Coronavirus: BP to cut 10,000 jobs following global slump in oil demand

Edmund HeaphyFinance and news reporter
Yahoo Finance UK
Oil giant BP said that it was axing thousands of jobs following a plunge in oil prices. (Yuriko Nakao/Getty Images)
Oil giant BP said that it was axing thousands of jobs following a plunge in oil prices. (Yuriko Nakao/Getty Images)

Oil giant BP (BP.L) said on Monday that it was axing 10,000 jobs at the company, citing the widespread economic fallout from the coronavirus pandemic and the resulting slump in oil prices.

The job cuts, equivalent to 15% of the company’s global workforce, will mainly affect senior office-based roles, the company said.

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“The oil price has plunged well below the level we need to turn a profit. We are spending much, much more than we make,” chief executive Bernard Looney said in a webcast to employees.

Looney told employees that BP was aiming to reduce capital expenditure by $3bn (£2.4bn) in 2020, and operating expenditure by $2.5bn.

“We will now begin a process that will see close to 10,000 people leaving BP — most by the end of this year,” he said.

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Looney noted that the senior rungs of BP’s workforce would “bear the biggest impacts,” telling employees that the company’s new structure would see the number of most senior-level jobs halved and the number of group leaders slashed by a third.

“The majority of people affected will be in office-based jobs. We are protecting the frontline of the company and, as always, prioritising safe and reliable operations,” he said.

Looney, who took over as chief executive in February, had already pledged to invest more in clean energy as part of a goal to become a carbon-neutral business by 2050.

But he suggested on Monday that the coronavirus pandemic was likely to speed up the company’s transition away from fossil fuels.

“To me, the broader economic picture and our own financial position just reaffirm the need to reinvent BP,” Looney said.

“While the external environment is driving us to move faster — and perhaps go deeper at this stage than we originally intended — the direction of travel remains the same.”

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Looney’s announcement marks the end of the three-month redundancy freeze that had been announced in March.

The company will also proceed with pay rises for certain employees from 1 October, and will resume promotions “in a measured way” from 1 July.

Looney said, however, that cash bonuses at the oil giant were “very unlikely this year.”

“Everyone on the BP leadership team realises these decisions will mean significant, life-changing consequences for thousands of colleagues and friends,” said Looney, noting that the company would help people launch a new career and help sharpen the job-seeking skills of departing employees.

In the three months to the end of March, BP made $791m (£624m) in underlying replacement cost profits, BP’s definition of net income.

While that was above consensus estimates, it represented a 66% decline on the same period a year ago. The company’s net debt rose $6bn to $51.4bn in the quarter.

BP did not give an update on its second quarter on Monday.

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