Rolls-Royce has posted an eye-watering £5.4 billion half-year pre-tax loss due to the impact the coronavirus crisis has had on the aviation sector.
The firm, which has its civil aerospace and defence divisions in Derby and Filton, near Bristol, revealed the figure in its half-year results, which were released to the stock market this morning.
The engine maker said its aerospace business had seen an “unprecedented” slump in activity due to the coronavirus crisis and expects demand for large engines to remain below 2019 levels until 2025.
Since the coronavirus crisis began, Rolls-Royce has introduced a number of measures to stop the business haemorrhaging cash.
This includes shedding 9,000 jobs from its global workforce of 52,000 in a bid to save the business £1.3 billion.
Just over 3,000 of these jobs are going in the 海角视频, around half of these in Derby where Rolls-Royce is the city’s largest private sector employer.
According to Rolls-Royce, 4,000 people have now left the firm’s civil aerospace business after thousands of staff expressed an interest in taking voluntary severance.
The company is also taking other measures to increase its liquidity, including taking a £2 billion loan – and selling off assets to raise another £2 billion. This would include offloading its Spanish based subsidiary, ITP Aero.
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In this morning’s half-year results, chief executive Warren East said: “We ended 2019 with good operational and financial momentum.
“However, the Covid-19 pandemic has significantly affected our 2020 performance, with an unprecedented impact on the civil aviation sector with flights grounded across the world.
“We have responded rapidly to increase our liquidity, with £6.1 billion at the end of the first half of the year and a further £2 billion term loan agreed in the second half of the year, to help weather the continued uncertainty around the timing and shape of the recovery in the civil aviation sector.
“We have made significant progress with our restructuring, which includes the largest reorganisation of our civil aerospace business in our history.
“This restructuring has caused us to take difficult decisions resulting in an unfortunate but necessary reduction in roles.
“These actions will significantly reduce our cost base, which combined with recovery in Power Systems and continued resilience in Defence, will help us to deliver significantly improved returns as the world recovers from the pandemic.”
Rolls-Royce’s civil aerospace business has been heavily impacted this year by the coronavirus pandemic after air travel across the world was brought to a virtual standstill.
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In March, when the lockdown began, the firm halted all but essential work at its civil aerospace site in Sinfin and the following month announced a raft of cost-cutting measures to help it save £750 million.
This included reducing the salary of its global workforce by at least 10%. The salary of its senior managers and executive team was also cut by 20% for the rest of 2020.
And it announced it would be reining in discretionary costs, such as non-critical capital expenditure projects, consulting, professional fees and sub-contractor costs, while also ceasing all non-essential travel and postponing external recruitment.
However, as the crisis in aviation continued to deepen, Rolls-Royce was forced to take further steps, which led to it announcing thousands of job cuts.
And the push to reduce costs does not seem to be abating any time soon, with the plans to offload other assets.
For example, earlier this week, the company confirmed plans to close its Annesley site, in Nottinghamshire, with many of the 120 staff there being offered the chance to transfer to Derby.
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Mr East said: “While our actions have helped to secure the group’s immediate future, we recognise the material uncertainties resulting from Covid-19 and the need to rebuild our balance sheet for the longer term.
“We have identified a number of potential disposals that are expected to generate proceeds of more than £2 billion, including ITP Aero and a number of other assets.
“Furthermore, in light of ongoing uncertainty in the civil aviation sector, we are continuing to assess additional options to strengthen our balance sheet to enable us to emerge from the pandemic well placed to capitalise on the long-term opportunities in all our markets.”
Prior to these latest cuts Rolls-Royce employed some 24,000 people across the 海角视频 in sites from Scotland to the South West, including a turbine blade manufacturing centre in Rotherham and an aerospace disc manufacturing plant in Washington, near Sunderland.