Leaner and determined to be greener, Rolls-Royce’s jet engine empire is raring to go as the air industry prepares to put the dark days of the pandemic behind it and put the throttle back on at Britain’s Farnborough Airshow this month.
The aerospace giant has used the crisis to carry out what one top executive called the biggest restructuring in its history, saving £1.3 billion ($1.6bn) by combining assembly lines, rethinking supply chains and cutting 8,700 jobs.
But its engineers were nothing but ambitious when The National toured the Rolls-Royce plant in Derby, with eggs being laid in almost every imaginable aviation basket from electric air taxis to smart engines to power washers.
“Now we are getting the fruits of the restructuring for the growth phase we are in,” said Sebastian Resch, the head of operations for Rolls-Royce’s civil aviation division.
Although the economic earthquake of Covid-19 has not completely settled down, passenger numbers are rising again as the aviation world returns to Farnborough and there are signs of growing optimism in the industry.
Meanwhile, investors are eager to hear what the jet engine business is doing to bring down its carbon emissions, as the richer world races to clean up its act by mid-century.
“We see ourselves very much as part of the solution,” said Matheu Parr, whose team works in the young but promising field of electric aircraft.
Collapse and comeback
The pandemic threw the air industry into its worst crisis in modern times as tourism ground to a standstill and business travellers turned to Zoom, sending demand for international flights collapsing by more than three quarters.
That was bad news for Rolls-Royce because it likes to sell engines under a subscription service in which airlines pay by the hour – so no flying hours, no revenue, and the company lost £4 billion in 2020.
The British manufacturer is the sole supplier for the Airbus A350 and has a sizeable market share on other flagship models such as the A380 and the Boeing 787.
As part of its slimming down process, it turned three assembly lines into one and moved production in Singapore back to Derby, where six or seven engines a week are prepared for passenger aircraft.
The company makes about a quarter of its materials in-house, such as ultra-strong turbine blades ready to withstand 12,000 revolutions per minute, and made in an increasingly automated process with robots doing heavy lifting.
For the parts it cannot make itself, Rolls-Royce has narrowed down its suppliers to a small group of what it regards as high-quality providers and signed long-term deals for the next decade.
We’re concentrating on being a leaner, more efficient business
Chris Cholerton
About $100,000 was saved by reducing costs on repairs of Trent XWB-84 engines, said staff at Rolls-Royce, where about 1,400 people work in maintenance and try to keep engines in their money-making “on-wing” position.
Mr Resch said the company had reduced losses on new engines by 35 per cent despite the volume of sales falling, and broken even if spare engines are included in the equation.
Pent-up demand for air travel is there – the long summer holiday queues at airports are a testament to that – although continuing restrictions in China represent what civil aerospace chief Chris Cholerton calls a handbrake on recovery.
Engineers have also been learning lessons from the debacle of the Trent 1000 engine, a component of Boeing 787s that was found to have cracks and other problems and led to what Mr Cholerton called “awful disruption”.
Rolls-Royce took a “huge reputational hit” from those problems, he said, and although most of the issues have been fixed there are two that have not yet been fully signed off by regulators.
Although it is not immune to supply-chain problems and labour shortages, Rolls-Royce is a prestigious name (although luxury cars are a separate company entirely) and 70 recent job openings attracted 1,300 applicants.
Some savings were afoot before the coronavirus arrived but “a crisis like the pandemic is a very good catalyst”, said Mr Cholerton. “We’re concentrating on being a leaner, more efficient business.”
Clean fuels
Rolls-Royce has already gone public with its ambitions for sustainable aviation fuels, which are made from plant or animal matter and mixed with regular jet fuel.
The big advantage of these blends is that they can be dropped into existing jet engines without engineers needing to fundamentally rework an aircraft as they do with electrics.
That makes SAF the low-emission solution “as far as the eye can see”, said engineer Simon Burr, although longer-term options are being enthusiastically studied.
SAF is more expensive than traditional jet fuel but Rolls-Royce wants to drive up demand by testing 100 per cent sustainable blends that are not currently approved for the market and would need to be compatible with fuel lorries.
“What we are trying to do is signal that you can invest with confidence,” said Mr Burr, who said French and Asian cooking oils had been tried in testing and that sustainable variants did not have the bad odour of jet fuel.
Rolls-Royce had planned to display one of the jewels in its collection, the all-electric, single-seater aircraft Spirit of Innovation, at the cancelled Farnborough show in 2020 but can now show it off as a world record-breaking item.
The plane is “the fastest electric anything on the planet”, said Mr Parr from the electrics department, having flown at a pace of 555 kilometres per hour to set the record for a 5km distance.
With a battery pack powerful enough to charge your phone every day for 20 years, the “flying battery with a pilot attached”, as some engineers jokingly called it, was intended to start generating a supply chain for electric plane parts.
More romantically, it was a nod to the spirit of 1920s and 1930s air racing in which Rolls-Royce was a major player, and a way of inspiring young people to get into aviation.
Nobody thinks that long-haul jumbo jets will be making all-electric journeys any time soon but engineers intend for the Spirit of Innovation to be the precursor for a fleet of electric air taxis and medical shuttles.
