Rolls-Royce Planning 9,000 Job Cuts, Facility Review
LONDON—Aero-engine manufacturer Rolls-Royce is looking to cut 9,000 jobs from its 52,000-strong workforce as the company restructures in the face of the coronavirus crisis.
The changes, announced on May 20, will largely impact the company’s civil aerospace business, and will also involve cuts to facilities and capital. Rolls-Royce plans to conduct a review of its facility footprint, but has not said which sites may be at risk.
Annual savings of around £1.3 billion ($1.6 billion) are being targeted, of which £700 million will come from the headcount reductions.
“Our airline customers and airframe partners are having to adapt and so must we,” CEO Warren East told the markets.
Recognizing that government-led plans to pay the salaries of workers were operating in some countries—including in the UK—during the COVID-19 outbreak to preserve jobs, East said “governments cannot replace sustainable customer demand that is simply not there” and that the company needed to respond to market conditions until the “world of aviation is flying again at scale.”
Rolls-Royce now expects activity in the commercial aerospace market to take “several years” to return to the levels seen just a few months ago.
The announcement follows warnings by company management at its annual general meeting on May 7 that the engine maker was “actively pursuing” changes to its business.
Media reports at the end of April suggested that as many as 8,000 jobs could be cut at the aero-engine manufacturer.
Rolls-Royce’s Power Systems and Spain’s ITP Aero are also developing and negotiating measures to deal with the situation. But no impacts are expected on the company’s UK- and U.S.-based defense business, operations of which have been described as “robust” with no layoffs required. The company is exploring the possibility of moving some staff into the defense business.
East is hoping that the changes will make the company stronger for when it reaches the other side of the crisis. He wants Rolls-Royce to be able to continue to innovate.
“The world on the other side of this pandemic will need the power that we generate to fuel economic recovery,” East said. “We must ensure that we are able to continue to innovate and play our leading role in enabling the vital sectors in which we operate achieve net zero carbon emissions.”