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RRoyce: important company reorganisation to block aircraft and transport crisis

Among the measures, 9,000 layoffs on 52,000 workers

The Rolls-Royce (RR) unveiled in a press release that: "The impact of COVID-19 on RR and the whole of the aviation industry is unprecedented. We have already taken action to strengthen the financial resilience of our business and reduce our cash expenditure in 2020. It is, however, increasingly clear that activity in the commercial aerospace market will take several years to return to the levels seen just a few months ago. We must now address these medium-term structural changes, as demand from customers reduces significantly for our civil aerospace engines and aftermarket services.

Warren East, RR, CEO said: 'We are proposing a major reorganisation of our business to adapt to the new level of demand we are seeing from customers. As a result, we expect the loss of at least 9,000 roles from our global workforce of 52,000. In addition to the savings generated from this headcount reduction, we will also cut expenditure across plant and property, capital and other indirect cost areas. The proposed reorganisation is expected to generate annualised savings of more than £1.3bn, of which we expect headcount to contribute around £700m. The cash restructuring costs related to these actions are likely to be around £800m, with outflows incurred across 2020 to 2022'.

The proposed reorganisation will predominantly affect our Civil Aerospace business, where we will carry out a detailed review of our facility footprint. It will also have implications for our central support functions. Our Power Systems business and ITP Aero are currently developing, negotiating and executing extensive measures to deal with the current situation. Our Defence business, based in the UK and US, has been robust during the pandemic, with an unchanged outlook, and does not need to reduce headcount. As part of the reorganisation, we will ensure that our internal Civil Aerospace supply chain continues to support our defence programmes and explore any opportunities to move people into our Defence business.

Due to the need to consult with the appropriate employee and trade union representatives, we are not providing further details of the impact of the proposed reorganisation on specific sites, or countries, at this stage. The restructuring announced on 14 June 2018 will transition into this wider proposed reorganisation. Focused predominantly on reducing the complexity of our support and management functions, the programme has substantially delivered on its objectives".

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