RollsRoyce to Cut 2600 Aerospace Jobs

Photo Courtesy of Rolls-Royce

Rolls-Royce to Cut 2,600 Aerospace Jobs

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

LONDON -- Rolls-Royce (IW 1000/172), 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 programs 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 5% 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 program to improve operational efficiency and reduce cost," the company said in a statement -- after it cut more than 400 jobs at its defense 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 (US$192 million) over the next two years.

But it expects also to eventually deliver annualized cost savings of about £80 million thanks to the job cuts as well as a move to reorganize 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 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. "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 programs have now entered their production phase, reducing our engineering requirement," it noted.

Copyright Agence France-Presse, 2014

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