The impact of COVID-19 on Rolls-Royce and the whole of the aviation industry is unprecedented, say the firm in a statement.

Rolls-Royce are a leading manufacturer and service provider of engines for aircraft of all types, from large commercial jets to high performance combat aircraft.

“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, 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 take 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 employee 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 firm also discussed the specifics in a recent press release, quoted below.

“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.”

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Geoffrey Roach
Geoffrey Roach
4 months ago

I know that it is extraordinarily difficult but if there is ever a time when the government should bring forward defence orders it is now. Even placing orders with a “reasonable” delay frame would reassure company’s that the work is coming.

Mark F
Mark F
4 months ago
Reply to  Geoffrey Roach

Their defence sector is quite healthy at the moment. RR seem very keen to axe jobs and potentially put the company in a provision of strength for the future at the expense of jobs. The downside is you lose an experience of wealth. I think the government needs to the survival RR or it could go bust.

Geoffrey Roach
Geoffrey Roach
4 months ago
Reply to  Mark F

I agree with what you say about the civil aviation sector. I’m not sure it will ever recover to it’s former size.I was really using this news as a hook for general funding. It may not be economical but with RR providing engines right across the defence sector and also civil engineering… Also there is Bae and umpteen others where placed orders would allow for better forward planning.

Mark B
Mark B
4 months ago
Reply to  Geoffrey Roach

Civil aviation will recover however things will never be quite the same. New tech will emerge and people will travel but the reasons will be different. In time it might even exceed previous levels. Viruses have now changed from being regarded as a nuisance to a threat. Mankind will seek to eradicate them.

expat
expat
4 months ago

I was reading that a deal between Boeing and Embraer had collapsed the other day. Certainly now is a great opportunity for Government backed investment perhaps as BAe JV with EMbraer to get BAe back into the civil sector and adds to the defence portfolio. Push Embraer to use RR engines and other UK parts manufacturers. Short hall is likely to come back quicker than long haul RR has been very focused on longer haul twin isles so is really suffering. Alas such move with never be proposed by the government or the opposition. Embraer is just an example but… Read more »

Helions
Helions
4 months ago

I believe RR has a good chance of winning this contract. That’s a LOT of engineering and engine work…

https://www.defensenews.com/air/2020/05/20/the-air-force-launches-a-contest-to-replace-the-b-52s-engine

Cheers

Trevor
Trevor
4 months ago
Reply to  Helions

If airlines are not buying planes how can RR build engines.

Helions
Helions
4 months ago
Reply to  Trevor

Well, if the USAF selects RR to re-engine the BUFF then I’m assuming that they would be building a LOT of engines… 😀

Cheers

John Walker
John Walker
4 months ago
Reply to  Helions

You think those engines will be built in the UK?

Helions
Helions
4 months ago
Reply to  John Walker

I think a lot of the components and engineering work will be…

Cheers!

dan
dan
4 months ago

China’s gift that keeps giving…..

Jonny
Jonny
4 months ago

At least we have brexit to look forward to, with all the economic benefits that will bring.

/s