FTSE 100 aero-engine maker Rolls-Royce (RR.) has unveiled plans to axe a third of its 52,000 of its global workforce as adapts to the collapse of the airline industry.
Rolls-Royce, one Britain’s best known industrial companies, supplies engines for large aircraft such as the Boeing 787 and the Airbus A350, said on Wednesday that ‘at least 9,000’ jobs would be cut as it closes some of its design, testing and manufacturing facilities.
LONG-RUN DAMAGE
The drastic action was announced as the company warned that it anticipates ‘several years’ of struggle for the commercial aviation industry that has already wiped demand for its plane engines and slashed maintenance and servicing.
‘We must now address these medium-term structural changes, as demand from customers reduces significantly for our civil aerospace engines and aftermarket services,’ said chief executive Warren East.
Rolls-Royce relies on aerospace for just over half of its annual revenues, which were around £16.6bn in 2019, and the company said that the job cuts would mostly be in its civil aerospace unit.
MASSIVE BELT-TIGHTENING
The reorganisation was expected to generate annualised savings of more than £1.3bn, of which the headcount reduction would contribute around £700m.
Related cash restructuring costs were likely to be around £800m, with outflows incurred across 2020 to 2022.
‘Our airline customers and airframe partners are having to adapt and so must we,’ said East. ‘We must take difficult decisions to see our business through these unprecedented times.’
Shares in the £5bn company fell nearly 3% in morning trade on Wednesday, close to 15-year lows, at 260p.
