Rolls-Royce Holdings Plc said it’s cutting as many as 2,500 positions and will streamline the business, enacting the deepest job cuts yet under Chief Executive Officer Tufan Erginbilgic.
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 Monday. As part of the corporate overhaul, Chief Technology Officer Grazia Vittadini will leave the company in April next year, Rolls-Royce said.
Erginbilgic is driving his turnaround effort deeper into the company after already switching some key management positions, including the head of the civil engine subsidiary. The engineering technology & safety businesses will be unified and run by Simon Burr, a senior manager at the civil aerospace subsidiary who is joining the executive team as part of the shift, the company said.
Having joined Rolls-Royce from BP Plc, Erginbilgic brought in consultants to advise on streamlining the organization. Rolls makes engines for the largest commercial aircraft and earns money based on their hours of use as well as with lucrative service contracts.
“This is another step on our multi-year transformation journey to build a high performing, competitive, resilient and growing Rolls-Royce,” the CEO said in the release.
The CEO, who likened the company to a “burning platform” shortly after taking over at the start of the year, has presided over a more than doubling of the stock price, as long-distance travel rebounds from pandemic lows, reigniting demand for large aircraft like the Airbus A350, for which Rolls-Royce is the sole supplier.
About half of Rolls-Royce employees are in the UK, 11,000 work in Germany and about 5,500 are located in the US. The last time the company cut a large number of positions was in the early days of the Covid-19 pandemic, when aircraft around the globe were largely grounded.
Cash flow at Rolls has risen rapidly this year, lightening the burden of interest payments just as rate increases make borrowing more expensive. Accelerating its debt-reduction plans could lead to credit-rating upgrades for Rolls, Bloomberg Intelligence said in a report.
Read more: Rolls Restoring High-Grade Path May Spur £1.3 Billion Debt Cut
--With assistance from Siddharth Philip.
