Rolls-Royce Chief Looks to the Electric-Jet Future

(Bloomberg) -- Rolls-Royce Holdings Plc’s Warren East said he’s keen to lead the engine maker into a new age of electrically powered aircraft after spending years focused on costs cuts and restructuring.

The CEO, recruited by Rolls from semiconductor developer ARM Holdings Plc, said his enthusiasm for leading the U.K. engineering giant is undimmed by the saga of firings, disposals and internal realignments, and that he wants to stay at the helm through a new phase of expansion and technological change.

“I didn’t join Rolls-Royce to do restructuring,” East, who has been chief executive for four years next month, said in an interview at the Paris Air Show. “I’m not a turnaround person. Once you’ve made it a more competitive business you want to resume the journey of growing market share.”

East took over after Rolls had been rocked by a run of profit warnings and a corruption probe. Things got worse before they got better, with the CEO saying problems were more deep-seated than he’d realized and ordering thousands of job cuts. Technical faults with the Trent 1000 engine that powers Boeing Co.’s 787 also forced the group to focus on emergency repairs when it should have been preoccupied with a production ramp-up vital to future earnings.

Rolls-Royce’s margins are still behind those of other major aero-engine manufacturers and East said he needs to close that gap and make the London-based company more competitive before he can return to expansion.

Electric Future

The upheaval that would come with a switch to hybrid and electrical propulsion could play to Rolls’s advantage, the CEO said, with the “discontinuity” creating an opportunity to grab a higher market share in a wholly new market.

A move away from jet propulsion had been regarded as decades away, but Airbus SE is now actively studying the introduction of an electric-hybrid design with its next narrow-body plane, and such technology has been a hot topic at this week’s aviation expo in the French capital.

“A few years ago there wasn’t this noise at an air show about electric propulsion, you really had to look hard for it, if at all,” East said.

Rolls put down a marker at the show with the purchase of a Siemens AG business that formed part of a venture with Airbus to build a small regional hybrid aircraft, and the CEO said the greater potential of electric planes is clear, with performance improvements of no more than 1% a year being eked out from gas turbines, compared with a 10% jump in battery energy density.

East said cutting so many jobs has been tough, but that his aim is to position Rolls to be competitive for the next 50 years and beyond.

“It’s obviously uncomfortable for some people who are either going to lose their job themselves, or they know somebody who is going to lose their job,” he said. “But it’s getting them to understand that we’re not some hard-man management that is just doing this so we can line the pockets of investors.”

To contact the reporter on this story: Benjamin Katz in Paris at bkatz38@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Christopher Jasper, Andrew Noël

©2019 Bloomberg L.P.