Latest news with #TufanErginbilgic
Times
4 days ago
- Business
- Times
Rolls-Royce hails British support for next-generation jet engine
The UK is backing Rolls-Royce to become a global leader in the $1.6 trillion market for short-haul aircraft engines, by offering potential taxpayer support for its next generation of jet engines. The Rolls chief executive Tufan Erginbilgic this weekend confirmed that the Derby-based FTSE 100 engineer will return to the larger 'narrow body' or 'single aisle' market as Labour puts the move at the heart of its industrial strategy. 'This is the single-biggest opportunity for economic growth for the UK in the next 50 years,' he said. • Rolls-Royce has wowed the City — can it charm airlines too? The government last week said that 'gas turbines are critical to UK national and economic security, and our role and capabilities in the UK with companies like Rolls-Royce can lead to significant growth'. A priority would be to 'secure a UK engine position on next-generation single-aisle programmes', ministers outlined in the government's industrial strategy. In a wide-ranging interview with The Sunday Times, Erginbilgic set out his strategy: • Rolls is in talks with a number of industrial and engineering partners over its new UltraFan engine, which could lead to the British firm reviving its joint venture with US rival Pratt & Whitney.• He confirmed talks with the government over taxpayer support for the new engine.• He insisted that a deal was still to be done with Airbus on the UltraFan despite the Franco-German planemaker hinting at a preference for different technology manufactured abroad.• Erginbilgic revealed plans to expand Rolls's nuclear energy programme with the development of smaller 'advanced modular reactors' that could be rolled out to power the military on the front line.• He expressed confidence that the Trump administration will not backtrack on the Aukus defence partnership.• He said that Rolls could benefit from increased defence spending by expanding into autonomous vehicles and drones. Erginbilgic has overseen a dramatic turnaround in the fortunes of Rolls-Royce since he took the helm at the start of January 2023. Rolls's share price has risen by more than 800 per cent since, with the company now boasting a stock market valuation of £80 billion — making it the fifth-biggest company on the FTSE 100. The engineer's success stems in no small part from the building and maintenance of aircraft engines. Civil aerospace is Rolls-Royce's biggest single sector, accounting for about half of revenues and two-thirds of profits. The engines it makes, however, are only for long-haul planes — also known as 'wide body' or 'twin aisle' aircraft. Rolls has an estimated 44 per cent of the wide-body market globally. Its rival General Electric has 54 per cent. Development of the new £3 billion UltraFan engine has been in the works for a number of years. 'Given the technology we have, given the credibility we establish in the industry, and the financial strength we have and the engineering capability, we are actually saying we can play in the narrow-body [market],' Erginbilgic said. Moving into this market would present a challenge in scaling up Rolls's operations, because there are many times the number of short-haul aircraft as long-haul ones. To do so, Erginbilgic confirmed his preference to join forces with another engineering or industrial company. 'We are saying we have the engineering capability. But if you consider beyond engineering capability and so on, I believe … that [a partnership] may be the best outcome for the company,' he said. The Turkish-born executive refused to be drawn further on the names of potential partners. Industry sources pointed to the likes of Pratt & Whitney, with which Rolls had an ill-fated joint venture for short-haul engines before it collapsed more than a decade ago. Other potential parties include Mitsubishi and Kawasaki of Japan, Germany's MTU Aero Engines and South Korea's Hyundai. Erginbilgic said that he was in talks with the UK government for financial support to accelerate the UltraFan programme. 'This [state help] is not actually a new phenomenon; our competitors get this four or five times as much as we do,' he said. 