A Rolls Royce jet engine on display at the Rolls-Royce aircraft jet engine production and repair facility in Blankenfelde on February 28, 2023 near Berlin, Germany.
Omer Messinger | Getty Images News | Getty Images
Shares of Rolls-Royce are at a 52-week high, after reaching 248 pence (308 cents) in Friday trading and climbing roughly just under 190% in the span of a year.
The British aerospace and defense company’s financial performance has been transformed, thanks to a turnaround plan led by its CEO Tufan Erginbilgic, who took the job in January. Its soaring stock price suggests that the markets have dismissed criticism of its jet engines by Emirates Airline President Tim Clark at the Dubai Airshow this week.
The comments were directed at Rolls-Royce’s Trent XWB-84 engines used on the Airbus A350-900 passenger jet. Speaking to journalists at the Dubai show, Clark disparaged the cost and maintenance required for the engines.
“Clearly, the engine isn’t doing what we want it to do, so until it does we won’t be ordering,” he said. “If the engine was doing what we want it to do … then it would re-enter the mix of assessment for our fleet plan.” Clark said that Emirates would have ordered between 35 and 50 of the jets, otherwise.
He also called the engines “defective,” saying that “Emirates gets very high utilization … You don’t want to sit on the ground or have it broken down regularly, apart from which the brand damage and reputational damage would be enormous, particularly if you broke down at an out-station, and you had nowhere to go. So we don’t buy airplanes that are defective.”
Rolls-Royce later pushed back against the criticism, saying in a statement that the A350-900′s XWB-84 engine “is the best engine out there when you look at efficiency, durability and reliability.”
In comments to Dubai-based outlet The National, Ewen McDonald, Rolls-Royce’s chief customer officer of civil aerospace, said that the aero-engineering firm and Emirates are “jointly aligned on this and we will continue to work through it.”
Emirates on Thursday confirmed a smaller-than-expected Airbus order of 15 of its A350-900 jets — a purchase that the airline said had a value of $6 billion.
The British engine-maker, which also makes the engines behind Boeing 787, has endured several overhauls in the last decade. Erginbilgic announced in October that the company would cut as many as 2,500 jobs around the world to “remove duplication and deliver cost efficiencies.”
The turnaround plan means that Rolls-Royce is also focusing on its “core” capabilities, bringing engineering technology and safety units into one team to improve efficiency and standardization.
“The proposals include creating a new enterprise-wide procurement and supplier management organization to support the consolidation of group spend, leverage scale and develop consistent best in class standards,” the company said in a statement in October.
Financial results for the company’s half-year earnings in August showed tremendous recovery already: its underlying operating profit for the period was 673 million pounds ($837 million), more than five times the level of the previous year.
Analysts at Deutsche Bank confirmed the bank’s buy rating for Rolls-Royce, raising its price target from 210 pence to 310 pence, according to Reuters.