Rolls-Royce appoints Tufan Erginbilgic to succeed Warren East as chief

Rolls-Royce has appointed a private equity partner and former BP executive to succeed Warren East as the company's chief executive officer.

Tufan Erginbilgic will assume the position early next year, the FTSE 100-listed engineering group announced on Tuesday.

Erginbilgic, 62, is a partner at Global Infrastructure Partners, a private equity firm focused on making large investments in infrastructure companies. He spent more than 20 years at BP, including five years on the executive board, and was head of refining and marketing before leaving the oil company in 2020.

Rolls-Royce has been looking for a new boss since East announced in February that he would leave the group at the end of the year.

The coronavirus pandemic brought much of the world's aircraft fleet to a standstill and also hit Rolls-Royce, whose engines power wide-body aircraft. In 2020, the company embarked on a major restructuring plan, cutting 9,000 jobs and having to bolster its balance sheet with £7.3bn of new equity and debt.

With the selection of Erginbilgic, Rolls-Royce has continued its practice of using people outside the company to fill senior management positions. East was previously CEO of chipmaker Arm Holdings.

Anita Frew, Rolls-Royce chairwoman, said in an interview with the Financial Times last month that she doesn't see aerospace experience as a must for a new CEO. The candidate selected should be "someone familiar with a large, complex industrial enterprise," she said. "I don't think it has to be aerospace. The Board doesn't think it has to be aerospace."

The relatively unknown Erginbilgic will have to lead Rolls-Royce back to full financial health and manage the threat of decarbonization for a company based on engines fueled by petroleum products. Under East, the company has invested in electric aircraft and small modular nuclear reactors.

Deutsche Bank analysts rated the news as "neutral to positive" for the group as it clarifies leadership issues at the top of the company. While Erginbilgic has limited aerospace experience, he is a seasoned industry professional with extensive experience in improving profitability," it said.

Rolls-Royce shares, down 27 percent year-to-date, were little changed at 92.5 pence on Tuesday morning.

Erginbilgic, who has both British and Turkish citizenship, will receive a base salary of £1.25m, 30 per cent of which will be paid in shares, which will be deferred for two years.

Frew said Tuesday Erginbilgic is a "proven leader for successful teams in complex multinational organizations, with the ability to foster a high-performance culture and deliver results for investors."

"He brings extensive strategic and operational experience and an in-depth understanding of safety-critical industries, including aerospace, and the challenges and commercial opportunities presented by the development of low-carbon technologies," she added.

Erginbilgic said he is committed to "building a growth platform to create value for all stakeholders".