Rolls-Royce could sell its electric aircraft business

Isbel Lázaro.

Rolls-Royce podría vender negocio de aviones eléctricos

Inspenet, December 10, 2023.

Rolls-Royce intends to sell its aircraft electric motors segment in an effort to raise up to £1.5bn through the sale of non-strategic assets. CEO Tufan Erginbilgic argues that Sustainable Aviation Fuels (SAF) represent the only viable solution for large aircraft to achieve their climate goals in the near future.

In that sense, the company is reorganizing its aeronautical engines division and abandoning the section dedicated to purely electric aircraft, focused on small aircraft. According to Erginbilgic, Rolls-Royce must make “resource allocation decisions” and the sale of this unit will offer “better value to a third party.” Although Rolls-Royce’s automobile division is owned by BMW, a separate portion of the company specializes in manufacturing aviation and marine engines.

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Erginbilgic also told reporters at a press conference: ” I don’t think that in the next 15 or 20 years hydrogen is going to play a role ,” although the company will continue to work on hydrogen technology” with EasyJet.

Likewise, the CEO expressed his conviction that Sustainable Aviation Fuel (SAF) will be the only means to achieve net zero emissions goals. These statements generated some controversy within the company, leading Rolls-Royce to issue a separate statement following the call, reiterating its commitment to developing hydrogen capabilities in collaboration with EasyJet and stating its aspiration to bring this technology to long-term flight tests.

Rolls-Royce and the SAF

Although the belief that SAF is the only realistic option for long-distance flights, especially those exceeding 2,000 km, is not new in the industry. It is highlighted that, so far, hydrogen combustion is the only low-emission technology that can power large-scale aircraft on intercontinental and international flights.

After the CEO’s strong statements and subsequent confirmation that the company will continue to focus on the development of hydrogen fuel cell aircraft, the CEO directed his statements towards immediate profitability. He expressed his commitment to addressing inefficiencies at Rolls-Royce through a specific focus on the civil aviation wide-body aircraft sector, which accounts for the majority of the company’s revenue. These profit margins are expected to increase from 2.5% last year to a range of 15-17% in the near term.

We are setting compelling and achievable medium-term financial targets, which will take Rolls-Royce far beyond any previous financial performance ,” says Erginbilgic.

Financial difficulties negatively affected Rolls-Royce in the run-up to this year, marked by problems with its Trent 1000 engine and the impacts of the pandemic. The grounding of long-haul aircraft during lockdowns led to a decline in revenue linked to engine flight hours.

During Rolls-Royce’s all-electric aircraft phase, the company sought to set records with the fastest electric aircraft in collaboration with ACCEL, which made its maiden flight in 2021. Additionally, Rolls-Royce has partnered with aircraft designer Tecnam to supply Norwegian regional airline Widerøe with an all-electric airliner by 2026. However, Tecnam withdrew from the project in the middle of this year, citing problems in the development of the batteries. Additionally, in 2021, Rolls-Royce invested in the British start-up Vertical Aerospace, focused on the development of electric air taxis.

In the previous year, Rolls-Royce began an air mobility collaboration with Hyundai, focused on the joint development of all-electric propulsion and hydrogen fuel cell technologies for aviation. Both companies signed a letter of intent with the objective of offering low-emission solutions for the Urban Air Mobility (UAM) and Regional Air Mobility (RAM) markets. The future of this collaboration is yet to be determined for Rolls-Royce.

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