Rolls-Royce shares plummet as it ‘prepares to cut 8,000 jobs’ amid coronavirus pandemic

Rolls-Royce shares plummet as it ‘prepares to cut 8,000 jobs’ amid coronavirus pandemic

The British aero-engine maker fell 4.2 percent to the bottom of the FTSE 100 after reports it was cutting up to 8,000 of its 52,000-strong workforce to ride out an economic slump amid the coronavirus crisis. Rolls-Royce senior executives are said to be working on a restructuring plan that would see the mulling of up to 15 percent of its workforce as customers cut production and airlines parked planes due to a halt in global travel, according to insiders.

The company’s engines power Airbus SE (AIR.PA) and Boeing Co’s (BA.N) widebody jets and Rolls-Royce is paid by airlines based on how many hours its engines fly.

Finance director Stephen Daintith told workers that the group expected its civil aerospace business to be a third smaller as a result of the COVID-19 pandemic and to expect job losses, according to the Financial Times.

But an announcement on the final figure is not expected before the end of May, when the company will update employees.

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A Rolls-Royce spokesman told staff at the company would be given further details before this end of this month.

But he warned “we will need to take further action”.

He said: “The impact of the COVID-19 pandemic is unprecedented. We have taken swift action to increase our liquidity, dramatically reduce our spending in 2020, and strengthen our resilience in these exceptionally challenging times.

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“But we will need to take further action. We have to do this right, which means we are working closely with our employee and trade union representatives and then we will consult with everyone affected.

“We have promised to give our people further details of the impact of the current situation on the size of our workforce before the end of this month.”

A source told Reuters the size of layoffs has been mentioned internally by senior management, but is by no means finalised and there is a lot of negotiation still to be done.

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Discussions with unions about the job cuts have just begun, the newspaper reported.

The scale of job cuts is still likely to be larger than after 9/11 when the group cut 5,000 jobs and the vast majority of it is expected to hit the civil aerospace unit.

While job losses are also expected in the unit’s operations in Singapore and Germany, Britain’s civil aerospace 16,000-strong workforce is expected to bear the majority of the cuts.

Published at Mon, 04 May 2020 08:48:00 +0000