Rolls-Royce announces £750m China deal

Rolls-Royce delivered a boost to David Cameron's trade mission to China by announcing a £750m deal to supply and service jet engines for a Chinese airline. The British engineering firm has also been contracted to reduce the carbon emissions of China Eastern Airlines, by 190,000 tonnes in the first year of a fuel management service. The airline has a fleet of more than 300 aircraft. The companies signed a memorandum of understanding in Beijing for the largest order secured so far during the prime minister's visit to China. The news is welcome relief for Rolls-Royce whose shares fell 10% after a Qantas airliner made an emergency landing in Singapore last week following the mid-air explosion of a Trent 900 engine. Qantas has grounded all its Airbus A380 superjumbo planes powered by the Rolls-Royce engines while the incident is investigated. Until the Rolls-Royce deal, signed in Cameron's presence in the Great Hall of the People, the government could only account for a string of modest deals with British firms, including measures to boost Scotch whisky sales and allow imports of breeding pigs into China. Rolls-Royce, whose shares were up nearly 2% on the news, will supply and service Trent 700 engines for 16 newly-ordered Airbus A330 aircraft. It will also provide enhanced performance kits to upgrade the Trent 700s on China Eastern Airlines's 20 existing A330s. The deal follows the $14bn (£10bn) order for the 16 Airbus planes, signed in Paris last week, which could earn British firms $5bn. Rolls-Royce has an order book nearing £60bn but will be cheered by the extra orders from the Chinese airline. Like many UK companies, Rolls-Royce plans to expand in China and sell high-value services to the country's 1.3 billion population. Liu Shaoyong, the chair of China Eastern Airlines, said: "We have found the Trent 700 to be extremely effective in service and are pleased to select it for our latest aircraft. "We also look forward to working with Rolls-Royce through our carbon partnership, which, we anticipate, will reduce fuel consumption by at least 2% in its first year alone, the equivalent of a 190,000-tonne reduction in CO 2 , which equates to the amount of CO 2 produced by 80,000 cars over the same period." Cameron, who is is accompanied by four senior ministers and more than 40 business leaders, said: "We want a stronger economic and business relationship with China – we are the fifth-largest economy in the world, but we have only 2% of China's imports."