Rolls-Royce Holdings Plc is poised to announce the deepest job cuts under Chief Executive Officer Tufan Erginbilgic as he streamlines the UK manufacturer to prepare for an upswing in demand for large aircraft engines.
The reductions are set to total 2,000 to 2,500 employees, or about 6% of the global staff, according to people familiar with the matter, who asked not to be identified discussing plans that haven’t been announced. The cuts target the global white-collar workforce, including senior management, one of the people said. Sky News reported on the plan earlier, citing people familiar with the matter.
A representative for the company declined to comment. About half of Rolls-Royce employees are in the UK, 11,000 work in Germany and about 5,500 are located in the US.
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 CEO, who liked 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.
The CEO, who joined Rolls-Royce from BP Plc, 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. 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.