Rolls-Royce to cut 4,600 jobs with axe falling mainly in UK

Rolls-Royce has announced 4,600 job cuts – mainly in the UK – to save £400m a year in the latest round of restructuring under chief executive Warren East.

The aero-engine maker will cut support staff and management over the next two years with a third of the jobs disappearing by the end of 2018. The cost of the restructuring will be £500m.

Rolls said the job reductions were designed to strip out overlaps between business units and the company’s large corporate headquarters, based in Derby in the East Midlands. The businesses will be fully accountable for their performance and will have the support they need after the overhaul, the company said.

“We are making these job cuts right now because as a business we have a good market share, especially in wide-body civil aircraft," East told the BBC. "The problem is we need to improve our business performance so that we are making a sufficient money out of that to expand in the future.

“We have been hiring the people who make the components and make the engines. We have to complex a management and support organisation. Most of these management and support functions are in Derby and it will be most strongly felt in Derby.”

He said the scale and timetable for the job cuts meant compulsory redundancies were inevitable.

East has already been through several rounds of reorganisation at Rolls after taking over in July 2015 following a string of profit warnings by the company that was seen as a symbol of the UK’s engineering abilities.

Rolls’s problems have been intensified by faults with its Trent 1000 engines, which are used by Boeing. The company has set aside at least £300m over two years for repairing the engines and on 11 June Rolls said it would carry out tests on a further 166 engines.

East said the job cuts were not linked to the cost of the Trent engine matter.

“It’s true that is going on at the moment. This is completely disconnected. We need to make ourselves competitive and fit for the future.”

The company said trading was in line with guidance set out in March for “free cash flow of around £450m +/- £100m”.