Enginemaker Rolls-Royce will cut 17% of its workforce, around 9,000 jobs, mostly affect its civil aerospace business
Rolls-Royce Holdings PLC will cut 9,000 jobs from its global workforce as it looks to weather what it expects to be years-long impact on air travel demand triggered by the novel coronavirus.
The enginemaker, which makes turbines for Boeing Co. and Airbus SE's biggest aircraft, said the cuts will mostly affect its civil aerospace business and amount to 17.4% of its 52,000 staff pending negotiations with unions. Some sites may close, it said. In addition, Rolls-Royce said it will cut capital expenditure. It expects to achieve annual savings of more than £1.3 billion , of which £700 million will come from the drop in headcount. The company expects around £800 million in restructuring cash costs spread between 2020 and 2022.
"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," Chief Executive Warren East said in the statement. "Governments cannot replace sustainable customer demand that is simply not there."
The industry is expecting travel on the long-haul flights that Rolls-Royce engines predominantly power to be the last segment to recover from the crisis. The company makes the majority of its profits from maintenance contracts that accrue per hour that one of its engines is in the sky. Both Boeing and Airbus have also announced cuts to their widebody production rates.
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