Rolls-Royce reorganises amid COVID-19 impact

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As Rolls-Royce struggles to deal with the impact of COVID-19, it has revealed that its commercial aerospace division will take several years to recover to the levels seen at the start of 2020. In order to address the problem and strengthen the financial resilience of the business, the company has announced that at least 9,000 employees from its global workforce of 52,000 will be made redundant.

Warren East, Rolls-Royce, CEO said: “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. But we must make difficult decisions to see our business through these unprecedented times. 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, and governments cannot replace sustainable customer demand that is simply not there. We have to do this right, which means we will work closely with our employees and trade union representatives as appropriate, look at any viable alternatives to mitigate the impact, consult with everyone affected, and treat our people with dignity and respect.”

The savings generated from this reduction in staff along with cuts in production facilities, property, and other indirect costs, will reduce expenditure across the company by an anticipated annual saving of more than £1.3bn, of which the reduction in staff salaries will contribute around £700 million. The restructuring costs related to other actions will likely generate a saving of around £800 million.

Warren East added: “The strategic choices that we have made over the last few years have helped us to respond rapidly to COVID-19 and the synergies between our divisions leave us well placed to capitalise on the long-term potential of our markets. The world on the other side of this pandemic will need the power that we generate to fuel economic recovery. I absolutely believe the call for that power to be more sustainable will be stronger than ever. This plays to our strengths. We must ensure that we are able to continue to innovate and play our leading role in enabling the vital sectors in which we operate to achieve net-zero carbon emissions. We have emerged from troubled times before, to achieve incredible things. We will do so again.”

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