Rolls-Royce plans to eliminate up to 2,500 positions as part of a cost-cutting initiative spearheaded by its new CEO enacting the deepest job cuts yet.
The reductions will target 2,000 to 2,500 employees, or about 6% of the global staff, the company said in a regulatory statement, confirming reports of job losses late on October 16 (Monday).
According to chief executive officer Tufan Erginbilgic, the job reductions are to restructure the organisation into a more “agile and cost-effective enterprise”.
Headquartered in Derby, Rolls-Royce employs 42,000 people worldwide. Over half of this workforce, about 21,000, is situated in the UK.
Additionally, the company has substantial teams in Germany and the US, with 11,000 and 5,500 employees in those nations respectively.
The newly appointed CEO had assumed the role at the year’s commencement, and had previously expressed concerns about the company’s sustainability, likening Rolls-Royce to a “burning platform”. He also criticised one of its primary divisions for its glaring mismanagement.
On the topic of the layoffs, Erginbilgic remarked, “Our vision is to shape a Rolls-Royce that’s future-ready. This requires a leaner, more effective structure that can serve our customers, collaborators, and stakeholders optimally. We’re fortunate to have a passionate and skilled team, and I’m confident that these modifications will boost their proficiency in crucial sectors, ensuring our prolonged success.”
The anticipation surrounding these job cuts had been building, especially since Mr. Erginbilgic unveiled his revitalization strategy for the underperforming firm earlier in the year.
Previous speculations had suggested potential layoffs numbering up to 3,000 in May, which the company had denied.
Year-to-date, Rolls-Royce’s stock value has surged by 116%, fuelled by the aviation sector’s post-pandemic rebound and investor enthusiasm for the firm’s cost-reduction actions.
This positive trend signifies a recovery phase for the company, following a challenging pandemic period that necessitated staff reductions and significant fundraising to navigate through the lockdowns.
The enterprise, recognised for crafting engines for prominent aircraft like the Airbus A350 and Boeing 787, faced setbacks due to global travel bans.
However, addressing employees earlier this year, Erginbilgic stated, “Rolls-Royce’s performance issues predate the pandemic by a significant margin. From my discussions with stakeholders, it’s evident this is our final opportunity to rectify it.”
The company’s stock experienced a significant uptick in February, coinciding with the announcement of Erginbilgic’s reform strategy. A subsequent rise occurred in July when Rolls-Royce reported an impressive profit surge.
