News | Published May 21 2020

Rolls-Royce to cut one fifth of jobs in restructure

Rolls-Royce is poised to cut at least 9,000 jobs as it restructures in response to the Covid-19 pandemic.

The outbreak of the virus has caused an “unprecedented” fall in demand, with chief executive Warren East saying that the crisis had forced the FTSE 100 firm into a “major reorganisation”.

Speaking to BBC Radio Four, East said: "We haven't completely concluded on where the job losses will be, but...of our civil aerospace business, approximately two thirds of employees are in the UK at the moment, and that's probably a good first proxy.”

Derby based Rolls-Royce employs 52,000 people worldwide, with redundancies likely to eclipse a fifth of its workforce and save around £700 million per year.

East added that some Rolls-Royce factories could be closed completely, if travel restrictions deal a major hit to its aerospace business. Around half of the business’ annual revenue currently comes from its airline sales and services arm.

He said: "We are reviewing our footprint because obviously when you wind an operation down from a certain level it becomes uneconomic, so [closing sites] might be possible”.

Prior to the outbreak, the company was set to deliver 450 new engines for large airliners in 2020, and this has now been cut to 300. Meanwhile, two-thirds of the global airline fleet is currently grounded due to Covid-19 enforced travel restrictions.

East told BBC Radio Four that flying hours clocked up on Rolls Royce engines had fallen by 90 per cent in April, and by 40 per cent over the first four months of 2020.

Its stock has also fallen alongside demand, with prices dropping by 3.4 per cent in early trading on Wednesday, trading at 259.2p.

Restructuring is expected to save an annual total of £1.3 billion, but cutbacks are expected to cost £800 million over the next two years.

Rolls-Royce expects to confirm more details about its restructuring process following consultation with trade unions.

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Authored by

Alexander Bridge-Wilkinson
Junior Editor
May 21 2020

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