Rolls-Royce Holdings PLC (LON:RR.) confirmed it is speaking to staff and trade unions about cutting jobs, after recent reports that it was looking to cut up to 8,000 jobs.
Production guidance for 2020 was cut to around 250 widebody plane engines from the 450 previous guidance, with civil aerospace flying hours 40% lower than expected for the first four months of 2020.
April saw a 90% collapse in flying hours as most airlines grounded almost their entire fleets.
Chief executive Warren East, who has presided over long-running problems with the group’s Trent 1000 engines with an estimated impact of £3.2bn of costs and lost forecast earnings, said he was eying more cuts on top of the £750mln cash savings announced last month.
With 4,000 UK staff having been furloughed, the FTSE 100 company said it now expects to deliver up to £1bn of cash savings in 2020 to mitigate the immediate disruption caused by the coronavirus pandemic, which by hitting air travel has lowered demand for the group’s aeroplane engines.
READ: Rolls-Royce urged not to make 'knee-jerk reaction' of further UK job cuts
“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,” East said in a statement issued ahead of the annual shareholder meeting.
As part of planned changes to the civil aerospace division, the statement confirmed that Rolls-Royce was “committed to working with our trade union and employee representatives, as well as our customers and suppliers, as we adjust to the new outlook and establish a more appropriate cost base in order to secure our future”.
Axing up to 8,000 of its 23,000 UK staff would represent a cull of 15% of its global workforce and would take East’s tally well above 12,000 since he started.
“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 and will consult with affected employees in due course.”