UK-based automobile giant Rolls Royce will be slashing 17% of its workforce, 9,000 employees, to boost savings amid the current travel slump that has made a dent in the company’s maintenance revenue as demand for jetliner purchases declines.
Beyond being a luxury car maker, Rolls Royce focuses largely on manufacturing aircrafts for the global fleet, which on account of COVID-19 is facing significant losses. "This is not a crisis of our making," said CEO Warren East in a media 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," he added. While the organization is conducting a “detailed review” of its facility footprint, it expects the decision to significantly impact the civil aerospace business and central support functions.
Rolls Royce was already facing trouble prior to coronavirus. Earlier this year, East had cautioned investors about the need to save £1 Bn (S$1.74 Bn) post it was nationalized after entering liquidation, this figure is expected to be increased to £1.3 Bn on an annualized basis, £700 Mn alone from job cuts.
The company reportedly was planning a 15% cut to its workforce in early May, also bringing down the production of plane engines from 450 to 250. The unending economic impact of coronavirus has forced businesses to let go of employees despite that being the last resort. With restrictions on movement and travel, it remains to be seen how airlines and automobile businesses sustain themselves.