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Rolls-Royce’s performance is ‘unsustainable’ and it is underperforming every key competitor, the new Chief Executive Officer Tufan Erginbilgic said in a global address to staff, as reported by the Financial Times (FT).
“It is at a level [at which] it cannot continue. Rolls-Royce has not been performing for a long, long time, it has nothing to do with Covid, let’s be very clear. Covid created a crisis, but the issue in hand has nothing to do with it,” he said.
He told employees that they were losing money in every investment, and investors were losing patience with the engineering group.
Tufan Erginbilgic took over the company from Warren East at the start of January to improve the company’s performance. According to FT, the compnay’s profit margins have been lower than bigger competitors like General Electric etc.
Erginbilgic said that the company is a ‘burning platform’. More than a decade ago, Nokia’s then-CEO Stephen Elop descibed the Finnish company as a “burning platform”. Three years later, the mobile business of Nokia was sold to Microsoft.
“We do have a burning platform, not because I say so but because of what I am going to share with you,” he said.
The new CEO also launched a “transformation programme” with a focus on “optimisation”. FT said that this could mean more job cuts, especially among the white-collar workers, in coming days. The company had cut around 9,000 jobs in 2020 amid air travel slump due to the Covid-19 pandemic.
He further added that the company’s civil aerospace division was not generating cash or profits even before the pandemic. The company generates bulk of its profits from the hours its engines are for in the air.
Experts said that opening up of China might have a potivie impact on the company’s financial positions.
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