Under its new chief executive, Rolls-Royce has announced plans to axe up to 2,500 jobs globally to create a "more efficient and effective" company, that will be 'Fit for the Future'.
Clearly, It can be seen as the first major move by Tufan Erginbilgic who, on becoming chief executive in January, who termed Rolls-Royce as a "burning platform", and that must transform to survive.
Tufan Erginbilgic, the former BP executive who replaced Warren East as chief executive, also said the coronavirus pandemic could not be blamed for what in reality was a perennial underperformance of the business compared with rivals.
“We underperform every key competitor out there,” Erginbilgic said in an address at Rolls-Royce’s UK manufacturing site at Derby, which was broadcast to staff globally. “Every investment we make, we destroy value.”
The Derby-based aircraft engine maker announced the layoffs on Tuesday as it said it wants to become a more “streamlined and efficient organisation”.
Highlighting his fit for future Agenda led by transformation, on Tuesday, he said:
“We are building a Rolls-Royce that is fit for the future.
“That means a more streamlined and efficient organisation that will deliver for our customers, partners and shareholders. Our business is full of committed, talented people and I believe these changes will enable them to build greater capability in areas that are key to our long-term success.
“This is another step on our multi-year transformation journey to build a high-performing, competitive, resilient and growing Rolls-Royce.”
Notably, Rolls-Royce has 42,000 employees globally, 21,000 of those are based in the UK. It also has large workforces in Germany and the US, where 11,000 and 5,500 staff are based respectively.
However, in another recent development, Rolls-Royce has successfully completed the first tests of its UltraFan technology demonstrator. It’s also the first time in 54 years the aero-engine manufacturer has tested a brand-new engine architecture.
Chief executive Tufan Erginbilgic was optimistic about the UltraFan, he said:
"The UltraFan demonstrator is a game changer - the technologies we are testing as part of this programme have the capability to improve the engines of today as well as the engines of tomorrow.
The company posted profits of £524m for the first half of the year, compared to a £111m loss for the same period in 2022. Shares have also seen a jump by 116pc this year amid a post-Covid recovery in aviation industry , and as investors cheer news of cost-cutting measures.
So far, Rolls-Royce, the company that managed to slash its debt by £500m to £2.8bn, has not given any details of where the job cuts will take an effect, but reports have suggested that hundreds of UK posts will be affected. It also said that the planned changes would "remove duplication and deliver cost efficiencies".
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