London: Rolls-Royce Holdings Plc Chief Executive Officer Warren East’s five-year bid to revive earnings has been shattered by the coronavirus crisis as the U.K. engineering giant moves to scrap 9,000 jobs.
Jet-engine-maker Rolls will cut 17% of its workforce and boost savings goals amid a travel slump that’s wiping out vital maintenance revenue and prompting airlines to scale back years of jetliner purchases, according to a statement Wednesday.
Rolls-Royce is particularly exposed because of its focus on larger aircraft facing a reduced role in global fleets as the pandemic depresses economies and alters travel habits. East said before the outbreak that the London-based company was turning a corner after years of restructuring that saw it eliminate about 10,000 posts in an effort to become more agile and productive.
“This is not a crisis of our making,” the CEO said in the release. “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.”
The reorganization will predominantly impact the civil aerospace business. and the company said it’s carrying out a “detailed review” of its facility footprint. It will also have implications for central support functions.
East, who joined from semiconductor developer ARM Holdings Plc, has told investors that Rolls-Royce needs to save 1 billion pounds ($1.24 billion) this year as it faces the biggest challenge since the 1970s, when it was nationalized after entering liquidation. That figure will now be extended to 1.3 billion pounds on an annualized basis, 700 million pounds from job cuts.
The company previously said it plans to produce 250 plane engines this year, down from its previous estimate of 450.
It was reported earlier this month that Rolls was considering a 15% cut to its workforce.