BP is reducing its capex this year by 25%, a cut of $3 billion, while slashing operating costs by a similar figure over the next year. (Source: Tommy Lee Walker / Shutterstock.com)
BP Plc is planning to cut 10,000 jobs as coronavirus hits the oil major’s finances and the company accelerates a strategy shift under its new CEO to become leaner.
Bernard Looney said in a letter to staff on June 8 that the company was “spending much, much more” than it made as the pandemic had dealt a large blow to BP’s earnings and caused widespread financial damage across the energy industry.
While the company introduced a three-month redundancy freeze in March, this has now lifted. BP aims to cut nearly 15% of its workforce of about 70,000 people by the end of this year.
“The majority of people affected will be in office-based jobs. We are protecting the frontline of the company and, as always, prioritizing safe and reliable operations,” Looney said.
The latest announcement follows a decision last month to halve the number of top managers. The pool of managers will be cut from 250 to about 120, with many who held leadership positions under former chief Bob Dudley leaving the company.
Looney started in his new role in February and BP is working towards a new operational and leadership structure as it seeks to achieve its ambition to be a net-zero emissions company by 2050. While BP will generate the bulk of its cash from fossil fuels for the foreseeable future, it has ambitions to invest in cleaner businesses.
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Looney told the Financial Times in April that “there will be job cuts globally, towards the end of this year”, as the company seeks to drive down costs and reorganize the business, but denied at the time that BP planned to announce sizeable cuts in June.
BP is reducing its capital spending this year by 25%, a cut of $3 billion, while driving down operating costs by a similar figure over the next year. “We will likely have to go even further,” Looney wrote in the letter to staff.
It has secured new credit lines and tapped the bond market for nearly $7 billion. BP has kept its dividend intact but said it would review its dividend policy quarter by quarter, with analysts saying its current payouts were unsustainable.
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