Rolls-Royce's Jet Stream: How the Trent Deal Could Lift This Stock Soaring

The global aviation sector is undergoing a seismic shift, and Rolls-Royce (RR.L) has just landed a deal that could ignite its next chapter of growth. Let's break down the strategic partnership with Riyadh Air—the Saudi Arabian national carrier—and why this 100-engine order for the Trent XWB-97 could be a game-changer for Rolls-Royce's valuation.

The Deal: Powering Riyadh's Ambitions

In June 2025, Rolls-Royce announced a historic agreement with Riyadh Air to supply 100 Trent XWB-97 engines, doubling the original 50-engine order from 2023. These engines will power 50 Airbus A350-1000 aircraft, enabling Riyadh Air to expand its fleet and connect over 100 global destinations by 2030—a cornerstone of Saudi Vision 2030. But the real gold here isn't just the hardware—it's the TotalCare service agreement, which wraps Rolls-Royce's engines in a layer of recurring revenue gold.

This isn't a one-off sale. TotalCare is a predictable, long-term service contract that transfers maintenance risks to Rolls-Royce. Airlines pay a fixed fee for Rolls to manage engine health, repairs, and even replacement parts. The result? Stable, recurring cash flows for Rolls, insulated from cyclical demand swings.

Why This Deal Matters Now

1. Saudi Vision 2030 = Rolls' Growth Catalyst
   Riyadh Air isn't just buying engines; it's betting on Rolls-Royce's technology edge. The Trent XWB-97 is the world's most efficient large aero-engine, offering 97,000 pounds of thrust and a 99.9% dispatch reliability rate. With Saudi Arabia pouring resources into transforming Riyadh into a global aviation hub, Rolls-Royce is positioned to supply the backbone of this expansion.

2. TotalCare: A Cash Machine in Disguise
   The TotalCare agreement isn't just risk transfer—it's a revenue annuity. Rolls-Royce's civil aerospace division, which generated £17.8 billion in revenue in 2024, now gains a guaranteed income stream tied to these engines' operational lifespan. With Rolls' £1 billion investment in improving Trent engine durability, these engines will stay in service longer, amplifying the TotalCare payout.

3. Undervalued? You Betcha
   Rolls-Royce's stock has been a laggard, trading at just 9.5x forward EV/EBITDA compared to peers like GE Aviation (GE) at 14.2x. Investors are overlooking the structural tailwind of TotalCare's recurring revenue model. If Rolls can replicate this deal across other airlines (and why wouldn't they?), this valuation gap closes fast.

Risks? Sure—But They're Manageable

• Execution Risk: Rolls must deliver on its £1 billion Trent engine upgrades to ensure reliability and reduce maintenance costs.
• Geopolitical Uncertainty: Saudi Arabia's Vision 2030 could face setbacks, though Riyadh Air's launch in 2023 suggests strong government backing.

The Buy Signal: Time to Climb Aboard

This deal isn't just about engines—it's about revenue diversification and profitability. Rolls-Royce's civil aerospace division, once seen as a laggard, is now a growth engine. With TotalCare's annuity-like cash flows and Saudi's ambition as tailwinds, now's the time to position ahead of the service contract ramp-up in late 2025.

Investment Thesis: Buy Rolls-Royce shares now at £95. Set a target price of £120 by mid-2026, reflecting 15x EV/EBITDA once TotalCare's value is recognized. For the bold, consider a 5% allocation in a diversified portfolio—it's a bet on global aviation's next phase, and Rolls is the engine behind it.

Final Call: Riyadh Air's Trent deal isn't just a contract—it's a launchpad. Strap in, because Rolls-Royce is about to take flight.