Emirates tells Rolls-Royce: Go back to basics, put products first

The head of Dubai's Emirates has urged Rolls-Royce to go "back to basics" and focus on the performance of its engines, a day after the British firm laid out plans to quadruple profits. Shares in the engine maker rose after CEO Tufan Erginbilgic unveiled a strategy on Tuesday to revive its fortunes including a sharp increase in profit margins and "value-driven pricing," suggesting higher servicing bills. But Emirates Airline President Tim Clark, who criticised Rolls over pricing and the performance of its largest engine at this month's Dubai Airshow, appeared unswayed by the plans which rely on sharply increasing civil engine profit margins to 15-17%. "If you have an engine ... not performing as it should do, your costs are going to rise. But your ability to extract value from the client is going to fall simply because the client won't accept non-performance," he told Reuters, referring to the costs borne by engine makers due to service contracts per flight hour. "It's a very clear kindergarten understanding of cause and effect. Get your product right, design it to what the client wants, give it that high level of reliability. And yes, paradoxically, you can extract more value for your money for your buck in terms of your investment." At this month's air show, Clark ruled out an immediate deal to buy Airbus A350-1000 jets, the larger of two models, blaming a dispute with Rolls over the poorer-than-expected durability of its engines, coupled with pressure for higher servicing prices.<br/>