Rolls-royce cuts travel ex­penses

The Sunday Telegraph - Money & Business - - Business - By Alan Tovey

THE cash cri­sis at Rolls-royce caused by the spi­ralling costs of fix­ing a faulty jet-en­gine model has prompted a ban on all but es­sen­tial travel at the bluechip en­gi­neer.

The com­pany spends up to £150m a year on travel and ac­com­mo­da­tion but staff are now un­der in­tense pres­sure to slash this by 30pc.

Rolls-royce faces £1bn of ex­tra costs be­cause parts of its new Trent 1000 en­gine are wear­ing out faster than ex­pected.

A com­pany-wide in­ter­nal memo is­sued days after Rolls re­vealed mount­ing costs from the Trent 1000 in April warned of “ad­di­tional fi­nan­cial head­winds”. Staff have been urged to find “any way to re­duce in­di­rect costs … of which travel and ac­com­mo­da­tion are a ma­jor el­e­ment.

“There­fore with im­me­di­ate ef­fect all fu­ture travel will be re­stricted to that which is es­sen­tial for the busi­ness, [such as] vi­tal cus­tomer and sup­plier meet­ings and field en­gi­neer travel.”

Staff were told “air travel will be un­der par­tic­u­lar scru­tiny. We should use telep­res­ence con­fer­ence calls and other tech­nol­ogy wher­ever pos­si­ble”.

Costs have spiked as engi­neers have been dis­patched to in­spect and re­place parts on the af­fected jets.

The memo said a 30pc drop in travel spend­ing is be­ing tar­geted. When chief ex­ec­u­tive War­ren East took over in 2015, he gave up perks in­clud­ing a chauf­feur and com­pany flat with a re­mit to get Rolls on course after a slew of profit warn­ings.

He has since cut out lay­ers of man­age­ment, sold busi­nesses and re­duced five di­vi­sions to just three.

He has set Rolls a goal of gen­er­at­ing £1bn of cash a year by 2020, but the Trent 1000 could en­dan­ger this, lead­ing to even harsher mea­sures, in­clud­ing scrap­ping some non-en­gi­neer­ing train­ing and reducing IT in­vest­ment.

Last week, Rolls re­vealed that it would leave its West­min­ster base, head­ing for cheaper ac­com­mo­da­tion in Kings Cross. Staff were asked to “please do ev­ery­thing you can to re­duce costs”.

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