The reduction would be equal to as much as 5 percent of the global workforce, London-based Rolls-Royce said in a statement today. An initial 140 posts will be cut at an assembly and test site at Derby, England.
A slump in sales of new planes as the credit crunch and slowing growth crimp demand for air travel has followed on the heels of delays to major programs. Production of Boeing's 787 Dreamliner has been hurt by a machinist strike, parts shortages, incomplete work by suppliers and a redesign, while Airbus may fall short of next year's delivery goal for the A380 superjumbo.
``We are determined to maintain our focus on cost reduction and competitiveness as the world economy enters a challenging period,'' Chief Executive Office John Rose said in the statement. ``It is too early to determine the precise effects of the global economic downturn and program delays. However, we wanted to give all our employees an early indication of the likely scale of the job reductions we expect in 2009.''
Rolls-Royce fell 12.5 pence, or 4.7 percent, to 255.25 pence and was trading at 256.5 pence as of 8:01 a.m. in London trading. The stock has declined 51 percent this year.
Rolls employees 39,000 people worldwide, 60 percent of them in the U.K. The company said in January it would cut 2,300 office jobs to help counter the effects of higher raw-material expenses and the weaker dollar, and that program is now largely complete, it said today.
The new reduction will eliminate 1,500 to 2,000 posts, Rolls said. Firings will be minimized by scrapping temporary positions, avoiding recruitment and seeking voluntary departures.
``We have seen similar things in previous downturns and it reflects the reduction in flying and aftermarket revenue,'' said Clive Forestier-Walker, an analyst at Numis Securities in London with a ``hold'' rating on the stock.
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