Rolls-Royce Plc is offering its ITP Aero subsidiary for sale and hopes to raise at least £2 billion ($2.6 billion), part of its effort to regain financial stability amid declining commercial aviation and industrial demand related to the Covid-19 pandemic. Other holdings also may be made available, according to the aerospace and industrial engine manufacturer. It announced the prospective sales along with its midyear 2020 results, which included a loss of £5.4 billion ($7.13 billion ) and a -24% year-over-year drop in net revenue.
“We ended 2019 with good operational and financial momentum," commented CEO Warren East. "However, the COVID-19 pandemic has significantly affected our 2020 performance, with an unprecedented impact on the civil aviation sector with flights grounded across the world.
"We have responded rapidly," he continued, describing borrowing over £8.0 billion ($10 billion) to increase liquidity, and implementing an aggressive downsizing strategy. "This restructuring has caused us to take difficult decisions resulting in an unfortunate but necessary reduction in roles. These actions will significantly reduce our cost base, which combined with recovery in Power Systems and continued resilience in Defence, will help us to deliver significantly improved returns as the world recovers from the pandemic.
ITP Aero (Industria de Turbo Propulsores) is a Spanish business established as a joint venture with SENER in 1989, but it has been a wholly owned subsidiary of Rolls since 2016. It produces turbofan engines for civil and defense aircraft, as well as industrial gas turbines, with activities ranging from R&D, design, metal casting, engine manufacturing, and testing.
ITP Aero has been involved in Rolls' development of the new high-power UltraFan engine, a new high-bypass turbofan jet engine to be introduced in 2025, with noise and fuel burn reductions, and 25% greater more efficiency than a first-generation Trent engine.
The Spanish group recently manufactured the first Intermediate Pressure Turbine (IPT) casing of the UltraFan, as part of research sponsored by Spain's Centre for the Development of Industrial Technology (CDTI) and the European Union's Clean Sky 2 program.
In May Rolls put forth a downsizing plan for its Civil Aerospace division to reduce total employment by 9,000, of which 4,000 separations already have been effected through voluntary severance and early retirement agreements, and at least 5,000 are expected across the organization by the end of 2020.
Rolls is proposing to reduce employment in its Civil Aerospace division by 8,000, approximately one-third of the unit's total prior to the onset of the pandemic. A further 1,000 positions will be eliminated from the group's central functions.
Similar downsizings are in progress across the commercial aviation sector, including Airbus, Boeing, and GE Aviation.
Rolls-Royce also is scaling back its manufacturing organization, consolidating its Trent wide-body engine assembly and testing from three global sites to one in Derby, England; and consolidating Trent fan blade production from two sites to one, in Singapore.
Further, Rolls will focus its disc and turbine blade machining in the U.K., including combining two advanced turbine blade machining operations to one, in Derby; and consolidating blisk production from three sites to two, Derby and Oberursel, in Germany.
Rolls also announced its chief financial officer, Stephen Daintith, has resigned to accept a position with Ocado – and online grocery retailer.