ROLLS-ROYCE CRASH

Press, Volume CXI, Issue 32524, 6 February 1971, Page 1

ROLLS-ROYCE CRASH

Attempt to save contract (N.Z.P.A -Reuter—Copyright) LONDON, February 5. Last-ditch attempts were under way today to salvage from the ruins of Britain’s giant Rolls-Royce empire at least the jobs of 20,000 men—and an American move appeared the only way out.

The cause of the RollsRoyce crash was the contract signed in 1968 with the huge Lockheed Aircraft Corporation to provide RB2II engines for its Tristar airbus.

The British Government said it proposes to negotiate with the American Government and Lockheed—whose senior officials are in London —to try to save the RB2II contract. A receiver has been appointed to take over RollsRoyce assets —and the Government has told Parliament it will be responsible for the company’s essential defence and international operations. Lockheed’s immediate reaction to the crash was that it was “appalled”—but it said it would see what could be done. However, the firm itself is in serious financial difficulties, and financial experts see any American rescue move as only a slim possibility. s3oom PAY-OUT To break the RB2II contract entirely might mean the British Government’s paying out up to £3OO million and putting 20,000 men—a third of the RollsRoyce work force—out of jobs. The Prime Minister (Mr Heath), according to British press reports, has made a personal appeal to President

Nixon to underwrite the losses Rolls-Royce suffer if it delivers the RB2II engines—but the reports could not be confirmed either with the British or United States Governments. Whatever happens, the Rolls-Royce division which produces the sleek and expensive limousines traditionally associated with power and opulence will now be sold off by the receiver to a suitable bidder. In Washington, there are signs that the affair could irritate relations between Britain and the United States. Government officials in London avoided comment on the crash, but they are concerned at the impact it will have on Lockheed. WHITE HOUSE The White House had no comment on the London reports that Mr Heath had approached President Nixon. The main cause of Lockheed’s troubles has been the soaring costs of the CSA military transport plane—the world’s largest aircraft—which is costing twice as much to build as Lockheed originally estimated. Rolls-Royce has built the giant Olympus 593 engines which power the Concorde, I the Anglo-French entry in the supersonic market—but the Rolls-Royce collapse is not expected to have an effect on the Concorde programme, French aviation sources say.