Rolls-Royce Hit Hard by COVID-19 "Aerospace Business Shutdown for 2 Weeks"

[Asia Economy Reporter Yujin Cho] British aircraft engine manufacturer Rolls-Royce will suspend aerospace business operations for two weeks this summer as passenger demand plummets due to the impact of COVID-19.

According to major foreign media including Bloomberg, Rolls-Royce stated in an email statement on the 7th (local time), "We have begun discussions with the union regarding the temporary closure of the civil aerospace division and cost-cutting measures."

They added, "Due to the COVID-19 crisis severely impacting the global civil aviation market and causing a collapse in demand, it is inevitable to implement cost-cutting measures such as suspending operations."

Approximately 12,500 employees in the UK and 19,000 employees worldwide in the civil aerospace business division are expected to be affected by this measure. Rolls-Royce, headquartered in Derby, UK, employs 51,700 people globally.

Rolls-Royce stated, "Labor and management have reached a fundamental agreement to negotiate a 10% improvement in productivity and efficiency in the UK civil aviation sector," and "We have now started complex and constructive discussions with the union on how to achieve this."

Facing an unprecedented recession and extremely uncertain market conditions, the company is forced to plan production on a weekly basis amid worsening business conditions.

Rolls-Royce said this is the first time since its stock market listing in 1980 that it has suspended operations due to financial problems.

Rolls-Royce estimated last month that the outflow of surplus cash would reach ?2 billion (approximately 3.075 trillion KRW) as recovery in long-haul flight demand slows.

Rolls-Royce is seeking ways to overcome the deep and prolonged downturn in aviation demand. As part of this, it cut 9,000 jobs last year, accounting for about two-thirds of its total workforce. Of these, 8,000 were in the civil aerospace division. Through these workforce reductions, the company expects to save ?1.3 billion annually by the end of next year.

At that time, CEO Warren East stated, "In addition to reducing the workforce by at least 9,000, we will also reduce costs across factories, owned assets, capital, and other indirect expenses."

This content was produced with the assistance of AI translation services.