The Rolls-Royce boss does not believe in hydrogen propulsion

LONDON – Rolls-Royce wants to generate more revenue in its day-to-day business in the coming years and will continue to rely on traditional kerosene-powered engines. The group is exiting its business with electric drives for air taxis and is skeptical about rapid success in hydrogen systems.

Rolls-Royce focuses on conventional driving technology. “I don’t think hydrogen will play a role in the next 15 or 20 years,” Rolls-Royce boss Tufan Erginbilgic said Tuesday at a press conference during the capital market day.

Although the group is already working on hydrogen technology with British low-cost airline Easyjet, in the opinion of a former BP manager, so-called sustainable aviation fuel (SAF) may be the only option, at least for large aircraft. to meet climate goals.

The engine maker’s shares rose sharply in morning trade after the publication of new medium-term targets: Recently, Rolls-Royce’s note cost almost seven percent more than the previous day.

The aviation industry is facing the challenge of significantly reducing its share of global CO2 emissions. The world’s largest aircraft manufacturer Airbus hopes to have hydrogen-powered planes by 2035.

As Rolls-Royce announced in London on Tuesday, operating profit is expected to increase to 2.5 to 2.8 billion British pounds (2.9 to 3.2 billion euros) by 2027. Free cash flow should be between 2.8 and 3.1 billion pounds.

For this year, rival GE Aerospace and RTX subsidiary Pratt & Whitney continue to expect operating profit of 1.2 billion to 1.4 billion pounds and cash inflow of 0.9 billion to 1.0 billion pounds. CEO Erginbilgic also indicated that he wanted to return to the narrow-body aircraft business. Rolls-Royce is in a “good position,” he said, according to the statement.

In an initial response, UBS analyst Ian Douglas-Pennant described the new targets as “strong”. So he expects that the average estimate from industry experts will increase significantly. Jefferies analyst Chloe Lemarie stressed that free cash flow was above expectations.

E-division is sold

In mid-October, the engine maker announced that it wants to cut more jobs. It is the biggest layoff to date under company boss Erginbilgic and affects 2,000 to 2,500 employees.

As Rolls-Royce announced further on Tuesday, the company wants to spin off its electronics business, which develops propulsion systems for aircraft such as air taxis. Erginbilgic said Rolls-Royce needed to make decisions about how to use its resources and the division could provide more value to a “third party”.

© dpa-AFX | 11/28/2023 10:24 am

H2 production is energy intensive and will only be profitable when renewable energy sources are widely available. Before that, however, as renewable energy becomes cheaper, the demand for energy will increase faster than its production, so it will take a long time. And given our current pace of planning, its apparent non-occurrence is more certain than any small pension.