As the impact of Coronavirus engulfs the world economy, one of the leading aviation companies in the world, the British aero-engine maker Rolls-Royce Holdings is considering cutting up to 15% of its workforce, a source said. Responding to the various media reports, the company said the situation demands ‘unprecedented’ response and employees will be notified about any cuts by the end of the month.
The outbreak has led to customers reducing production and the airlines have been forced to ground planes. Even though the exact nature of downsizing remains unclear, the plan has been shared among the top executives, sources said. It is believed that the plan is still in working stage and the negotiations are still going on at the firm.
The company supplies engines to well-known companies like Airbus SE and Boeing Co and the payment is made based on how many hours its engines have flown. Sources said, company is looking at laying off close to 8,000 of it 52,000-strong workforce.
After reports of lay offs appeared in various section of media, Rolls Royce issued a statement saying the impact of Covid-19 is 'unprecedented' and it has been forced to take swift action to increase its liquidity and dramatically reduce its spending. It claimed further action is needed and said the employees will be notified about any cuts by the end of the month.
“We have to do this right, which means we are working closely with our employees and trade union representatives and then we will consult with everyone affected. We have promised to give our people further details of the impact of the current situation on the size of our workforce before the end of this month,” the company said.
As the statement suggests, the exact nature of job cuts are unlikely to become clear before the end of this month, when the company is set to inform its employees. Rolls-Royce had done away with targets and final dividend in April itself to boost its financial capabilities to deal with the pandemic repercussions.
Warren East, the chief executive officer (CEO), had also hinted at salary cuts of employees across the world by up to 10% as a means to reduce cash expenditure. The major part of this action is likely to affect the company’s employees in Britain, even though, the plan will be implemented across its operations in Singapore and Germany.
