Pay cut for Rolls-Royce global workforce to safeguard business through coronavirus crisis

The move should help the engineering giant save around £750 million

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Robin JohnsonDerby Business Editor

08:21, 6 APR 2020
Updated08:58, 6 APR 2020

The Trent XWB production line at Rolls-Royce's civil aerospace division in Sinfin, Derby. — The Trent XWB production line at Rolls-Royce's Derby site (Image: Rolls-Royce)

Engineering giant Rolls-Royce has announced a raft of cost-cutting measures to help the firm save £750 million due to the coronavirus crisis.

The firm, which has its civil aerospace and defence divisions in Derby, has this morning revealed a number of moves to help safeguard the business.

In a trading update released to the markets, the company, which last month halted all but essential work at its civil aerospace site in Sinfin, said that it would be reducing the salary of its global workforce by at least 10%.

The salary of its senior managers and executive team will be cut by 20% for the rest of 2020, comprising a 10% reduction and a 10% referral in pay.

Rolls-Royce said it was also reducing discretionary costs, such as non-critical capital expenditure projects, consulting, professional fees and sub-contractor costs, ceasing all non-essential travel and postponing external recruitment.

A worker inspecting a Trent 1000 engine (Image: PA)

The firm said that the “headwind” caused by the Covid-19 outbreak so far was approximately £300 million.

Rolls-Royce said that the main impact on the firm had been on engine flying hours in its civil aerospace business.

It said: “Widebody flying hours fell by approximately 25% in the first quarter, compared to the prior year, and fell approximately 50% in March, with an expected further deterioration in April and beyond as airlines have grounded an increasing proportion of their fleets over the last few weeks.

The Trent 7000 has been designed and developed in Derby — Rolls-Royce is Derby's largest private sector employer (Image: Rolls-Royce plc)

“Output of new widebody engines remained broadly stable in the first quarter as airframe customers maintained production levels.

“However, our airframe and airline customers are facing unprecedented business challenges and we are in close communication with our customers and suppliers as we prepare for an anticipated reduction in engine delivery and MRO (maintenance, repair and overhaul) volumes.”

Chief executive Warren East said: "We find ourselves in unprecedented times, both as a company and as a key player in vital power markets across the world.

“Our priority is to do everything we can to safeguard the lives and livelihoods of our people and to play our part in helping our customers, partners and communities.

Rolls-Royce chief executive Warren East (Image: Rolls-Royce)

“We are taking significant measures to strengthen the operational and financial resilience of our business.

“I would like to thank all our 52,000 colleagues worldwide for their support, dedication and hard work at this time when difficult decisions are being made ."

In the trading statement, the firm also revealed more details of the role it is playing in the VentilatorChallenge��Ƶ Consortium, which is working to increase the ��Ƶ’s supply of ventilators to the NHS to treat Covid-19 patients.