Rolls-Royce chief executive Tufan Erginbilgic argues that the company can still afford to undertake further cost-reduction measures despite the extensive restructuring carried out during the pandemic.

Speaking during the company’s full-year briefing on 23 February, Erginbilgic said the previous cost-cutting efforts had focused primarily on civil aerospace and had been “activity-driven”.

“Demand disappeared, so Rolls-Royce did what it needed to do,” he says, adding that he felt the company had taken the right course of action.

But Erginbilgic says that the costs have returned as the activities have recovered.

“What we’re trying to do is really intervene with that, starting from this year, and create a more sustainable and more competitive cost base,” he says.

Rolls-Royce Pearl-c-Rolls-Royce

Source: Rolls-Royce

Rolls-Royce restructured during the pandemic as civil aerospace activity sank

Erginbilgic says the issue this time round is not about managing liquidity, but putting the company in a better position.

“Let’s face it, Rolls-Royce has been run as three decentralised divisions,” he says. “We’re not going to run it that way.

“We’re one team, one company, and we’ll take all the synergies – not only between divisions, but divisions and group.”

Erginbilgic claims the company presents a “big synergy opportunity” because “it’s never actually been looked at”, and adds that there are “simplification opportunities beyond that”.