Rolls-Royce reduces 9,000 jobs as top airlines turn off engines - GulfToday

Rolls-Royce reduces 9,000 jobs as top airlines turn off engines


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Rolls-Royce, the British maker of plane engines, said on Wednesday it will cut at least 9,000 jobs and slash costs elsewhere, as the coronavirus hammers the aviation sector.

“This is not a crisis of our making. But it is the crisis that we face and we must deal with it,” chief executive Warren East said in a statement announcing that Rolls would cut nearly one-fifth of its global workforce.

“Our airline customers and airframe partners are having to adapt and so must we.” Unions said they expected most of the cuts to occur in the UK, while analysts said the knock-on effect for supply chains meant many more people working across the aerospace industry were set to lose their jobs.

17% of staff — Rolls said it expected “the loss of at least 9,000 roles” from a global workforce of 52,000 and would also cut “expenditure across plant and property, capital and other indirect cost areas”.

The measures is expected to hand the company annual savings of more than £1.3 billion ($1.6 billion, 1.4 billion euros). The restructuring will cost Rolls about £800 million.

Rolls said the restructuring would predominantly affect its civil aerospace business.

“Our defence business, based in the UK and US, has been robust during the pandemic, with an unchanged outlook, and does not need to reduce headcount,” it added.

Rolls has already spent the past two years cutting thousands of management roles following weak demand for its power systems used by the marine industry.

“The restructuring announced... (in) June 2018 will transition into this wider proposed reorganisation,” Rolls said Wednesday.

“Focused predominantly on reducing the complexity of our support and management functions, the programme has substantially delivered on its objectives.” — ‘Terrible prospect’ — The new cull comes as global air travel remains virtually non-existent, even though governments have begun to ease their lockdowns.

With planes grounded worldwide, airlines are slashing thousands of jobs and Rolls has followed suit.

“Being told that there is no longer a job for you is a terrible prospect,” East added on Wednesday.

“But we must take difficult decisions to see our business through these unprecedented times.” Steve Turner, a senior official at British union Unite, accused Rolls of “shameful opportunism”.

“The news that Rolls Royce is preparing to throw thousands of skilled, loyal, world-class workers, their families and communities under the bus during the worst public health crisis since 1918 is shameful opportunism,” he said in a statement.

Paul Everitt, chief executive of UK aerospace trade body ADS, meanwhile said that Britain’s government needed to take “urgent action” to “minimise the impact on jobs and manufacturing capability in the long-term”. Following its announcement, Rolls-Royce saw its share price slide by 2.5 per cent to 261 pence in morning deals.

London’s benchmark FTSE 100 index was down 0.1 per cent overall.

“In a positive economy job layoffs will often send shares higher since it lowers wage costs,” said Jasper Lawler, head of research at London Capital Group.

“In such a hard economy for air travel to which Rolls Royce is closely tied, the job losses just spell out the difficulties.

The number of people claiming unemployment benefits in Britain leapt in April to its highest level in nearly 24 years and the coronavirus hit to jobs is set to deepen in the coming months.

The claimant count rose by 856,500 — the biggest ever month-on-month jump — to 2.1 million, a 69% increase from March, data published on Tuesday showed.

It was the highest level since July 1996, when Britain’s economy was still recovering from a deep recession caused by its failed bid to stay in the European Exchange Rate Mechanism.

April’s surge would have been even sharper without an emergency government programme to pay 80% of the wages of 8 million employees - or about one-in-four workers - put on temporary leave, who are not counted as unemployed.

Finance minister Rishi Sunak said there would be no immediate bounce-back in the economy, even when the government’s coronavirus shutdown is lifted.

“In all cases, it will take a little bit of time for things to get back to normal,” he told lawmakers Britain’s work and pensions minister, Therese Coffey, said unemployment would increase significantly.

Recent welfare changes meant the claimant count number included more working people who had suffered a big drop in earnings. But the surge in claims showed the scale of the hit to the labour market.

“While only covering the first weeks of restrictions, our figures show COVID-19 is having a major impact on the labour market,” Jonathan Athow, deputy national statistician at the Office for National Statistics, said.

A Reuters poll of economists had produced a median forecast for a leap of 676,500 in the claimant count, with forecasts ranging widely from just over 56,000 to as high as 1.5 million.

Tej Parikh, chief economist at the Institute of Directors, said the government’s wage subsidy scheme was holding off some job losses for now but it was not clear how firms would react when they are required to help fund it from August.


The number of people claiming unemployment benefits in Britain leapt in April to its highest level in nearly 24 years. The job crisis following coronavirus is set to deepen in the coming months.


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