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The
company, which makes engines for planes such as the Boeing 787
and Airbus 350, said on Wednesday it could also close factories
as it shrinks to fit the smaller market it expects to emerge
from the crisis.
Airlines and their supplies have been among the hardest hit
businesses by lockdowns to contain the pandemic, with passenger
air travel grinding to a virtual halt.
Britain, like many other economies, is also bracing for a deep
recession, with jobless claims in April leaping to the highest
in nearly 24 years.
"We have to reduce our cost base and adapt to the new world,
matching our capacity with expected demand," Rolls-Royce chief
executive Warren East told reporters, unveiling the company's
biggest round of cuts since privatisation in 1987.
The 9,000 jobs, out of a global staff of 52,000, will go
predominantly from Rolls's civil aerospace business, which
generates just over half of its 15 billion pounds ($18
billion)of annual revenues.
Rolls said it was targeting 1.3 billion pounds of annual cost
savings, with about 700 million coming from layoffs plus other
cuts that could include factory closures.
Headquartered in Derby, central England, about two-thirds of
Rolls civil aerospace jobs are based in the United Kingdom, East
said, adding that was "probably a good first proxy" of where the
jobs were likely to be lost.
East said Rolls had 16 to 17 major civil aerospace manufacturing
locations across the world, including big presences in Germany
and Singapore.
Consultations with unions will now get underway, with job losses
also expected in office support functions. Rolls' defence unit
will be spared, though, as military demand remains robust.
Forecasting air travel will not recover for three to five years,
East said Rolls was preparing for aviation activity to be about
a third less than in 2019.
Government schemes to help pay workers had been useful in the
short term, with Rolls' furloughing 4,000 staff under the UK
scheme, but the company needs to prepare for a future where its
airline customers fly less, East said.
The cuts follow a 2018 programme to axe 4,600 jobs, although
1,000 job losses outstanding from that round are included in the
9,000. Rolls has also been grappling with a long-running engine
problem which forced airlines to ground planes.
Its shares were last down 2%, having dropped 62% this year to
11-year lows.
(Reporting by Sarah Young; editing by Michael Holden and Mark
Potter)
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