Rolls-Royce PLC will double down on its jet engine business and look to sell its electric flight division, which develops electric propulsion systems for small aircraft and air taxis.
Rolls-Royce PLC is now under the leadership of Tufan Erginbilgiç and looking to rapidly raise profits while slashing costs. The company recently cut 2,500 management and administration jobs and it wants to increase operating margins for its jet engine division from 2.5% in 2022 to between 15% and 17% in the “midterm.”
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While speaking at the recent Rolls-Royce capital markets day, Erginbilgiç revealed that it will look at options to “exit” from the Rolls-Royce Electrical business that had been working on electric propulsion. It hopes to sell the business or at the very least, reduce its position in the company to a minority stake “with an intention to exit fully in the mid-term.” The company believes its electrical division “will represent good value to a third party” and allow it to better focus on its core electric engineering activities in its Power Systems, Defence, and Civil Aerospace businesses.
Rolls-Royce remains committed to reducing its environmental impact, despite backing away from electric powertrains. Erginbilgiç told investors that the sustainable aviation fuel that the company is developing will be the sole pathway for large airliners to achieve net zero climate targets. Rolls-Royce also remains committed to “developing [its] hydrogen capability in partnership with EasyJet,” but Erginbilgiç doesn’t believe “hydrogen will play a role” in the industry in the “next 15, 20 years.”
“Rolls-Royce is at a pivotal point in its history,” Erginbilgiç said in a statement. “After a strong start to our transformation programme, we are today laying out a clear vision for the journey we need to take and the areas where we must focus. We are creating a high performing, competitive, resilient and growing Rolls-Royce that will have the financial strength to control and shape its own destiny.”
