x Abu Dhabi, UAEFriday 21 July 2017

Rolls-Royce works on far from the madding crowd

Those expecting a quick response to criticism over the recent problems with the company's jet engines don't understand Rolls or its chief executive, Sir John Rose

Those expecting a quick response to criticism over the recent problems with the company's jet engines don't understand Rolls or its chief executive, Sir John Rose

Clamours for Sir John Rose, the chief executive of Rolls-Royce and the UK's greatest living industrialist, to admit he made a mistake are misplaced.

Rolls-Royce is by no means out of the woods but fears that the company might "do a BP" are overdone.

Last week, a Rolls-Royce engine on a Qantas A380 superjumbo disintegrated, scattering debris over an Indonesian island. The aeroplane made an emergency landing in Singapore, on three engines rather than the usual four. No one was injured and the aircraft suffered minimal damage.

In aviation parlance this was a rare "uncontained" engine failure. Parts of the engine broke up and pierced the casing, an event that could have caused far bigger problems.

Qantas responded immediately by grounding its six double-decker A380s. Six days later, Singapore Airlines, after initially giving its A380s the all-clear, took the precautionary step of replacing three Rolls-Royce engines with new versions of the same model.

Almost a week after the original incident we are no nearer an explanation from Rolls, or the Australian transport safety regulator that is leading the investigation.

Rolls-Royce shares, initially down 10 per cent, have rallied and dropped again as the company keeps a tight rein on information.

The Qantas incident comes as Rolls-Royce was already on the defensive about another engine model, which suffered a major test failure for the Boeing 787 Dreamliner this summer. Rolls-Royce said in its statement on Monday the two incidents were unconnected.

The worst fear for Rolls was a systemic problem with its world-famous Trent engine. But Monday's statement was not enough for commentators who have suggested the world's second largest engine maker could find itself facing a fundamental lack of investor confidence if Sir John were not seen to publicly steady the ship.

Nothing could be further from the truth. Sir John is a notoriously taciturn chief executive who asks to be judged on his results and his products rather than his presentation. A statement from Sir John at this point would really worry those who have followed the company for years.

Rolls-Royce's senior executives are scientists and engineers first and communicators second. They have no intention of rushing out a hasty explanation.

Unlike BP, which has millions of customers the world over, Rolls-Royce's customers probably number less than 200. The company knows exactly how to communicate with the airlines that buy its products and does not need to do so through the pages of the press.

One of the reasons last week's incident attracted so much coverage is that it happened on an Airbus A380, the most hyped plane in the world.

But it is important to put this incident into context. The Qantas episode is the first of its kind to occur on a large civil Rolls engine since 1994.

Sir John was proclaimed the greatest living British industrialist two months ago when the company announced he would step down next year from the position he has held since 1996.

Sir John will leave Rolls in much better shape than when he took over. Against the odds, he has helped to build the company into a world-beating company in a ferociously competitive high-tech sector.

He has won new customers in Asia, the Middle East and Latin America and turnover is now eight times what it was when he started. By the end of last year, profits had more than quintupled to £915 million (Dh5.42 billion) and Rolls-Royce's shares have risen 144 percentage points more than the FTSE 100 index since the start of 1996.

Even in the middle of this crisis, Rolls has announced that it had secured a £750m contract for 32 Trent 700 engines, for A330 jets at China Eastern Airlines.

Rolls-Royce's engineers are the best in the world and Sir John, a psychologist by training, knows not to second-guess them. Today, the company will make a routine interim management statement and will give an update on the Trent 900 problem.

After 14 years at the helm, Sir John knows that his company's success has been built on first-class teamwork. Far from closing ranks, Rolls is merely concentrating on what it does best.

It is not arrogance. It is just the safest way to proceed.

 

business@thenational.ae