Incoming boss faces tough task to fix Rolls
Rolls-Royce’s incoming boss faces a long list of challenges as the aircraft engine maker tries to bounce back from its painful experience during the covid-19 pandemic.
Tufan erginbilgic, a former BP executive, is due to take over running of the FTse 100 group in January with an initial pay packet worth almost £9m.
He will replace Warren east, who yesterday gave his final results announcement as boss of the jetengine maker. His stint at the top has been dominated by crisisfighting, first with engine problems and then with the pandemic.
The half-year results were no different, missing analyst expectations, with the company reporting a profit of £125m, down from £307m a year ago.
Rolls has been hard hit by the slow recovery of the airline industry from the pandemic as international restrictions on travel have remained in some regions. east, 60, said that in the first half of 2022 Rolls-Royce engines flew about 60pc of the hours they flew in 2019, the year before the pandemic, and were now at about 65pc of that level.
covid-19 lockdowns in china had been the ‘key retardant for the Rolls-Royce fleet of engines,’ east said. The company expects flying hours to recover to pre-pandemic levels by 2024.
The only silver lining in the results was the group’s cash burn, which dropped to £68m in the first half from nearly £1.2bn last year.
east remained defiant saying he was ‘ very pleased with the progress’ the company had made adding that he would leave RollsRoyce ‘a leaner, agile organisation with a more modern culture’.
Perhaps most worryingly for his successor, Rolls also admitted it was having problems hiring experienced, highly-skilled engineers.
Andy chambers, industrials analyst at research house edison, said one factor behind Rolls’s struggles to recruit could be the pandemicinduced downturn in the airline industry, which may have made a long-term career in the sector ‘seem less attractive’ than other areas such as electric vehicles.
He added that Rolls was also dealing with international competition and ‘work permits and visas’ could turn off potential hires.
But these difficulties do not seem to be shared by rivals with BAe systems reported last week to be planning to hire 1,000 engineers over the next 12 months in a push to help build the supersonic Tempest fighter jet.
AJ Bell investment director Russ Mould said: ‘The incoming chief executive needs to find a more dramatic fix for a now rather broken business.’