Rolls-Royce is to shed up to 8,000 jobs as a result of the coronavirus pandemic.

The massive reduction in headcount, the biggest in 30 years, comes as Airbus and Boeing slash production. The world’s biggest OEMs have cut production by 35 per cent and 50 per cent respectively as a result of a massive decline in orders from airlines following the collapse in global travel. With global passenger flights still remaining at a virtual standstill, both Airbus and Boeing have reported that it will take several years for demand to recover to 2019 levels.

The FT reports that senior executives at the engine maker have started work on a restructuring plan which would shrink the 52,000-strong workforce by up to 15 per cent. The proposal for job cuts at Rolls-Royce follow a week of redundancy announcements in the aviation sector with British Airways announcing last week that it would cut 12,000 jobs and Ryanair reporting the loss of 3,000 posts. According to the FT, Rolls-Royce is not expected to make a final announcement on the number of jobs affected until the end of May.

Scale of cuts will exceed redundancies following 9/11

The FT said its sources had reported that discussions had been started with unions with the manufacturer seeking to mitigate the final number of losses. The scale of the cuts are likely to exceed the company’s job losses after 9/11, which resulted in a reduction of 5,000 posts.

The UK government had hoped to preserve employment through wage support programmes but these will only remain in place until June. Following a decade of growth and a boom in aircraft orders up to last year, the global aerospace industry is now bracing itself for a massive fall in demand with government restrictions in air travel still in place to stem the progress of the coronavirus pandemic.

Finance Director Stephen Daintith told Rolls-Royce employees that the group expected its civil aerospace business to be a third smaller due to the crisis which would result in job cuts. Rolls-Royce suspended its dividend for the first time in more than 30 years last month. Further cost cutting measures include cutting back on capital expenditure and ditching its target to achieve £1bn in free cash flow by the end of this year.

The group is also considering cutting research and development investment and a slowdown in its UltraFan, next generation engine programme.

Unprecendented impact

A statement by the company read: “The impact of the COVID-19 pandemic is unprecedented. We have taken swift action to increase our liquidity, dramatically reduce our spending in 2020, and strengthen our resilience in these exceptionally challenging times. But we will need to take further action.”

Rolls-Royce’s civil aerospace business is expected to bear the brunt of the vast majority of cuts. The division employs 23,000 people worldwide and accounts for roughly half the group’s 2019 revenue of £15.4bn. The civil workforce includes 16,000 workers in the UK – around a quarter of the civil workforce have already placed on furlough.

Job losses are also expected within civil operations in Singapore and Germany.