Rolls-Royce: A Power Move

Shares in UK’s flagship engine manufacturer Rolls-Royce were +3% as the company announced it was cutting 4.6K UK jobs (8.4% of company workforce) to save a net £400M p.a. by end of 2020.

Rolls-Royce: A Power Move

Shares in UK’s flagship engine manufacturer Rolls-Royce were +3% as the company announced it was cutting 4.6K UK jobs (8.4% of company workforce) to save a net £400M p.a. by end of 2020.

Company was quick to respond to market pressure to improve its financial stability after European Aviation Safety Agency highlighted reliability issues with its Trent 1000 engines. Improving in-service maintenance for engines that power the Boeing 787 Dreamliner will mean extra expenses and investors were welcoming the news that Rolls-Royce was keeping firmly on top of the issue. Company’s engineering competence to improve engine reliability should not be impacted by the restructuring, with the job cuts coming from the corporate and support side of the organisation.

A leaner, meaner corporate structure would mean lean times for thousands of personnel losing their jobs, but the markets were happy that the new outlays were not being transferred on to them, with Rolls-Royceconfirming FY group free cash flow guidance at £450M (+/-100M).

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