Rolls-Royce on May 20 announced that it will cut 9,000 jobs from its global workforce of 52,000 to strengthen the financial resilience of its business and reduce cash expenditure in 2020. Rolls-Royce, like many others in the aviation industry, has taken a huge toll on its finances due to coronavirus lockdown and the latest measure to cut jobs is part of the company's reorganisation policy.
"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," said Warren East, Rolls-Royce, CEO in a statement released on the company's website.
The company will also cut expenditure across plant and property, capital, and other indirect cost areas. As per the company's latest release, the reorganisation is expected to generate annualised savings of more than £1.3bn, of which they expect headcount to contribute around £700m. The cash restructuring costs related to these actions are likely to be around £800m, with outflows incurred across 2020 to 2022.
The reorganisation will not impact employees in Rolls-Royce's defence business, based in the United Kingdom and the United States because as per the company it has been robust during the pandemic, with an unchanged outlook. The proposed reorganisation will predominantly affect its civil aerospace business and central support functions.
Rolls-Royce has customers in more than 150 countries, comprising more than 400 airlines and leasing customers, 160 armed forces, 70 navies, and more than 5,000 power and nuclear customers. The company's annual underlying revenue in 2019 was £15.3 billion, around half of which came from the provision of aftermarket services, according to Rolls Royce.
(Image Credit: Rolls Royce/Webpage)