Rolls-Royce is poised to reveal the full extent of massive job cuts later this month as the jet engine maker battles to cope with an unprecedented collapse in air traffic.
The firm vowed to set out details of a redundancy programme by the end of May as it warned that trading has been grim and pushed back publication of its half-year results due to the havoc being wreaked by coronavirus.
It sparked fears that the company may even be forced to seek a lifeline from taxpayers.
Half of Rolls' £15bn annual revenues come from selling and servicing airliner jets. It has been hammered by a 40pc fall in flying hours on its engines in the first four months of the year, with a 90pc plunge in April alone.
Boss Warren East said he expects the “severity of disruption caused by Covid-19 to lead to a smaller commercial aerospace market which may take several years to recover”.
As a result, Rolls is understood to be looking to cut 15pc of its workforce – about 8,000 staff – on top of a longer-term programme to remove 4,600 jobs.
The company is also making £1bn of savings and warned that deliveries of new engines this year will almost halve to 250, alongside lower demand for lucrative maintenance work.
Rolls’s defence arm, which represents about 20pc of revenue, is steady, but Mr East warned that the power division which is about the same size is suffering from a drop in demand.
Heavyweight broker JP Morgan has already suggested Rolls will need to raise £6bn on the markets to endure Covid, and is now predicting even more cash will be needed. The government may have to step in with a bailout, it said.
David Perry, an analyst at the investment bank, said: “Rolls is one of the most prestigious and important UK engineering companies.”
“Rolls’s role in the UK economy and in the global civil aero supply chain means it cannot be allowed to fail. This crisis is of far greater magnitude than anything imaginable.
“We recently argued that Rolls needed to issue £6bn in new equity. We now think this may not be enough and would not rule out a major equity raise this year and/or government intervention.”
The UK government has a “golden share” in Rolls which gives it the ultimate say in the company’s future.
This holding is a legacy from when Rolls was nationalised in 1971 after it ran into financial troubles developing an advanced new engine. It prevents a foreign power gaining control over the company’s sensitive work on jet engines for military aircraft and nuclear power plants for submarines.
The level of uncertainty caused by coronavirus has forced Rolls to push back its interim results announcement from July to the end of August.
Robert Stallard, an analyst at Vertical Research, said that Rolls’s civil aerospace arm depends on providing engines for wide-body airliners - jumbo-jets whose long-haul routes are likely to be the last to return to normal.
He added: “With wide-body looking likely to be one of the hardest hit parts of the aerospace industry and the slowest to recover, this puts Rolls in the epicentre of the aero downcycle pain.”
Shares in Rolls fell 2.5pc to 286p, meaning they have fallen 70pc in a year.
The company's troubles came as Melrose, the industrials business which acquired aerospace and automotive blue-chip GKN, reported that since coronavirus hit its sales have slumped by a fifth.