Huge scope for Rolls-Royce to grow market share, improve profits: CEO

Rolls-Royce Chief Executive Tufan Erginbilgic has said that his endeavor to increase the United Kingdom-based firm's profits was compatible with continuing to enhance market share, while also delivering improvements in engines demanded by airlines. Erginbilgic was inducted into Rolls-Royce in January this year, to turn around Britain's flagship engineering company. There has been a positive investor feedback as the Rolls-Royce shares have risen more than 200% this year. 

The challenge though is to convince airlines after an open spat with Dubai's Emirates, one of the world's biggest, whose president told Rolls last month to "go back to basics" and pay attention to improving the durability of its products before raising prices. "We are going to transform Rolls-Royce with customers, not against customers," Erginbilgic told Reuters. It was stated by Emirates that the time between repairs of Rolls' XWB-97 engine in hot and dusty conditions must improve before it will buy A350-1000s, raising questions over the impact on plane maker Airbus for which Rolls is the sole supplier of engines for wide-body jets.Old-time customer Thai Airways is finalising an order for 80 Boeing 787s powered by competitor GE after disagreements over pricing with Rolls, industry sources have said.

The move, which is intertwined with a defeat for the Airbus A350, follows a disagreement over whether Rolls could increase prices for engines on previously acquired 787s, in the event the airline added GE to its all-Rolls wide-body fleet, they said. None of the parties have agreed to comment. But Erginbilgic said in an interview on Wednesday that orders continued to flow despite recent criticisms.

"There is one deal, which is very important and big," he said. “We've made the deal. It is not announced yet.” Some analysts have voiced concerns about the impact of efforts to improve prices on Rolls' market share, even though the size of the market is growing overall. Competitivity is driven partly by the number of engines built relative to rivals. This has been ruled out by Erginbilgic. "Our delivery market share is around 55% and that will continue for the next 5-10 years, so we are gaining market share every year including this year".

(With Reuters inputs)