Rolls-Royce pins hopes on green trains and boats
Jets giant changes course as boss fears flights will take FIVE YEARS to recover
ROLLS- ROYCE is throwing its weight behind a string of green projects as it prepares to wait five years for the aviation industry to bounce back. The British engineer was forced to raise £2 billion from shareholders last month after global travel restrictions hammered i ts revenues from maintaining plane engines.
Chief executive Warren East told The Mail on Sunday he plans to plough funds into a string of clean energy projects to secure the 136-year-old firm’s future.
Next month will see the launch of tests for the UK’s first hybrid electric and diesel trains, and there are plans for a push into sustainable ‘synthetic’ aviation fuels. He also wants to create new hybrid electric systems for boats and the company is aiming to ramp up its nuclear energy programme.
East said that civil aerospace would remain the firm’s core business after two decades of heavy spending to boost market share, but added: ‘I think if you look over the next several years you will see more capital investment going into the bits that aren’t our civil aerospace business.’
Rolls- Royce last week said it would burn through £4.2 billion of cash this year – worse than originally feared – due to the global second wave of Covid cases.
East said the aerospace giant does not expect aviation to recover to 2019 levels until the 2024- 2025 financial year.
But the veteran engineer said that knowledge gleaned from green initiatives in the meantime could later be transferred to the Rolls-Royce aviation division.
‘In the world of civil aerospace we’re not actually going to be putting people on hybrid aircraft for quite a long time,’ he said. ‘So that’s an awful lot of time to invest if you don’t get some return from it.’
On the other hand, hybrid trains are offering a whole new opportunity. He said: ‘ We’ve got orders today and we’re going to have hybrid trains running here in the UK in the next 12 months or so.’
Hybrid trains are expected to be quieter, cheaper to operate and greener than diesel trains. They will also have lower emissions and could potentially be faster.
Rolls has signed a contract with rolling stock specialist Porterbrook and has begun to retrofit existing trains with hybrid diesel and electric engines.
‘We’re taking these hybrid trains everywhere and there are some countries where the notion of providing overhead wires is just not as practical,’ East said.
Rolls is examining hydrogen powered t rains, which have been devised in its German business.
The FTSE 100 group has also been developing a series of hybrid motors for working ships, ferries and patrol boats – although a Covidinduced decline in yacht demand has hampered efforts this year.
Other key green initiatives include a tie-up with autos giant Daimler to create carbon-neutral back-up generators for data centres, as well as engines for yachts which create zero emissions when in port.
East said he wants to ‘accelerate’ plans to build mini nuclear reactors after getting the green light from the Government last month. He said the Small Modular Reactor (SMR) programme would create UK jobs and could also be used to develop synthetic fuels, which are expected to be central to reducing emissions in aviation. Synthetic fuel is created by capturing carbon in liquid form from the gas emitted by other processes. As such, it can be classed as carbon-neutral.
‘Long distance air travel is very energy intensive so we’re going to need a lot of synthetic aviation fuel if we’re going to keep the world flying on a net zero basis,’ East said.
In a wide-ranging interview, he also quashed long-running rumours of a merger with BAE Systems, saying: ‘I know it’s talked about, but it’s nonsense really.’
The 59-year-old, a keen organist and the former chief executive of tech giant Arm, said Rolls had stockpiled extra parts to cope with potential Brexit delays. ‘Compared with Covid from our business point of view we don’t care,’ he said. ‘We’ve got bigger issues to worry about.’
Bosses last month committed to break even at some point in the second half of next year, begin £ 2 billion of disposals and undergo a major restructuring.
East refused to rule out further job cuts. He said the interests of 9,000 staff set to leave the business by the end of 2022 had to be balanced with those of the 44,000 who will remain. ‘We recognise that if you don’t make the business work there won’t be any jobs for any of them,’ he said.
He admitted that his five-year t enure had been rockier t han expected. Asked if he had feared for his job, East replied: ‘Yes. In my role you can get fired at any moment. That’s part of the gig.
‘I saw in the energy transition a fantastic opportunity. We’ve had a few delays on the way and what I saw as a modernisation job turned out to be a bit longer and a bit harder than I originally anticipated, but I think we’re getting there.’