Coronavirus: Rolls-Royce warns of 'significant' UK hit as 9,000 jobs are cut

May 20, 2020

Rolls-Royce has announced plans to cut 9,000 jobs - almost a fifth of its global workforce - as the coronavirus crisis takes a heavy toll on aviation.

The engine-maker told Sky News it would result in a "significant" hit to employment within the UK but refused to put a number on the impact or say where the axe would fall.

In an interview on Ian King Live, chief executive Warren East said he could not rule out site closures under a review being carried out by the company to help it navigate the downturn caused by COVID-19 that has grounded most of the world's airlines.

Rolls-Royce employs about 16,000 staff in its civil aerospace unit in the UK - most of them in Derby.

The company said it was targeting £1.3bn in annual cost savings - with £700m of that coming from the job losses.

It said the cuts to employment would be felt worst in its civil aerospace business - adding that it had begun consultations with unions.

Those negotiations are set to be combative as Unite accused the firm, which has furloughed 4,000 UK staff during the pandemic to date, of "shameless opportunism".

Rolls-Royce said its defence divisions in the UK and US would not be affected by the cuts.

Its aerospace unit accounts for roughly half of annual revenues.

The company is paid by airlines based on how many hours they fly, meaning its earnings will be hit by the collapse in air travel which is expected to last for years.

Mr East told investors: "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 take difficult decisions to see our business through these unprecedented times."

The cuts are the latest to be undertaken by the company after it announced 4,600 job losses in a shake-up in 2018.

The coronavirus crisis has exacerbated surging costs in its aerospace unit.

It had earlier warned that flying hours for its engines dived by 90% in April as airlines around the world temporarily ground large proportions of their fleets and slash jobs with a total of almost 20,000 planned by BA, Virgin Atlantic and Ryanair alone.

The company's actions have included slashing its global wage bill by at least 10% and scrapping its final shareholder dividend payout to save £137m.

Rolls-Royce shares - down by more than 60% so far this year - were 2.3% higher by the close of trading on Wednesday.

Steve Turner, assistant general secretary of the Unite union, said of the job loss plans: "The news that Rolls-Royce is preparing to throw thousands of skilled, loyal, world-class workers, their families and communities under the bus during the worst public health crisis since 1918 is shameful opportunism.

"This company has accepted public money to furlough thousands of workers.

"Unite and Britain's taxpayers deserve a more responsible approach to a national emergency."

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