Meggitt slashes jobs, costs as aerospace sector softens

Meggitt said it was cutting 15% of its workforce as it reported a softening in its civil aerospace business revenue and forward order book.

The FTSE 100 company also pulled full year guidance and said it was implementing a freeze on hiring and pay rises, slashing operating costs and cutting boardroom pay by 20%.

The company said Covid-19 would result in a “significant reduction” in demand across its civil aerospace business in 2020 in both OE and AM, as its customers adapted and scaled back their activities to reflect the reduction in global air traffic.

“The successful implementation of these combined measures throughout the year will be to reduce our cash expenditure levels by around £400m to £450m in 2020.”

At the end of the first quarter, the company had £1.67bn of committed facilities in place, providing headroom of £668m. It was this week confirmed as an eligible issuer under the UK Government's Covid Corporate Financing Facility.

Meggitt said group revenue was up 5% on an organic basis in the first three months of the year, with “strong growth” in defence more than offsetting a softer performance in civil aerospace and energy.

First quarter civil aerospace revenue was slightly ahead of the comparative period on an organic basis, within which original equipment revenue decreased 1% and aftermarket revenue grew 2%, with “good growth” reported in both OE and AM in business jets.

Defence revenue was ahead 15% organically, driven by particularly strong growth for original equipment.

It said it was continuing to see good order flow, and expected demand in that part of the business to be robust throughout 2020, adding that the majority of its manufacturing facilities remained open.

“Our defence portfolio represents a significant part of the group's revenues and is performing strongly as work on key defence programmes continues as scheduled.”

At 0846 BST, shares in Meggitt were up 6.09% at 263p.