Rolls-Royce is expecting to have to axe around 9,000 personnel – about 17% of its global workforce – in the aftermath of the economic downturn caused by the coronavirus outbreak.
Its civil aerospace division will be “predominantly” affected, it says, following the severe deterioration of the air transport market.
“We will carry out a detailed review of our facility footprint [in civil aerospace],” it adds.
Rolls-Royce’s defence business will not need to reduce staff numbers, says the company, although other operations are likely to be affected.
“As part of the re-organisation, we will ensure that our internal civil aerospace supply chain continues to support our defence programmes,” it adds.
Rolls-Royce says it will also “explore any opportunities” to move personnel to its defence division.
The company says the loss of the staff will contribute £700 million to a broad re-organisation which will save around £1.3 billion per year.
Rolls-Royce says it plans to cut expenditure across plants and property, capital and other indirect cost areas.
Cash costs relating to the restructuring will probably be around £800 million, the company says, incurred over 2020-22.
Rolls-Royce has yet to disclose which facilities or regions might be affected, as it needs to consult first with union representatives.
“This is not a crisis of our making,” says chief executive Warren East. “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.”
He says that governments are trying to assist businesses, but they “cannot replace sustainable customer demand that is simply not there”.
Rolls-Royce says it has already taken actions to strengthen its finances and reduce 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,” it states.
“We must now address these medium-term structural changes, as demand from customers reduces significantly for our civil aerospace engines and aftermarket services.”