Aerospace giant Rolls-Royce axed its dividend for the first time since 1987 on Monday and instigated major staff pay cuts as a string of other companies suspended dividends.
The FTSE 100 firm, which makes engines for passenger jets, will give 52,000 workers a 10% salary cut for the next 12 months but promised to pay them back a lump sum next year if conditions improve. About 120 senior managers are taking a 20% pay cut, including chief Warren East,
The dividend suspension will save £137 million. The last time Rolls failed to pay a dividend was upon privatisation after 16 years of state-ownership.
Rolls has also built up a cash buffer of an astonishing £6.7 billion after taking out more loans to weather the coronavirus storm.
Rolls is a major supplier to Airbus and Boeing and is suffering because of the downturn in global air travel. It gets paid for the time planes spend in the air and flying hours fell 50% in March.
Another major engineering firm, Babcock, today pledged to review its dividend but did not cut.
Ten other companies axed dividends on Monday, according to AJ Bell. They were: GVC, Petrofac, RBG, Amadeo Air Four Plus, SThree, ScS, Yu Group, H&T, Reach and Spectris.
