Rolls-Royce receives half the level of government support of its US competitors, according to its chief executive, who called for continued taxpayer investment to keep the UK aero-engine maker at the “cutting edge” of technology.
Tufan Erginbilgic, who has overseen a more than doubling of the Rolls-Royce share price since he arrived at the beginning of last year, said the company’s UK manufacturing operations were safe, but “some level of technology support needs to be there”.
“There are only two countries in the world that can do this [make modern aero-engines]: the US and the UK. But you cannot stand still. You need to be in cutting-edge technology all the time. And there is significant government support in the US — twice as much as we get,” he said in an interview with Times Radio.
Erginbilgic welcomed a £1 billion package of funding the government is putting into the industry through the Aerospace Technology Institute, the most recent tranche of which was announced last March. “We can stay in the UK, we should stay in the UK … but our competitors are getting a lot more [support] than we do.”
Airbus recently confirmed that it was exploring technologies for a replacement for its bestselling A320 family of aircraft, which have become the workhorses of short and medium-haul airlines around the world. Rolls-Royce does not provide an engine for the current aircraft, which investors have viewed as a weakness in its commercial position.
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Erginbilgic, 64, said he expected the new aircraft would enter service some time after 2035 and that while it was an important contract for Rolls-Royce “we don’t have to be on it”.
Times Radio: Interview with Tufan Erginbilgic
He said: “You can see our current results [with no A320 engines] and we are making good progress. But given the technology we have, I think we are well positioned to be on the new programme. I am even more confident of that now. We will participate, but only if makes sense for Rolls-Royce.”
Erginbilgic said that Rolls-Royce had no plans to follow the gaggle of companies that had quit the UK stock market for primary listings in the United States. He said, however, that the government’s golden share in Rolls-Royce — it has special protections from a takeover because of its provision of technology to the UK military — did not rule such a move out. “There may be some liquidity issues in the UK … but as we have shown, if you perform there is interest from everywhere.”
