer in a team approach, avoiding events that could have gone wrong otherwise."

[Q] "How important are LTSAs in the decision making process when selecting original equipment?"

[A] "Customers will always put the product first. However the cost of product ownership over typically three, six or as many as fifteen years will definitely become even more important a factor than it is today.

LTSAs are a very effective way of controlling through-life operating costs and that fact is becoming a major consideration when the customer is scanning the marketplace."