Rolls-Royce poised to cut 2,500 white-collar jobs

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Rolls-Royce is preparing to cut about 2,500 jobs as part of a major restructuring of the UK aerospace and defence company by its new chief executive aimed at streamlining operations and boosting returns.

The FTSE 100 company is expected to confirm the job losses, which will affect white-collar workers, as early as Tuesday, according to people familiar with the situation.

The cuts are likely to fall across Rolls-Royce’s global workforce of 42,000, and represent a reduction of almost 6 per cent. The news was first reported by Sky News.

Hundreds of workers could be affected at Rolls-Royce’s UK operations, which employ more than 21,000 people. Rolls-Royce declined to comment.

The restructuring has been widely expected after Tufan Erginbilgic, who became chief executive in January, promised to tackle years of underperformance at the company, which has been through multiple restructurings under successive leaders over the past decade. 

A previous revamp under former chief executive Warren East, when the Covid pandemic severely hit Rolls-Royce’s civil aerospace business which makes large passenger jet engines, set out to shed 9,000 jobs. 

This time, however, the job losses will affect the non-engineering workforce as part of a wider transformation programme to identify synergies and cut duplication across the company.

Currently white-collar roles in legal, marketing and other departments operate separately. McKinsey, the consultants, were brought in this year to advise Rolls-Royce on the revamp.

Erginbilgic has moved quickly to make his mark on the 117-year old company, which he described as a “burning platform” in an address to staff in January.

He has also been highly critical of the way in which Rolls-Royce’s power systems business, which makes diesel and gas engines for ships and trains, has been run. He told the Financial Times in May that this business had been “grossly mismanaged”, with costs not kept under control. 

The oil industry veteran has shaken up Rolls-Royce’s senior management, including the heads of its civil aerospace and defence businesses, cut spending on non-core projects and is renegotiating some of its sales and maintenance contracts with customers.

Shares have staged a significant recovery since the start of the year after a rebound in international air travel as well as early results from the transformation programme.

Rolls-Royce cheered investors in July when it raised its profit forecast for the year. The shares closed at 213p on Monday, up 115 per cent since the start of 2023.