'This is such a new development, such a big opportunity. We are effectively saying that in the development of this, actually a little bit of support would be great.' A major hurdle to entering the narrow-body market is striking a deal with one of the world's two main planemakers: Airbus and Boeing. Airbus is working on the next generation of its A320 workhorse, with its wing being developed at its centre of excellence in Bristol. The Franco-German company earlier this year hinted at a preference for an 'open-fan' engine developed by rival CFM — a joint venture between America's GE and French firm Safran — that appears to look more like a propeller than a 'closed duct' gas turbine. Asked whether Rolls had missed its opportunity to power the next generation of Airbus aircraft, Erginbilgic insisted: 'That's undecided … I talk to everybody.' Although civil aerospace represents the majority of Rolls-Royce' bottom line, the company's prowess in nuclear energy is exciting investors. Rolls manufactures power units for nuclear-powered submarines and has positioned itself to build a raft of small modular reactors — power stations the size of two football pitches — as part of the UK's push to decarbonise the electricity grid. • Rolls-Royce to build UK's first small nuclear power stations Erginbilgic said that nuclear power presented another big opportunity for Rolls. 'There is no other company on Earth — private company; I'm not including governments in this — with the nuclear skills that we have,' he said. 'What we do for nuclear submarines here, four companies do it in the US.' The 65-year-old revealed that Rolls was now expanding into the development of advanced modular reactors (AMRs), a type of small nuclear reactor that uses different fuels and technology and can be transported if required. 'We are actually working on technology in both areas in the US as well as the UK,' he said. 'Early applications will be really in space and defence.' One use of AMRs would be as a 'secure energy supply wherever your military is going', he said. Asked whether this would be a vital part of supporting military operations, he responded: 'Yes. That's my point. You cannot do it with SMR.' AMRs are considered novel technology and are likely to be many years away from practical usage. Elsewhere in defence, the future of the nuclear submarine deal between the UK, US and Australia — called Aukus — has been thrown into doubt after Donald Trump ordered Elbridge Colby, his adviser, to review it. The Aukus deal is worth billions of pounds to Rolls. Erginbilgic played down the prospect of the accord being scrapped. 'Yes, I am confident [in Aukus going ahead],' he said. 'The reality is that the UK government also reviewed; remember the whole defence review? 'So, they are doing a similar review. You cannot blame them for doing that. The UK government did the same thing. That is a normal review for a new government to do.' He continued: 'Even without Aukus, there is a submarine step-up, frankly.' Beyond submarines, Erginbilgic said that increased defence spending presented another opportunity for Rolls: 'Given what was published so far, and given what's going on in the world, autonomous [vehicles] and drones will be very important.' Erginbilgic admitted this was an area that Rolls had 'not been talking about', but added: 'But we have been developing products.'
Daily Mail
21-06-2025
- Business
- Daily Mail
Are turbulent times ahead for Rolls-Royce?
The take-off of Rolls-Royce shares is the talk of the City. The engineering giant, synonymous with British manufacturing prowess, saw its share price hit a record high this month in one of the most remarkable comebacks ever seen in the Square Mile. Garlands have been strewn over its Turkish-born boss, Tufan Erginbilgic, who took the helm in 2023 and has been hailed as a miracle worker for bringing the aero-engine maker back from the brink of financial ruin in the pandemic. Not only has Rolls-Royce recovered, it has become one of the best performers in the FTSE 100 index. But there's a rule in the world of big money: if something looks too good to be true, it probably is. This could be the case for Rolls-Royce and 'Turbo' Tufan, who earned the nickname due to the ferocious pace at which he works. Amid all the excitement, the City has overlooked a damaging row between Rolls-Royce and airlines including British Airways and Virgin Atlantic – which some believe could soon bring the engine maker and its share price back to earth. The issue is Rolls's Trent 1000 engines, which power Boeing's 787 Dreamliner. The Trent 1000s proved popular but are showing their age after clocking up more than 20 million flying hours. And they have been dogged by serious maintenance problems stretching back nearly a decade, with hundreds of planes grounded and even routes cancelled. Both BA and Virgin were forced to cancel hundreds of long-haul flights and re-routed passengers when planes were taken out of service for unscheduled repairs. BA's prestigious routes to the