Rolls-Royce’s shares rocket almost 16% as it announces plans for a post-Covid era shake-up, with smaller plane engines on the agenda
- A top executive said Rolls could restart making engines for smaller planes
- This marks a shift from the current strategy to only supply large jets
- The firm also announced a shake-up of its manufacturing operations
Around £1.5 billion was added to the value of Rolls-Royce as investors welcomed moves to get the engineering stalwart ready for the post-Covid era.
A top executive said Rolls could restart making engines for smaller planes – reversing a strategy to only supply large jets that has hamstrung the company in recent years.
The firm also announced a shake-up of its manufacturing operations and the closure of a UK factory in a bid to streamline the business.
Around £1.5 billion was added to the value of Rolls-Royce as investors welcomed moves to get the engineering stalwart ready for the post-Covid era
Shares rocketed by almost 16 per cent – its stock increased in value by 246 per cent since early October.
The company – which was already struggling before Covid hit – was hammered by the pandemic because it makes a lot of its income from servicing plane engines.
The grounding of flights prompted a sell-off – but it has made gains since Pfizer said last month it was on the brink of rolling out a vaccine.
Rolls technology chief Simon Burr yesterday stirred up hopes the company will move back into the market making engines for smaller planes.
Short-haul flights are expected to recover far quicker than long-haul – which is the only part Rolls engines currently service.
Burr said: ‘We don’t rule ourselves out of any part of the market today.’
Rolls will shift operations from several factories to a division called ITP Aero. Rolls is planning to sell ITP Aero for £1 billion.
About 620 people who work for Rolls at a factory in Hucknall, in the Midlands, will now work for ITP Aero, and the work is expected to stay in the UK.
But 140 jobs will be lost at Barnoldswick in Lancashire, as these will be moved to ITP’s sites in Spain, and it cast doubt on two other plants in Scotland and the Midlands, saying they were not ‘core’ to its business.