Rolls-Royce Expects to Make Progress on Job Cuts

By Robert Wall 

DERBY, England-- Rolls-Royce Holdings PLC expects to make progress on job cuts already this year after the company recently announced it would step up efforts to curb costs.

"I would anticipate quite a large number of people would leave the business before the end of his year," said Tony Wood, president of Roll-Royce aerospace.

Rolls-Royce last month announced it would slash 2,600 jobs, principally in its aerospace unit, at a cost of around GBP120 million over the next two years after Chief Executive John Rishton complained over "mixed progress" in cost-cutting efforts across the company.

"We are already well under way" with restructuring steps, Mr. Wood said.

The bulk of the restructuring measures will be implemented by the end of next year, though Mr. Wood said some cuts could continue into 2016. Rolls-Royce has said the layoffs announced last month aren't the end of the drive to cut costs.

The London-based company also replaced its chief financial officer after a series of profit warnings over the past year. Rolls-Royce said a promised return to growth in 2015 would be delayed amid a global economic slowdown, with underlying revenue for this year projected to fall by between 3.5% and 4%. Previously, the company said sales would be roughly unchanged from last year.

The effort to reign in costs comes as Rolls-Royce expects to see a sharp rise in commercial jet engine production driven by deals to power Boeing 787 Dreamliners planes and Airbus long-range jets. The British manufacturer will reach more than 50% market share for delivered widebody aircraft engines from 2016 and remain at that level for several years, said Eric Schulz, head of large aircraft engine programs at Rolls.

The engine maker competes for 787 orders against General Electric Co. and is the only turbine provider on the Airbus A350, due for its first delivery this month, and the A330neo jets set to enter service in 2017.

The increase in production should help Rolls-Royce in its effort to become more efficient as production facilities built to accommodate the anticipated output increase become fully used.

Write to Robert Wall at [e-mail]

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