ROLLS-ROYCE workers in Scotland have been told operations are “under review” as the company said it planned further cost-saving action when it unveiled a record half-year loss.
The plant at Inchinnan in Renfrewshire, which is the company’s second-largest civil aerospace facility in the UK behind its Derby base, will lose 450 of its 1,300 workers by the end of August with a further 165 job cuts expected by the end of the year.
However, Rolls-Royce said operations at the factory, where workers make compressor blades and seals, are under further review as the firm strives to deal with the “historic shock” of the grounding of the world’s aircraft during the coronavirus pandemic.
The company said it is in talks with the Scottish Government and Scottish Enterprise over “a range of options”.
The news comes as the company revealed £5.4 billion half-year losses and said it plans to sell off parts of its business to raise more than £2bn.
READ MORE: Rolls-Royce cash-burn hits £3bn after world's airlines grounded
It comes on top of the shake-up of its civil aerospace arm involving the reduction of 9,000 jobs globally, including 3,000 in the UK.
Rolls-Royce said the asset sales will help boost its balance sheet amid the “unprecedented” drop in aviation activity, which led to the mammoth loss for the six months to June 30 against losses of £791 million a year earlier.
On an underlying basis, the group swung to a £3.2bn loss from profits of £93m in the previous 12 months.
In Scotland, around 450 employees will have left Inchinnan through the voluntary scheme by the end of this month, with about 65 set to leave on compulsory redundancy from September.
So far more than 100 Inchinnan staff have been redeployed into roles across Rolls-Royce, but a further 100 staff are expected to leave by the end of the year.
READ MORE: Prestwick aerospace company consults over jobs
A spokesman for Rolls-Royce at Inchinnan said: “The Covid-19 pandemic has created a historic shock in civil aviation which will take several years to recover. Demand for our civil aerospace products and services has fallen significantly and we’ve had to take difficult, but necessary decisions to position ourselves for the future.
“This week we have told our employees that some of our civil aerospace sites will close, and some will see significant reductions in workload. We are still reviewing the potential impact on Inchinnan and are considering a range of options, in partnership with the Scottish Government and Scottish Enterprise.
“We understand this period of uncertainty is incredibly difficult for our employees.”
The company has earmarked ITP Aero in Spain for sale among other businesses to offload, but said it is continuing to “assess additional options” to bolster its finances.
READ MORE: Hundreds braced for job losses at Rolls-Royce plant in Renfrewshire
Experts said an investor cash call is looking more likely as the prospects for the aviation sector show little sign of short-term recovery.
Rolls-Royce said demand for large engines is set to remain below 2019 levels until 2025 and warned of “material uncertainties” caused by the pandemic which could cast doubts over its future.
In a “severe but plausible downside scenario”, which includes a second wave of Covid-19, it said it would only have necessary borrowing facilities for the next 12 months and would be forced to raise extra cash.
This “could be achieved through some combination of debt, equity and the proceeds from business disposals”, Rolls-Royce said.
Warren East, Rolls-Royce's chief executive, said: “We have made significant progress with our restructuring, which includes the largest reorganisation of our civil aerospace business in our history.
"In light of ongoing uncertainty in the civil aviation sector, we are continuing to assess additional options to strengthen our balance sheet.”
Shares in Rolls-Royce dropped as much as eight per cent at one stage and closed down 1.2% at 250p, against 635p in March.
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