17% global headcount reduction The £1bn of cash savings announced previously preserve liquidity in 2020, but given the unprecedented nature of the crisis now facing the aviation industry, Rolls is conducting a structural reduction in its cost base to adapt to the lower level of expected demand in Civil Aerospace over the medium term. The restructuring programme announced in 2018 was progressing well but a step change is now required – the minority of the headcount reductions and cost savings still outstanding on that plan will be rolled into the new reorganisation: Headcount reduction will be at least 9,000 from the global workforce of 52,000. Expenditure will be cut across plant and property, capital and other indirect cost areas. These actions are expected to generate annualised savings of more than £1.3bn (headcount reduction contributing c.£700m). Cash restructuring costs are expected to be c.£800m, spread across 2020-22. Power Systems and ITP Aero are also developing extensive measures to deal with the current situation. The Defence business has remained robust through the crisis. Our view The scale of the restructuring announced today highlights how COVID-19 is affecting the commercial aviation industry. Some industry participants do not see a return to 2019 levels of air travel until late 2023, or early 2024 for international travel. However, today’s statement may help to reassure that Rolls is taking the actions necessary to see it through this crisis. Forecasts Under Review