Rolls-Royce will cut more than two thousand employees

The British company Rolls-Royce, one of the world’s largest manufacturers of aircraft engines and other military and civil equipment, will cut up to 2,500 jobs in divisions around the world. The cuts are being carried out as part of a large-scale restructuring program, which, according to management, should make the company, which has significantly lost ground during the pandemic, more efficient.

As noted in the article published today, October 17, press release Rolls-Royce, the company is committed to building a “simpler, leaner organization to better serve customers and continue to create and service world-class products.” In a statement, Rolls-Royce head Tufan Erginbilgic indicated that the plan is the beginning of a new stage of transformation for the company, which will take several years. According to management, simplification and rationalization of the structure will require a reduction of 2,000-2,500 employees in Rolls-Royce divisions around the world. Now the total workforce of the manufacturer is 42 thousand people, of which approximately half are based in the UK. According to experts, the cuts will primarily affect office employees, not engineers and specialists working with technology.

Dramatic changes began at Rolls-Royce back in January of this year, when the post of CEO was taken over by Tufan Erginbilgic, who immediately called the company’s situation “the worst possible place.” The performance of Rolls-Royce’s largest division, which produces aircraft engines, directly depends on the state of the aviation market and the demand for servicing aircraft engines purchased by customers. Therefore, during the pandemic, when airlines sharply reduced engine purchases and there was almost no need for their maintenance, Rolls-Royce had a hard time. In 2020, the company was forced to lay off 9 thousand people to reduce costs. Overall, the company’s shares lost about 70% of their value during the pandemic.

The gradual recovery of the aviation market after the end of the pandemic has significantly improved Rolls-Royce’s financial position.

Since the beginning of this year, the company’s shares have grown by 120%, although they have not yet returned to their pre-pandemic prices.

In the first half of the year, Rolls-Royce was able to quintuple operating profit to £673 million, which was also significantly supported by higher prices for aircraft engines and their maintenance. Meanwhile, the company lags somewhat behind its competitors, given that Rolls-Royce’s production is primarily focused on engines for long-haul aircraft. In addition, a difficult situation is developing in the division for the production of energy equipment and marine engines, which, according to the current CEO of Rolls-Royce, has been “very poorly managed” in previous years, and therefore incurs higher costs compared to other divisions of the company.

It is expected that in November the CEO of Rolls-Royce will present his previously promised in-depth strategic analysis of the company’s business and plans for the next few years.

In particular, according to The Guardiancould include a return to the fast-growing narrowbody aircraft engine market, closer integration of its power generation and marine engine divisions, and other measures to boost sales and profits.

Alena Miklashevskaya