The CEO of Rolls-Royce wants to focus on increasing profits

Tufan Erginbilgic, the chief executive of Rolls-Royce, says his commitment to increasing the British company’s profitability is consistent with capturing more of the market and improving the engines demanded by airlines.

Tufan Erginbilgic was brought to Rolls-Royce in January last year to turn around the British giant. Investors have been enthusiastic so far, and the stock is up more than 200 percent this year.

Erginbilgic faces a challenge for the airline after a public row with Emirates, whose chief executive last month urged Rolls-Royce to “go back to basics” and look to improve the durability of its products before raising prices to persuade.

“We will change Rolls-Royce with the customers, not against the customers,” Erginbilgic told Reuters.

Emirates has said it needs to improve the time between overhauls of its Rolls-Royce XWB-97 engine in hot and dusty conditions before the airline buys the Airbus A350-1000.

Needs heard?

Durability is a critical issue for airlines, as unscheduled maintenance and increased waiting times for parts across the industry keep many planes grounded.

Christine Ourmieres-Widener, CEO of Air Caraibes and French Bee, said the waiting time for replacement A350 engines is 18 to 24 months.

Erginbilgic said Rolls-Royce is investing heavily in upgrading its Trent 1000 engine, an option for the Boeing 787, and the XWB-97 engine, which only powers the Airbus A350-1000.

“I will invest over a billion pounds in engine development over the next three to four years,” he said.

“We will more than double the run time of the Trent-1000 engine, the run time of the XWB-97 engine is good in good conditions, in bad conditions we will increase it more than four times.

The long-delayed approval of the Trent 1000 upgrade will come next year, he said, restoring competition against the Boeing 787.

“We did what we could. Now it will be confirmed next year,” he said.

“This will more than double the service life. By 2025, our program will achieve a further improvement of 25 to 30 percent. Our engine will be very competitive with GE.”

The Trent 1000’s historic durability issues have plagued Rolls since 2016, and the company narrowly escaped collapse during the COVID-19 pandemic when an attempted turnaround failed.

Erginbilgic’s solution for the Derby, UK-based company, which also operates in the defense and nuclear sectors, is a new pricing strategy for the sale and maintenance of its engines.

GE receives preferential treatment

Longtime customer Thai Airways has placed an order for 80 Boeing 787s with GE engines after falling out with Rolls-Royce over pricing, industry sources told Reuters.

The move, which marks the failure of the Airbus A350, follows a disagreement over whether Rolls-Royce will be allowed to increase the price of engines on previously purchased 787s if the airline equips its entire fleet with Rolls-Royce engines, it said.

Neither side wanted to comment. However, Erginbilgic said in an interview that the orders were continuing despite recent criticism.

“There is a plan that is very important and big,” he said. “We have completed the plan. It (the plan) has not been announced yet.”

Some analysts have expressed concern about the impact of the push for better prices on Rolls-Royce’s market share, even if the market as a whole is growing. Competitiveness is determined in part by the number of engines built relative to competitors.

Erginbilgic rejected this claim. “Our market in delivery is about 55 percent and will continue to be so for the next five to ten years, so we are gaining market every year, including this year.