Gulf States have been among the more prominent casualties. There was a furore last year when the airline scrapped direct flights from Heathrow to Bahrain and Kuwait, two of Britain's closest allies in the region, because of problems with the Rolls engines, some of which are prone to maintenance problems in hotter climates. Although flights to Bahrain were reinstated after a campaign led by The Mail, the Kuwait route and flights to Abu Dhabi remain suspended. This is a setback when businesses are desperate to forge trade links to the Gulf. Technical faults on the Trent 1000 have dogged Rolls since 2016, when a design flaw – which led to cracks forming in the turbine blades of some engines – was identified. According to Shai Weiss, the Virgin Atlantic boss, the Trent 1000 needs three times the attention of other turbines. The problems have so far cost Rolls up to £3 billion in repairs and payments to the airlines – and the row shows no sign of being resolved. If anything, it is likely to intensify as the summer travel season unfolds. Rolls-Royce has been spared President Trump's punishing trade tariffs under the recent US-UK trade deal. But it has been hurt by his America First policies: it missed out on one of the biggest ever engine orders from Qatar last month, losing to US rival GE. Not everyone, then, is convinced by the Rolls-Royce renaissance. The company's harshest critic is Willie Walsh, the former BA boss who now leads the International Air Transport Association trade body. The blunt Irishman has described the rise in Rolls shares as 'baffling' – and that was back in December, when the price was a good deal lower than today. Walsh accuses Rolls of basic engineering failings and of luring airlines to buy its turbines with, effectively, false claims. 'They built the engines and promised us great things,' he said. 'What they didn't say is: this engine is going to be 25 per cent more fuel efficient. But, by the way, you're going to have to change it every couple of months. 'I doubt anybody would have bought their engines if that's what they were saying.' But investors seem happy to set aside these concerns. Shares continue to be swept up in the hope Rolls will win lucrative defence contracts as Britain rebuilds its military strength. There's some sense to this: as well as making turbines for passenger planes, Rolls-Royce produces engines for combat vehicles, fighter jets, submarines, ships and helicopters. Rolls has also chosen to build the next generation of mini nuclear reactors. These factors have helped it overtake drugmaker GSK and data provider Relx to become Britain's sixth-largest company, with a valuation of £75 billion. Credit is certainly due to Tufan, who conducted a root and branch overhaul after taking charge. He put every aspect of the business under the microscope and imposed what he describes a 'zero tolerance for mediocrity' regime. Such is his obsession with performance that he instigated a three-and-a-half-month-long study of how Rolls fared against its rivals before he even arrived. This delved deep into internal processes and was the basis of a highly detailed strategy to rebuild the balance sheet and improve profitability. So far as the stock market is concerned, the medicine is working. There has been an astonishing £68 billion rise in the value of Rolls-Royce shares in the two years since Tufan arrived. Having lost £4 billion in a year in the pandemic, Rolls made an operating profit of £2.5 billion last year, its highest ever. Any investor shrewd enough to have bought £1,000 worth when he joined would now have a holding worth almost £8,500. That is an alchemy of wealth creation that even the tech giants of Silicon Valley would struggle to match. 'It's been a monster performer,' says Jamie Murray of Shore Capital stockbrokers. Rolls has a loyal army of 150,000 small shareholders who have stuck with the company through thick and thin since it was privatised under the Thatcher government in 1987. Younger investors are also enjoying the ride. Rolls is one of the most popular shares on investment platforms such as Trading 212 which are used by newer generations of share owners. There is no denying Tufan's actions – cutting costs, slashing 2,500 jobs and re-negotiating loss-making contracts – have been a big factor in transforming the 119-year-old company's fortunes. Naturally, Tufan has reaped personal rewards. He has pocketed £18 million in salary and bonuses in the last two years, including £7.5 million to persuade him to leave his former employer, BP. His performance is all the more impressive given the tough climate facing aviation – particularly