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A Giant of the Skies Is Flying On One Engine

4 3 10
14.06.2018

The decision by Rolls-Royce Holdings Plc to cut about 9 percent of its workforce prompted one big question on Thursday: Why now?

Warren East took over as chief executive three years ago with a mission to transform the productivity of the aircraft engine-maker and to deliver on an unprecedented rollout of new engines. During his short tenure there’s already been plenty of upheaval, including thousands of job cuts. Arguably the last thing Rolls-Royce needs right now is yet more disruption. Airline customers are furious about technical troubles with its Trent engines that have grounded Boeing 787 planes.

East insists that the cuts, expected to deliver 400 million pounds ($537 million) in yearly savings, have nothing to do with those problems and won’t affect customers. Perhaps, but it’s hard to escape the feeling that he’s reaching for the ax not from a position of strength, but one of weakness.

The CEO is admired by analysts and investors and most have kept faith with Rolls-Royce even though it generates pretty feeble profit and cash flow at the moment. In return, East has........

© Bloomberg