Rolls-Royce outlined plans to exit the electric propulsion business to focus on its core businesses.
The move was announced by the engine maker’s CEO, Tufan Erginbilgic, during the firm’s annual Capital Markets Day on November 28, 2023.
The sale of the electric business division could bring in between £1 and £1.5 billion to Rolls-Royce coffers.
In this regard, Rolls-Royce is betting on sustainable aviation fuel (SAF) as the main driver of decarbonization for the aviation industry. All of Rolls-Royce’s in-production engine types will be able to run on 100% SAF.
The engine maker is optimistic about its new UltraFan, an improved efficiency engine technology which was successfully tested earlier in 2023. Rolls-Royce expects UltraFan engines to power both widebody and narrowbody aircraft in the future.
Rolls-Royce also noted that it sees opportunities in the executive aviation segment and is targeting 8-9% growth in Pearl engine deliveries.
Rolls-Royce is currently in the middle of a restructuring program to turn itself around and boost profitability. The pandemic had a strong impact on the engine maker, as the company’s service revenues depend heavily on the number of hours engines are in use.
Erginbilgic said he expected the group to increase its profits to the £2.5-2.8 billion range, up from the £0.65 billion profit it reported in 2022. The civilian aerospace division is expected to make the largest contribution to this turnaround and reach profit margins of 15 to 17% by 2027 (compared to the group’s goal of 13-15%), up from the meagre 2.5% it reported for the last fiscal year.