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Rolls-Royce to Cut 9,000 Jobs in Civil Aerospace Business as Part of Major Reorganization

Rolls-Royce announced on Wednesday a major reorganization to strengthen the company’s financial resilience and reduce 2020 cash expenditures. The reorganization, which will largely impact the company’s Civil Aerospace business will result in 9,000 job cuts.

Rolls-Royce Announces Major Reorganization - Image Courtesy Rolls Royce

The disruption of the entire aviation industry as a result of the global COVID-19 pandemic is unprecedented and the impact of reduced air travel demand is rippling across all sectors. With thousands of aircraft grounded worldwide and airlines delaying or deferring delivery of new aircraft over the next few years, the global supply chain is suffering. Today, Rolls-Royce announced a major reorganization designed to strengthen the company’s finances, reduce cash expenditures and preserve liquidity. At this point, the industry consensus places a return to pre-pandemic demand levels at about three years, an eternity in any cash-intensive business. As a result, Rolls-Royce is proactively addressing medium-term structural changes that reflect the reduced demand for aerospace engines and aftermarket services. In Wednesday’s announcement, Rolls-Royce CEO, Warren East, said in part,

“This is not a crisis of our making. But it is the crisis that we face, and we must deal with it. Our airline customers and airframe partners are having to adapt and so must we. Being told that there is no longer a job for you is a terrible prospect and it is especially hard when all of us take so much pride in working for Rolls-Royce. But we must take difficult decisions to see our business through these unprecedented times. Governments across the world are doing what they can to assist businesses in the short-term, but we must respond to market conditions for the medium-term until the world of aviation is flying again at scale, and governments cannot replace sustainable customer demand that is simple not there. We have to do this right, which means we will work closely with our employee and trade union representatives as appropriate, look at any viable alternatives to mitigate the impact, consult with everyone affected and treat our people with dignity and respect.”

As a result of the reorganization, Rolls-Royce will cut at least 9,000 jobs from their global workforce of 52,000, predominantly in the Civil Aerospace business. The company is also cutting expenses across plant and property, capital and other indirect cost areas and expects to achieve annual savings of over £1.3 billion.

Source: Rolls Royce


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