Aerospace giant Rolls-Royce (RR.L) has placed 4,000 staff on furlough as job cuts loom.
The engine maker said in a statement on Thursday it had placed 4,000 employees on the government’s job retention scheme as it looks to cut costs. The disclosure was made ahead of its annual general meeting with shareholders.
Rolls-Royce said demand for its airplane engines had plummeted since the start of the year due to the novel coronavirus pandemic. It does not expected the market to recover quickly.
“The disruption caused by COVID-19 is expected to lead to a smaller commercial aerospace market which may take several years to recover,” the company said.
As a result, Rolls-Royce is slashing costs. The company said it was on track to save £1bn in costs this year alone.
It has widely been reported that Rolls-Royce is planning to lay off up to 8,000 workers. The company said on Thursday it would give staff “further details of the impact of the current situation on the size of our workforce before the end of this month and will consult with affected employees in due course.”
Chief executive Warren East said he had to “take the difficult but necessary decisions to ensure the group emerges from this period with the appropriate cost base for what will be a smaller commercial aerospace market”.
Shares in the company fell 4.1%.
While engine factories lay dormant, Rolls-Royce has repurposed them to build emergency ventilators and personal protective equipment (PPE) for frontline workers. The company has produced over 10,000 3D printed face shields.
“In this unprecedented period of uncertainty we have rapidly adapted our business to safeguard its future for all of our stakeholders,” East said.
“I am proud of the dedication and commitment of my colleagues and thankful for the continuing support of our shareholders and other stakeholders during this challenging time."