Rolls-Royce is planning to suspend production of aircraft engines for two weeks with staff set to lose pay.
Workers have been told the two weeks’ pay they will lose from the shutdown, which will take place in the summer, will be spread across the year to minimise the impact on their income.
The move is expected to affect 12,500 workers in the UK, who make jet engines for airliners, and all 19,000 staff in Rolls-Royce’s international civil aerospace division.
The engineering giant said it was in talks with unions over the shutdown, which is caused by the impact of the Covid-19 pandemic on civil aviation.
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It stated: “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.
“We have now begun complex and constructive discussions with the union on how this can be achieved.”
The company has not used the furlough scheme for all employees, only using it where there workloads have been severely cut. It said: “We are continuing to use the UK government Coronavirus Job Retention Scheme – and similar schemes elsewhere in the world – across areas of civil aerospace where workload has significantly reduced as a result of Covid. However, unilaterally claiming furlough for all employees across the UK Civil Aerospace business in a pre-planned way is not consistent with the intent – nor is it, we believe, within the spirit – of the scheme, as workload is not impacted across all areas.”
A large slice of Rolls-Royce’s revenue comes from payments per hour an engine flies. So with fewer flights the company is getting through far more cash than normal. It expects £2bn of cash to leave the business in 2021, more than double forecasts.
Last month, Rolls-Royce announced that “more contagious variants of the virus were creating additional uncertainty”, as it cut its forecast for engine flying hours this year to about 55%, compared with pre-Covid levels in 2019.
The company has already embarked on production cost-cutting measures across its global operations.
The historic Rolls-Royce factory at Barnoldswick, Lancashire – where Lancaster bombers were made in the second world war – was subject to nine weeks of strike action from Unite members at the end of the last year over plans to shift engine production to Singapore. However, talks between the company and unions last month produced a deal that would guarantee the long-term future of the plant and see it shift to engineering training and green propulsion research.
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