Large engine flying hours for Rolls-Royce increased further last year, but remain 35% below the pre-crisis level of 2019, the manufacturer has disclosed.
But it expects this gap to reduce to 10-20% this year following the easing of travel restrictions in China.
Rolls-Royce large civil engine deliveries reached 190 – down slightly on the 195 handed over in 2021 – among them 44 spares.
Spare engine deliveries accounted for 23% of the total, above the typical figure of 10-15%, because Rolls-Royce says it is working to “improve resilience” for the global fleet.
It expects to have a similar elevated level of spare-engine deliveries this year and next.
Rolls-Royce also handed over 165 engines to the business aviation sector, up on the previous figure of 114.
The company’s civil aerospace division turned in a fully-year underlying operating profit of £143 million for 2022, in contrast to the previous year’s loss of £172 million.
Rolls-Royce attributes the improvement to better long-term service agreement contract margins, as well as a different mix of spare engine sales, and more third-party business.
It also benefited from reduced losses on installed large-engine deliveries and higher aftermarket profit, plus service agreement catch-up effects.
Rolls-Royce says it achieved the profit improvement despite inflationary and supply-chain problems which, it adds, are likely to “persist” this year.
Its civil aviation activity for 2022 included large engine orders from Malaysia Aviation Group, Qantas and Norse Atlantic Airways, and the company stands to benefit from the recent agreement for Air India’s fleet renewal.
But new chief executive Tufan Erginbilgic says the company, despite the higher figures, is “capable of much more”, having benchmarked its performance against peers.
He says a transformation programme – including a strategic review – is underway which will improve efficiency and commercial outcome and result in a “sustainable reduction” in working capital.
The company aims to direct investment priority to the “most profitable opportunities”, he says, adding that it will set out its findings and medium-term targets in the second half of this year.
Rolls-Royce will look at delivering cost efficiency, and obtaining the “right reward” for the risks it takes, while each business unit will derive plans to address “performance gaps”, the company states.
“This will require a winning culture, underpinned by more effective performance management and a shared determination to deliver cash and reduce debt,” says Erginbilgic. “Our success will enable us to reward investors for their support and invest in future growth.”