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Rolls-Royce nails contract for B-52 bomber engines FTSE 100 engineering giant wins contract for US.

The B-52 Stratofortress is the US Air Force's oldest bomber CREDIT: AFP PHOTO / US AIR FORCE

Rolls-Royce has defeated American rivals to win a contract to supply engines for the US Air Force’s B-52 bombers in a deal worth up to $2.6bn (£1.9bn). The engineering giant fended off competition from the incumbent Pratt & Whitney as well as General Electric to win the high-profile contract after a tender process that spanned several years.

The win sent shares up more than 9pc to their highest level since June 2020, making it the biggest riser on the FTSE 100, but remain below their pre-pandemic high. Rolls-Royce share growth since June 2020 The F130 engines, to be made at Rolls' Indianapolis factory, were chosen to replace the bombers’ engines in an initial six-year deal worth $500m. This could rise to $2.6bn if all options are exercised.

The US Air Force plans to keep its B-52 Stratofortress aircraft in operation until about 2050 and the engine replacements form part of a wider $11bn upgrade plan. Tom Bell, chief executive of Rolls-Royce North America, said: “The F130 is a proven, efficient, modern engine that is the perfect fit for the B-52.”

The B-52 is the US Air Force’s oldest bomber and flew its first missions during the Cold War in the 1950s carrying nuclear bombs. Nicknamed BUFF – Big Ugly Fat Fellow – it was most recently deployed to help the US withdraw from Afghanistan.

Rolls-Royce said it had invested $600m in its Indianapolis site, where 650 engines will be manufactured. The contract win will also create 150 new jobs in the area. The British group has been a supplier to the US Air Force for more than 70 years, making engines for jets including the Osprey and Global Hawk.

A US Air Force B-52 Stratofortress flying above the English coast in 2019 CREDIT: Sgt. Emerson Nunez/Alamy Stock Photo

The win came as Rolls-Royce finalised the €1.7bn sale of its ITP Aero division to a consortium of buyers led by private equity firm Bain Capital. It had been in exclusive talks with Bain since last month over the sale of the Spanish aircraft engine unit, which makes jets for fighters such as the Typhoon as well as turbines used to power airliners such as the Airbus A350.

The consortium also includes Madrid-based JB Capital and industrial group Sapa, with other local industrial partners expected to join next year. The sale of ITP, which is based in Spain’s Basque region, has proven politically sensitive due to the area's separatist history.

The deal includes agreements to keep the company as an independent entity led by current boss Carlos Alzola, with headquarters to remain in Zamudio, near Bilbao. The sale forms a key part of plans outlined by Warren East, Rolls-Royce chief executive, to make disposals worth £2bn by March 2022.

The company recently sold its Bergen marine engines operation, as well as its stake in Air Tanker, which provides in-flight refuelling services for the RAF. The disposals are intended to shore up Rolls-Royce’s balance sheet after a collapse in air travel during the pandemic left the FTSE 100 firm scrambling for cash.

The engineer raised more than £7bn in emergency funding last year, while it announced plans to cut roughly 9,000 jobs – almost a fifth of its global workforce – to help slash costs. Mr East said: "Today's announcement is a significant milestone for our disposal programme as we work to strengthen our balance sheet, in support of our medium-term ambition to return to an investment grade credit profile."