Rolls-Royce boss overhauls top team in revival battle

·4 min read
Tufan Erginbilgic, chief executive officer of Rolls - F. Carter Smith/Bloomberg
Tufan Erginbilgic, chief executive officer of Rolls - F. Carter Smith/Bloomberg

Rolls-Royce’s new chief executive Tufan Erginbilgic has ordered a shake-up of the engineer’s top team after he clashed with executives amid a battle to revive the company’s fortunes.

The FTSE 100-listed jet maker said on Friday that Tom Samson, head of its small modular reactor (SMR) developer, would leave as part of the overhaul, while finance boss Panos Kakoullis would be replaced.

Mr Kakoullis has been replaced with Mr Erginbilgic’s former BP colleague Helen McCabe, who was part of his team when he was a top executive at the oil company. Ms McCabe is Rolls-Royce’s sixth finance chief in two years.

Mr Erginbilgic and Mr Kakoulis are understood to be "different characters" according to someone familiar with the move, and that the new chief executive sought to replace the finance chief with Ms McCabe, who he said could deliver "dramatic improvements". Mr Kakoulis will remain on the board until at least 31 Aug.

It comes after Mr Erginbilgic called Rolls a “burning platform” in a speech to staff when he became chief executive in January.

The former BP executive subsequently launched a strategic review of the business and said shareholders would not receive an annual dividend for 2022.

Mr Samson, who has headed up Rolls’s project to make mini-nukes since its inception in 2020, leaves as the company battles to win contracts for the power plants.

It was dealt a blow last month when ministers said other companies with similar technology could compete for the next round of government funding to make the power plants a reality.

The SMR business froze hiring earlier this month since no government orders were on the horizon.

Mr Erginbilgic told The Telegraph in February that Britain risks squandering its role as a leader in mini-nuclear reactor technology if ministers fail to throw their support behind a key project.

He said at the time: “We need to come to the table and work very seriously and sign an agreement for the deployment of the first project. First mover advantage will be important.”

The project is at the mercy of government caprice and the UK has a chequered history of keeping its promises on large nuclear projects, said Nick Cunningham, an aviation analyst.

Mr Erginbilgic is unlikely to want to exit defence and civil engine building or the company’s power business, which could make the SMR project a target for being sold, he said.

Mr Cunningham added: “It takes many years to build, it's very, very expensive, particularly as the cost of renewables has come down so dramatically.”

Boris Johnson, and Tom Samson of Rolls Royce SMR look at a model of a Rolls Royce Nuclear Power plant - Simon Dawson / No 10 Downing Street
Boris Johnson, and Tom Samson of Rolls Royce SMR look at a model of a Rolls Royce Nuclear Power plant - Simon Dawson / No 10 Downing Street

Rolls Royce insisted Mr Samson’s departure was by mutual consent. The company’s former civil aviation boss Chris Cholerton will lead the SMR business until a replacement for Mr Samson is found.

The company said: “The Board and Tom have decided that a new CEO would be better placed to take the business forward at this critical junction in the growth of Rolls-Royce SMR.

“Accordingly, it has been mutually agreed with immediate effect that Tom will leave the business to pursue other interests.”

As part of the shake-up Rob Watson, head of the company's electric plane business will be promoted to lead the company’s key civil division, which develops jet engines for passenger airliners.

Adam Riddle will replace former defence boss Tom Bell, and has also been made chairman and chief executive of Rolls’ North America business.

Mr Erginbilgic is battling to return Britain’s biggest engineer to growth and profitability after it was ravaged by the drop in travel caused by the pandemic.

The company made much of its revenue from maintaining engines, offering power by the hour to airline customers. When planes around the world were grounded during lockdown, that money dried up.

His predecessor Warren East raised billions of pounds from investors and sold businesses including Spanish engine parts maker ITP Aero to patch up the company’s finances.

Rolls is particularly dependent on the return to growth of the long-haul travel market, since its commercial jet engines are all designed for the largest planes.

In spite of being only a few months in the job, Mr Erginbilgic has already secured a big order from Air India which could spend as much as $3.5bn with Rolls after buying 470 aircraft last month to renew its fleet.

Announcing the overhaul on Friday, Mr Erginbilgic said: “With the leadership changes announced today we are acting at pace and gaining the momentum we need to transform Rolls-Royce. Together, my leadership team has a winning mindset, strong strategic alignment and a shared ambition to make Rolls-Royce a company that delivers for all stakeholders."