Rolls-Royce to cut thousands of jobs, sources say

Jet engine manufacturer said to be considering making 8,000 workers redundant

The jet engine manufacturer Rolls-Royce has confirmed it is preparing to make large-scale job cuts in the expectation of several years of lower commercial aviation demand as a result of the coronavirus pandemic.

The company is considering making as many as 8,000 of its 52,000 global workforce redundant, according to sources with knowledge of the matter.

The coronavirus crisis has severely affected Rolls-Royce’s business, because aircraft manufacturers have cut production rates and air traffic has plummeted, dealing a huge blow to its units servicing jet engines.

About 4,000 UK workers have been furloughed, the company said on Thursday before its virtual annual meeting, meaning the government was paying 80% of the wages of about a quarter of the company’s UK workforce. Some of its workers were involved in the national effort to build more ventilators for the NHS.

With lower aerospace volumes expected for some time, however, Rolls-Royce would have to shrink permanently, its chief executive, Warren East, said.

The company had to “take the difficult but necessary decisions to ensure the group emerges from this period with the appropriate cost base for what will be a smaller commercial aerospace market which may take several years to recover”, he said.

The company expects to deliver only 250 engines this year, just over half its previous expectation of 450. Its engines are used on Airbus’ A330, A340, A350 and A380 planes, and the Boeing 777 and 787 Dreamliner.

Many of the airlines who operate such aircraft have already revealed swingeing job cuts. British Airways is making 12,000 workers redundant, and Ryanair and Virgin Atlantic are each cutting 3,000 jobs.

Rolls-Royce said the flying hours clocked up by its engines around the world were about 40% below previous expectations during the first four months of the year. Hours fell by 90% in April, resulting in a “significant reduction in the volume of service visits”.

East also said that the company was making “stronger than expected progress” in cutting costs, allowing it to save £1bn this year.

The firm has also made some progress in returning the troubled Trent 1000 engine to full working order. The engine has been plagued with problems for more than two years, and none of the workers on the programme have been furloughed as it tries to solve issues with the durability of parts in its compressor.

Rolls-Royce said it had resolved eight of the nine issues it had with the engine. The engineering fixes and grounding of planes have already cost billions of pounds.

The company said its significant defence business has cushioned the blow dealt by the slump in commercial aviation, although physical distancing rules had caused disruption. Demand from its energy customers has fallen, however, because of the crisis in the oil and gas sector caused by low oil prices.


Jasper Jolly

The GuardianTramp

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