a post-pandemic shortage of components and spare parts. Rolls-Royce is not the only manufacturer facing complaints. Problems with turbines made by American rival Pratt & Whitney have led to more than 40 of Wizz Air's planes being grounded. And investigators are still looking at what caused an Air India flight from Ahmedabad to Gatwick to crash just after take-off this month, killing 270 people. The Boeing Dreamliner, which was powered by recently serviced GE engines, had 'a clean history', Air India's chairman said this week. The question, then, is this: can Rolls-Royce's gravity-defying performance continue? Those with long memories know that Rolls – which was declared insolvent in 1971 due to cost overruns and development problems with its RB211 engine – has had a chequered past. Nationalised by Edward Heath's Conservative government, its fortunes have yo-yoed ever since. The famous car-making arm was separated out in 1973 and is now owned by BMW. Some say Tufan, a British and Turkish citizen with a background in engineering, has been a lucky general. His arrival at Rolls coincided with a post-pandemic bounce in flying among business passengers and holiday makers. But Tufan and Rolls-Royce will need more than luck in the months ahead. The problems with the Trent 1000 and other engines in the core civil aerospace business – which accounts for just over half of Rolls's £17.8 billion of sales and the bulk of profits – remain a dangerous Achilles' Heel. While Tufan cannot be blamed for the difficulties he inherited, he has so far not managed to draw a line under them – certainly not so far as the airlines are concerned. BA, for example, told The Mail on Sunday it was 'very disappointed' that it had been forced to make changes to its schedules because of the failings. 'Our teams continue to work closely with Rolls-Royce,' a spokesman added. And, while the original design faults on the Trent 1000 engines have now been fixed, Rolls accepts the supply chain shortages could last for another 18 months, meaning more delays, more grounded flights – and even higher air fares. 'The supply chain environment remains challenging,' said the spokesman, admitting that there had also been 'a significant increase in Trent 1000 major refurbishments' last year. Rolls has responded by committing £1billion to a series of upgrades across the Trent family of engines aimed at reducing the number and frequency of repairs. Erginbilgic hopes to put a new high-pressure turbine blade into all the engines in the Rolls fleet over the next two years in a move that will more than double the amount of time the Trent 1000 spends in the air. The improvements cannot come soon enough for customers and passengers. And, as for what this means for the stellar share price, experts are divided. Analysts at Bank of America think the company could be worth up to £100 billion – in other words, the shares could climb significantly higher. Its long-term success depends on whether the company can deliver cleaner, greener, quieter engines – and, in that respect, the Trent 1000 saga does not augur well. For the moment, Rolls is flying high. But its critics, while still in a small minority, are adopting the brace position – in case of a sudden and troubling loss of altitude.
Yahoo
19-06-2025
- Business
- Yahoo
Rolls-Royce boss urges Labour to back £3bn jet engine project
The chief executive of Rolls-Royce is lobbying ministers to support his company's £3bn jet engine project, saying it could be the 'the single biggest item for economic growth for the UK'. Tufan Erginbilgic is pushing for the Government to back Rolls's plans to launch a range of engines for short-haul planes, a market it abandoned more than a decade ago. He said the project could create 40,000 jobs in Britain and deliver a surge in exports. Mr Erginbilgic is lobbying Labour to support the scheme as the Government prepares to launch its upcoming industrial strategy. He said: 'Any country needs to support competitively advantaged industries. If you give some momentum that will create lots of export growth, and employment with that.' Britain's biggest manufacturing company has stepped up talks with potential partners as it eyes a return to making engines for short-haul planes of the kind used by Ryanair and easyJet. Speaking at the Paris Air Show, Mr Erginbilgic said: 'We are progressing. We would like to enter narrowbody, that's true, and it's even more true right now. 'Our preference is partnership. I can't go into details because of the confidentiality about these things, but we are talking to multiple parties. 