Rolls-Royce to cut at least 9,000 jobs

The FTSE 100 engine maker said the job cuts from its global workforce of 52,000 would fall mainly on the civil aerospace business and that it would also review the division's facilities. Unions said almost 4,000 of the cuts would be in the UK.

Cutting 17% of the workforce will save Rolls-Royce about £700m a year and the restructuring will also reduce spending on plant and property, capital and other areas. The cost of the programme will be about £800m over three years.

Rolls-Royce said it had already taken steps to reduce spending during the crisis but that it would take several years for commercial aerospace to pre-crisis levels. Airline fleets have been grounded and the industry is struggling to find ways to survive new norms on social distancing and a deep recession.

Warren East, Rolls-Royce's chief executive, said: "Being told that there is no longer a job for you is a terrible prospect and it is especially hard when all of us take so much pride in working for Rolls-Royce. But we must take difficult decisions to see our business through these unprecedented times."

East said some of the company's civil aerospace manufacturing sites were likely to close. The company employs about 12,000 people in the East Midlands City of Derby where it is the biggest employer.

"We can't just wind down the number of people employed at all those locations," East told the BBC. "I think it's inevitable that some locations will probably end up closing."

East said he would also cut jobs at the company's central support functions. The defence division has been unaffected by the crisis and does not require job cuts, he said. While talks with unions go on the company will not discuss which sites or countries will be affected.

The Unite Union said 3,375 of the job cuts would be in the UK and would be made by the end of 2020. The union accused the company of "throwing workers under the bus" during a public health emergency.

Unite official Steve Turner said: "This company has accepted public money to furlough thousands of workers. Unite and Britain’s taxpayers deserve a more responsible approach to a national emergency."

UK unemployment surged to a 24-year-high of 2.1m in April as employers laid off workers at a record pace during the Covid-19 crisis. Economists say joblessness could rise further from 5.8% of the workforce to nearly 10% as companies cut costs and adjust to the long-term impact of the crisis.

Rolls-Royce's job cuts are some of the biggest announced so far, including IAG's announcement that it would cut headcount at British Airways by 12,000.

Russ Mould, investment director at AJ Bell, said: “Rolls is at the sharp end of the crisis given the importance of civil aerospace work to the business. A model built on maintenance and spares and repairs contracts on an installed base of engines doesn’t work when engines are not in use and orders for the planes which take its engines have collapsed.

“Cutting that number of staff in itself will be a big effort … and could come with political complications given most of its aerospace activities are based in the UK."

Rolls-Royce shares fell 2.7% to 260.09p.