Job cuts on the horizon at Rolls-Royce as Covid hits aerospace market

Aerospace and defence giant Rolls-Royce signalled on Thursday that there are job cuts ahead as it said the commercial aerospace market could take several years to recover from the impact of Covid-19.

The company, which has already furloughed 4,000 of its employees, said it was working with its trade union and employee representatives and will update staff with details of the impact of the pandemic on the size of its workforce before the end of this month.

Recent press reports have suggested Rolls-Royce may cut up to 8,000 jobs.

"Looking ahead, the severity of the disruption caused by Covid-19 is expected to lead to a smaller commercial aerospace market which may take several years to recover," it said.

It noted that civil aerospace widebody engine flying hours were down around 40% on its expectations for the first four months of the year. This reflected a fall of 90% in April as airlines around the world have temporarily grounded a majority of their fleets.

Due to this lower level of activity, the group said it’s now enacting a significant reduction in the volume of service visits in its maintenance, repair and overhaul (MRO) shops for 2020 compared to its original plans and expects MRO volumes this year to be below 2019 levels.

In addition, the company said its airframe customers have reduced aircraft production rates and it currently expects to deliver around 250 widebody engines in 2020, down from previous guidance of 450.

Chief executive Warren East said: "We are working hard to mitigate the near-term disruption caused by Covid-19 and are making stronger than expected progress on our mitigating actions, giving us confidence that we can now deliver up to £1.0 billion of savings this year.

"However, we must also take the difficult but necessary decisions to ensure the group emerges from this period with the appropriate cost base for what will be a smaller commercial aerospace market which may take several years to recover."

At 0920 BST, the shares were down 3.4% at 283.70p.