'Do we have the technology, do we have the capability, do we have the opportunity? Yes, yes and yes.' Rolls-Royce would seek government support in helping to fund the £3bn development cost of the engine. Mr Erginbilgic argued that General Electric and Pratt & Whitney, the other major player in the sector, get four or five times as much backing. He said that support for the project would also deliver a huge boost to the economy. He said: 'It is that big. Think about that. If you pick economic growth in the UK, one item, this will be the number one.' He added that the project could create more than 40,000 jobs across the supply chain. Rolls, which has its main manufacturing plant in Derby, would use technology developed as part of its Ultrafan programme on the new engines. It would need to develop a reduced-thrust version of the Ultrafan, which was initially developed for larger, long-haul planes. The 120-year-old company aims to develop the engines to coincide with the introduction of the next generation of the narrowbody planes from Airbus and Boeing in about a decade's time. Mr Erginbilgic is eyeing new markets after piloting a stunning turnaround at Rolls-Royce. He told Rolls's 42,000 workers that they were on a 'burning platform' when he took over in 2023. However, shares in the company have surged more than 700pc since Mr Erginbilgic, a former BP executive, took charge. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Telegraph
18-06-2025
- Business
- Telegraph
Rolls-Royce boss urges Labour to back £3bn jet engine project
The chief executive of Rolls-Royce is lobbying ministers to support his company's £3bn jet engine project, saying it could be the 'the single biggest item for economic growth for the UK'. Tufan Erginbilgic is pushing for the Government to back Rolls's plans to launch a range of engines for short-haul planes, a market it abandoned more than a decade ago. He said the project could create 40,000 jobs in Britain and deliver a surge in exports. Mr Erginbilgic is lobbying Labour to support the scheme as the Government prepares to launch its upcoming industrial strategy. He said: 'Any country needs to support competitively advantaged industries. If you give some momentum that will create lots of export growth, and employment with that.' Britain's biggest manufacturing company has stepped up talks with potential partners as it eyes a return to making engines for short-haul planes of the kind used by Ryanair and easyJet. Speaking at the Paris Air Show, Mr Erginbilgic said: 'We are progressing. We would like to enter narrowbody, that's true, and it's even more true right now. 'Our preference is partnership. I can't go into details because of the confidentiality about these things, but we are talking to multiple parties. 'Do we have the technology, do we have the capability, do we have the opportunity? Yes, yes and yes.' Rolls-Royce would seek government support in helping to fund the £3bn development cost of the engine. Mr Erginbilgic argued that General Electric and Pratt & Whitney, the other major player in the sector, get four or five times as much backing. He said that support for the project would also deliver a huge boost to the economy. He said: 'It is that big. Think about that. If you pick economic growth in the UK, one item, this will be the number one.' He added that the project could create more than 40,000 jobs across the supply chain. Rolls, which has its main manufacturing plant in Derby, would use technology developed as part of its Ultrafan programme on the new engines. It would need to develop a reduced-thrust version of the Ultrafan, which was initially developed for larger, long-haul planes. The 120-year-old company aims to develop the engines to coincide with the introduction of the next generation of the narrowbody planes from Airbus and Boeing in about a decade's time. Mr Erginbilgic is eyeing new markets after piloting a stunning turnaround at Rolls-Royce. He told Rolls's 42,000 workers that they were on a 'burning platform' when he took over in 2023. However, shares in the company have surged more than 700pc since Mr Erginbilgic, a former BP executive, took charge.
Bloomberg
17-06-2025
- Business
- Bloomberg
Rolls-Royce in Talks With Potential Narrowbody Engine Partners
Rolls-Royce Holdings Plc is in talks with potential partners to build engines for the next generation of narrowbody jets, as the UK manufacturer looks to re-enter the most lucrative segment in commercial aviation. The company is talking with 'multiple parties' about partnerships that would involve its Ultrafan turbine technology, Chief Executive Officer Tufan Erginbilgic told reporters on Tuesday.
