Rolls-Royce closes down electric flying taxi operations

Rolls-Royce has formally pulled out of the electric flying taxi business, closing down its operations, which had been much-hyped under the aerospace and engineering group’s previous management.
Almost exactly three years ago, Rolls-Royce’s Spirit of Innovation, an aircraft looking not dissimilar to a Spitfire for the 21st century, smashed the electric air speed record by 120mph, clocking 345mph in the skies over southern England from its base at RAF Boscombe Down.
It was not only a showcase of Rolls-Royce’s electric aviation development, acquired from Siemens of Germany three years earlier, but was a signal that the company was serious about its future application in electric vertical take-off and landing aircraft, known as eVTOLs or flying taxis.
That all changed, however, with the departure of Warren East, the former Rolls-Royce chief executive who had championed the project. When Tufan Erginbilgic arrived in January 2022 to replace him he doubted the timelines of when it would become reality and worried about the amount of money the development of powerful batteries and motors would suck in.
Despite the programme having received UK taxpayer support, this time last year he declared that the business was up for sale and in the spring Rolls-Royce pulled out its financial and technology support of Britain’s would-be eVTOL champion, the Bristol-based Vertical Aerospace.
In a trading update on Thursday, Rolls-Royce confirmed that, having failed to find a buyer for its Advanced Air Mobility division, the decision had been taken in September to close it down.
The nascent in-development flying taxi market is at a crossroads. Vertical Aerospace, with its share price bombed out on the Nasdaq stock exchange, is seeking emergency funding to keep its dream alive. A German eVTOL rival Lilium went bust last month having burned through $1 billion.
Following the publication of the trading statement covering the third quarter of the year, shares in Rolls-Royce came off their all-time high of 574p hit on Wednesday, which valued the company at just of £49 billion.
While the company assured investors that it is still on track to make between £2.1 billion and £2.3 billion of underlying operating profits for the full year, which will spin off cash of between £2.1 billion and £2.2 billion, some didn’t like the reporting of another key metric, engine flying hours.
Rolls reported that flying hours for the engines that it makes primarily for the Airbus A350 and Boeing 787 long-haul aircraft are up 18 per cent year-on-year and have finally reached and surpassed pandemic par with the Trent XWB and Trent 1000 engines flying on average at 102 per cent of hours before the onset of Covid-19.
While that is within the expected range set by Rolls for the full year of between 100 per cent and 110 per cent, analysts said the figure at the nine-month stage was a little light on their estimates. The long-term contracts Rolls has with airlines mean they don’t get paid for the engines upfront but over the length of service agreements and those payments are dependent on how much the planes with Trent engines fly.
The shares fell 21¼p, or 3.7 per cent, to close at 552¾p.
Having persuaded the credit ratings agency to return the company’s debt to investment grade, Erginbilgic has signalled that the dividend for equity shareholders will return in the new year. “Our transformation of Rolls-Royce into a high-performing, competitive, resilient and growing business continues with pace and intensity,” he said.
During the most recent quarter the company has cleared out a number of other peripheral businesses. Separately it has secured contracts and investment from the Czech government for its small modular civil nuclear reactors (SMR) based on the technology that powers the Royal Navy’s nuclear submarine fleet.
Of the company’s campaign to persuade the UK government to sign up to its small reactors to help to power the green energy transition, the company said: “The Rolls-Royce SMR was shortlisted as one of four potential SMR providers. We remain the only company in step 3 of the generic design assessment, around 18 months ahead of the competition in the regulatory process.”