British engine manufacturer Rolls-Royce is laying plans for a temporary shutdown of its facilities during the summer. The company is suffering on the sales front due to fewer aircraft flying, which is affecting servicing requirements. The move, which still needs to meet union approval, could affect all 19,000 staff working in its civil aerospace division.
Two weeks closure for Rolls-Royce
The jet-engine factories of Rolls-Royce are set to fall silent for a period of two weeks this summer, as the engine maker strives to stem its losses. With the downturn in air traffic caused by the COVID-19 pandemic, the aerospace company has seen lower than expected demand for its services.
The plan, first revealed by the Sunday Telegraph, is tentative at the present time and requires agreement from the workers’ unions before it can go ahead. All 19,000 workers in its civil aerospace division would see a wage hit if it goes ahead, and would be the first temporary closure of its factories since the 1980s.
In a statement, the company confirmed,
“As we continue to manage our cost base in response to the ongoing impact of the Covid-19 pandemic on the whole commercial aviation sector, we are proposing a two-week operational shutdown of civil aerospace over the summer.”
The two-week shutdown would save Rolls-Royce tens of millions of dollars in wage expenses, as well as in various running costs for its factories. Staff have been told that the wage losses over the two-week closure would be spread over the entire year, to minimize the impact on their income.
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A bleaker than expected outlook
Usually, Rolls-Royce would deliver more than 500 Trent engines over the course of a year, to be used on aircraft such as the A330, A340, A350 and A380, as well as the Boeing 777 and Dreamliner. With long-haul travel reaching a near standstill in 2020, not only were new engines not required, but the company’s servicing and maintenance schedule slipped too.
Last year, as the company forecast its path to recovery, it had expected 2021 long-haul flying hours to reach around 70% of pre-pandemic levels. However, in a market outlook published earlier this year, the company has now revised down that target to just 55% of previous levels.
The company had been aiming to return to a cash positive position during the second half of 2021. But with new variants of the virus emerging and the efficacy of the vaccines to deal with these in question, the outlook is becoming increasingly bleak.
The company has been working to drive down its costs, with 7,000 jobs trimmed since the beginning of the crisis. A further 2,000 roles are expected to be removed by 2022. So far, the company has made cost savings totaling an impressive £1 billion ($1.37 billion).
A two-week closure could give Rolls the bump it needs to get through the rest of this difficult period. It is still forecasting a 90% air traffic recovery in 2022, although it admits that in a worst-case scenario, this could be limited to just 80%. Nevertheless, it still hopes to turn cash-positive by the end of this year.