Rolls-Royce Suggests Likelihood of More Job Cuts

 - May 7, 2020, 2:00 PM

This story is part of AIN's continuing coverage of the impact of the coronavirus on aviation.

Rolls-Royce said little in a statement issued Thursday to dispel unconfirmed press reports that the UK engine group plans to cut as many as 8,000 jobs as it continues to evaluate measures to react to Covid-19-related business distress. So far, the company has placed 4,000 of its UK employees on furlough, the company reported.

“We are working hard to mitigate the near-term disruption caused by Covid-19 and are making stronger than expected progress on our mitigating actions, giving us confidence that we can now deliver up to £1.0 billion of savings this year,” said Rolls-Royce CEO Warren East ahead of the company’s annual general meeting on Thursday. “However, we must also 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.”

In the statement, the company promised to give its 52,000-strong workforce further details of plans for possible layoffs by the end of May, while stressing its commitment to working with trade unions, employee representatives, customers, and suppliers “as we adjust to the new outlook and establish a more appropriate cost base in order to secure our future for all stakeholders.”

The company cited a 40 percent decline in civil aerospace widebody engine flying hours compared with its prior expectations for the first four months of the year. As a result of the lower level of activity, the company has reduced the volume of service visits in its maintenance, repair, and overhaul (MRO) shops for 2020 versus original plans; it now expects MRO volumes to end the year below 2019 levels. Meanwhile, the company now expects to deliver just 250 engines this year, down from its previous guidance of 450, due to production rate cuts at airframe customers.

Despite its travails, Rolls doesn’t expect its decision to reduce direct procurement from suppliers and institute furloughs to affect the progress of the Trent 1000 recovery. The company said it now has enough overhauled and spare engines to reduce aircraft on ground to about 10 when air traffic resumes, well ahead of schedules to reduce the number to single digits by the end of the second quarter.