Rolls-Royce to axe 9,000 jobs in air travel slump

Britain’s jobless claims in April leap to highest in nearly 24 years

LONDON: Rolls-Royce plans to cut at least 9,000 jobs, or more than a sixth of its workforce, in the latest blows to the UK economy and aviation industry dealt by the coronavirus pandemic.

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 ($18 billion) of annual revenues.

Rolls said it was targeting £1.3 billion 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 Roll’s 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. Consultations with unions will now get under way, 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. The 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.

Published in The Express Tribune, May 21^st, 2020.

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