Story ID: 
Rolls-Royce To Exit Electrical Propulsion Business
By: Charles Alcock
Caption: The aircraft engine maker is looking for buyers for its Electrical division
Word Count: 481
Rolls-Royce is open to offers from prospective buyers for its Electrical division, which is focused on activities such as developing electric propulsion systems for eVTOLs, including Vertical Aerospace’s VX4. The UK-based aircraft engine maker revealed the move as part of a wider restructuring plan rolled out on Tuesday in a briefing for analysts that could include other divestitures across the group expected to raise up to £1.5 billion ($1.9 billion) over the next five years.
Announcing details of a long-anticipated corporate reboot, Rolls-Royce CEO Tufan Erginbilgiç said the company is “looking at options to exit [the Electrical business] in the short-term or alternatively for the right value, reduce our position to minority with an intention to exit fully in the mid-term.”
What isn’t entirely clear from the divestiture announcement is whether Rolls-Royce only intends to stop working directly on battery electric propulsion systems like those being developed for Vertical, or whether the change might also impact its wider work on new hybrid-electric propulsion systems for airliners. For instance, the Electrical division now being put on the auction block has been involved in the development of a turbogenerator that could run on sustainable aviation fuel.
“We believe, given the world-class capability we have built in advanced air mobility, that this will represent good value to a third party and will allow us to focus on our core electrical engineering activities in [our] Power Systems, Defence, and Civil Aerospace [business units],” Erginbilgiç said.
It is unclear whether Rolls-Royce notified Vertical Aerospace of its plans to exit the electric propulsion business prior to today's announcement. Vertical is now building a second VX4 prototype to resume flight testing in early 2024, but this is not expected to feature the Rolls-Royce propulsion system.
"Vertical is working with Rolls-Royce to understand today's announcement in more detail," the company said in a written statement issued late on Tuesday. "In parallel, we continuously assess our strategic options to ensure we can successfully deliver the VX4 in its certification timeline."
As part of a restructuring aimed at achieving annual savings of up to £500 million, Rolls-Royce will cut around 2,500 jobs. It also will be seeking partnerships to spread investment costs in new airliner engines—such as the UltraFan program for next-generation narrowbody airliners—in a bid to boost profitability across its remaining portfolio.
Erginbilgiç made it clear that the business aviation sector will remain a core activity. He said that Rolls-Royce’s position as turbofan supplier to Gulfstream Aerospace and Dassault Falcon is proving to be a driver of annual revenue growth expected to average between 3 and 5 percent, compared with between 5 and 7 percent in the commercial airliner market. “By providing the power for three out of four of the fastest, long-range [business] jets, we expect our global fleet to increase to more than 9,000 engines,” Erginbilgiç said.