Is that not a helicopter? No, says Mr Parr – the Rolls-Royce version is safer, quieter, cheaper and more manoeuvrable, as well as offering a zero-emission option that could be charged in 20 to 30 minutes on the tarmac.
Insiders see opportunities in shuttling across Norwegian fjords – helpfully, the Nordic country has abundant hydroelectric power – or in hopping across remote Scottish islands for the short journeys typical of small planes.
Rolls-Royce will have more to say at Farnborough on its longer-term sustainability plans, but a separate division of the company is looking at miniature nuclear reactors, and its own operations are meant to reach net zero by 2030.
“We are involved in all the disruptive technology which will play a role in the future of aviation,” Mr Cholerton said.
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Uefa Champions League semi-finals, second leg:
Liverpool (0) v Barcelona (3), Tuesday, 11pm UAE
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Maestro
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
How to wear a kandura
Dos
- Wear the right fabric for the right season and occasion
- Always ask for the dress code if you don’t know
- Wear a white kandura, white ghutra / shemagh (headwear) and black shoes for work
- Wear 100 per cent cotton under the kandura as most fabrics are polyester
Don’ts
- Wear hamdania for work, always wear a ghutra and agal
- Buy a kandura only based on how it feels; ask questions about the fabric and understand what you are buying
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Fixture and table
UAE finals day: Friday, April 13 at Rugby Park, Dubai Sports City
- 3pm, UAE Conference: Dubai Tigers v Sharjah Wanderers
- 6.30pm, UAE Premiership: Dubai Exiles v Abu Dhabi Harlequins
UAE Premiership – final standings
- Dubai Exiles
- Abu Dhabi Harlequins
- Jebel Ali Dragons
- Dubai Hurricanes
- Dubai Sports City Eagles
- Abu Dhabi Saracens
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December 28
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Milos Raonic v Dominic Thiem, no earlier then 7pm
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Rafael Nadal v Stan Wawrinka / Pablo Carreno Busta, 5pm
Novak Djokovic v Milos Raonic / Dominic Thiem, no earlier then 7pm
December 30
3rd/4th place play-off, 5pm
Final, 7pm
Porsche Taycan Turbo specs
Engine: Two permanent-magnet synchronous AC motors
Transmission: two-speed
Power: 671hp
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Our legal columnist
Name: Yousef Al Bahar
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
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Notable salonnières of the Middle East through history
Al Khasan (Okaz, Saudi Arabia)
Tamadir bint Amr Al Harith, known simply as Al Khasan, was a poet from Najd famed for elegies, earning great renown for the eulogy of her brothers Mu’awiyah and Sakhr, both killed in tribal wars. Although not a salonnière, this prestigious 7th century poet fostered a culture of literary criticism and could be found standing in the souq of Okaz and reciting her poetry, publicly pronouncing her views and inviting others to join in the debate on scholarship. She later converted to Islam.
Maryana Marrash (Aleppo)
A poet and writer, Marrash helped revive the tradition of the salon and was an active part of the Nadha movement, or Arab Renaissance. Born to an established family in Aleppo in Ottoman Syria in 1848, Marrash was educated at missionary schools in Aleppo and Beirut at a time when many women did not receive an education. After touring Europe, she began to host salons where writers played chess and cards, competed in the art of poetry, and discussed literature and politics. An accomplished singer and canon player, music and dancing were a part of these evenings.
Princess Nazil Fadil (Cairo)
Princess Nazil Fadil gathered religious, literary and political elite together at her Cairo palace, although she stopped short of inviting women. The princess, a niece of Khedive Ismail, believed that Egypt’s situation could only be solved through education and she donated her own property to help fund the first modern Egyptian University in Cairo.
Mayy Ziyadah (Cairo)
Ziyadah was the first to entertain both men and women at her Cairo salon, founded in 1913. The writer, poet, public speaker and critic, her writing explored language, religious identity, language, nationalism and hierarchy. Born in Nazareth, Palestine, to a Lebanese father and Palestinian mother, her salon was open to different social classes and earned comparisons with souq of where Al Khansa herself once recited.
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ECB Hawks v ECB Falcons
Monday, April 6, 7.30pm, Sharjah Cricket Stadium
The match will be broadcast live on the My Sports Eye Facebook page
Hawks
Coach: Chaitrali Kalgutkar
Squad: Chaya Mughal (captain), Archara Supriya, Chamani Senevirathne, Chathurika Anand, Geethika Jyothis, Indhuja Nandakumar, Kashish Loungani, Khushi Sharma, Khushi Tanwar, Rinitha Rajith, Siddhi Pagarani, Siya Gokhale, Subha Srinivasan, Suraksha Kotte, Theertha Satish
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Coach: Najeeb Amar
Squad: Kavisha Kumari (captain), Almaseera Jahangir, Annika Shivpuri, Archisha Mukherjee, Judit Cleetus, Ishani Senavirathne, Lavanya Keny, Mahika Gaur, Malavika Unnithan, Rishitha Rajith, Rithika Rajith, Samaira Dharnidharka, Shashini Kaluarachchi, Udeni Kuruppuarachchi, Vaishnave Mahesh
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Allen Lane