Up to 10 per cent of the Rolls-Royce workforce could be cut as the engine maker seeks to thin middle management against a backdrop of continued engine issues.
It’s believed between 4,000 and 5,000 job losses will be announced by CEO Warren East when he updates City analysts on the company’s fortunes this Friday. The company’s Derby manufacturing base is expected to bear the brunt of the decision, with back-office staff and management targeted rather than frontline engineers.
While Rolls-Royce has declined to confirm or deny the reports of job cuts, it revealed in a statement on Monday that it has identified additional issues with its Trent 1000 engine. Previous problems with the intermediate pressure compressor (IPC) of a batch of Trent 1000s known as ‘Package C’ have caused problems for airlines operating Boeing’s 787 Dreamliner. Now, Rolls has discovered a similar durability problem may exist across 166 ‘Package B’ engines. This brings the total number of engines affected to 549. Inspections and associated costs could cost the company around £1bn.
According to Rolls, it has already successfully run a redesigned Package C IPC in a development engine, and a design solution for Package B is underway. Potential issues with the Trent 1000 TEN engine are also being explored, although no issues with IPC durability have been found so far, the company said.
“We are working closely with our customers to minimise any operational impact of these inspections and we deeply appreciate their continued co-operation,” said Chris Cholerton, president of Civil Aerospace at Rolls-Royce. “We remain absolutely committed to eliminating this issue from the Trent 1000 fleet.”
Engines identified as having durability issues have had limitations imposed on them by aviation regulators, forcing some airlines to alter their routes. The inspection process has also led to some passenger planes being grounded for longer than expected and operators resorting to leasing aircraft in order to plug scheduling gaps. Despite its engine troubles, Rolls-Royce says it will deliver £1bn of free cash flow by 2020 as part of the restructuring plan put into place by Warren East since taking over as CEO in 2015.