LONDON • Rolls-Royce Holdings chief executive Warren East's five-year bid to revive earnings has been shattered by the Covid-19 crisis as the jet-engine maker moves to scrap 9,000 jobs.
The British giant will cut 17 per cent of its workforce and boost savings goals amid a travel slump that is wiping out vital maintenance revenue and prompting airlines to scale back years of jetliner purchases, according to a statement yesterday.
Rolls-Royce is particularly exposed because of its focus on larger aircraft which are facing a reduced role in global fleets due to the pandemic. Mr East said before the outbreak that the firm was turning a corner after years of restructuring that saw it eliminate about 10,000 posts.
"This is not a crisis of our making... but we must deal with it," he said in the statement. "Our airline customers and airframe partners are having to adapt and so must we."
The reorganisation will predominantly impact the civil aerospace business, and the firm said it is carrying out a "detailed review" of its facility footprint.
Mr East has told investors that Rolls-Royce needs to save £1 billion (S$1.74 billion) this year as it faces the biggest challenge since the 1970s, when it was nationalised after entering liquidation. That will now be extended to £1.3 billion on an annualised basis, with £700 million from job cuts.
The company previously said it plans to produce 250 plane engines this year, down from its previous estimate of 450.