Rolls-Royce to axe 2,600 jobs

Rolls announced in a statement that it will reduce its number of employees by 400 by the end of next year, on top of 600 job cuts already unveiled in May (AFP Photo/Justin Tallis)

London (AFP) - Rolls-Royce, the maker of aircraft engines, said on Tuesday that it plans to shed 2,600 jobs, mainly at its aerospace division, over the next 18 months to cut costs.

The British company said headcount reduction was necessary following the completion of development programmes for engines used to power Boeing 787 Dreamliner and Airbus A350 passenger planes.

It also hinted in its statement at further cuts to a global workforce currently at 55,000.

The announcement to reduce staff numbers by almost five percent comes after Rolls had last month slashed its earnings forecasts partly as a result of Western trade sanctions against Russia over the Ukraine crisis.

Meanwhile in May, Rolls-Royce shocked investors when it issued a profit warning at its marine division, which has been beset by production problems. The group has been hit hard also by adverse foreign exchange movements.

"Rolls-Royce today announces additional headcount reductions as part of an intensified programme to improve operational efficiency and reduce cost," the company said in a statement -- after it cut more than 400 jobs at its defence unit in early 2014 owing to government budget cuts.

"We now propose a restructuring plan that will reduce headcount by 2,600 over the next 18 months, principally in our Aerospace division. The majority of this reduction will be achieved in 2015," the statement added.

Rolls said its restructuring plan would result in incremental costs of about £120 million ($192 million, 154 million euros) over the next two years.

But it expects also to eventually deliver annualised cost savings of about £80 million thanks to the job cuts as well as a move to reorganise the company into two divisions -- Aerospace and Land & Sea. Rolls makes power systems also for submarines.

Rolls announced that David Smith had been appointed as its chief financial officer with immediate effect, replacing long-serving employee Mark Morris.

Smith joined Rolls-Royce earlier this year from US car giant Ford, taking up the role of chief financial officer at the group's aerospace division.

"We are taking determined management action and accelerating our progress on cost," Rolls-Royce chief executive John Rishton said in the statement.

"The measures announced today will not be the last, however they will contribute towards Rolls-Royce becoming a stronger and more profitable company."

The statement added: "A large engineering team was required for the development phase of the Trent 1000 and Trent XWB engines" for Boeing and Airbus planes, respectively.

"Both these major programmes have now entered their production phase, reducing our engineering requirement," it noted.

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