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Rolls-Royce will cut up to 2,500 jobs as part of a global restructuring by its new chief executive to streamline its operations and boost returns.
The FTSE 100 company, whose engines power large civil aircraft as well as submarines and military jets, said the revamp would lead to between 2,000 and 2,500 roles being lost from its workforce of 42,000, a cut of almost 6 per cent.
The plan will create a new procurement organisation in a bid to leverage the engineering group’s scale and reduce costs. Back-office functions such as human resources and finance will be brought together.
Rolls-Royce is also centralising its activities focused on engineering technology and safety into a single new division. As part of the overhaul, Grazia Vittadini, chief technology officer who joined from Airbus in November 2021, will leave the group in April.
“This is another step on our multiyear transformation journey to build a high performing, competitive, resilient and growing Rolls-Royce,” said chief executive Tufan Erginbilgic.
Vittadini is the most high-profile casualty of the overhaul. Erginbilgic told staff in an internal memo on Tuesday that she had decided to “explore new opportunities” outside of the group. He credited her for being a “leading voice in the importance of the energy transition to our business and our customers, while bringing a crucial reality check to the technical challenges that come with that”.
The restructuring has been widely expected after Erginbilgic, who became chief executive in January, promised to tackle years of underperformance at the company, which has been through multiple restructurings under successive leaders over the past decade.
A previous revamp under former chief executive Warren East, when the Covid pandemic severely hit Rolls-Royce’s civil aerospace business that makes large passenger jet engines, set out to shed 9,000 frontline jobs.
This time, however, the job losses will affect the non-engineering workforce. McKinsey, the consultants, were brought in this year to advise Rolls-Royce on the revamp. About half of Rolls-Royce’s workforce is in the UK. The group employs 10,800 in Germany and 5,400 in the US.
Erginbilgic has moved quickly to make his mark on the 117-year old company, which he described as a “burning platform” in an address to staff in January.
He has also been highly critical of the way in which Rolls-Royce’s power systems business, which makes diesel and gas engines for ships and trains, has been run. He told the Financial Times in May that this business had been “grossly mismanaged”, with costs not kept under control.
The oil industry veteran has shaken up Rolls-Royce’s senior management, including the heads of its civil aerospace and defence businesses, cut spending on non-core projects and is renegotiating some of its sales and maintenance contracts with customers.
Shares have staged a significant recovery since the start of the year after a rebound in international air travel as well as early results from the transformation programme.
The company will update investors on the results of a separate strategic review next month.
Rolls-Royce cheered investors in July when it raised its profit forecast for the year. The shares closed at 213p on Monday, up 115 per cent since the start of 2023.
