Rolls-Royce (LON: RR) will announce over 4,000 jobs cuts this week in attempts to reduce costs and increase profits.
The cuts are expected to be revealed on Friday when the firm updates City analysts. According to the Sunday Times, the cuts will affect middle managers and back-office staff.
“We are proposing to move to a considerably simplified staff structure, with fewer layers and greater spans of control across the group,” said a spokesperson for Rolls-Royce.
“We said we had retained restructuring experts … to support us with this programme. We added that we expected this programme to deliver a significant reduction in costs and assist us in improving performance across the group as a whole.”
The group has declined to comment on the exact number of job losses.
Jobs in human resources, finance and purchasing are expected to be affected. Frontline engineering jobs are likely safe due to last year’s deal between the company and union to protect around 7,000 roles at plants in Derby, Hucknall and Annesley in a £150 million investment in UK aerospace facilities.
Analysts at JP Morgan (LON: JMC) wrote in a note last month: “We would not be surprised if [Rolls-Royce] announces a headcount reduction of c10 percent. We would not be surprised if its upfront restructuring costs were c£350-400 million over [one to three] years.”
In February 2017 the jet engine-maker reported a record loss of £4.6 billion. The job cuts will save the company an estimated £200 million by 2021.
The chief executive, Warren East, who took over in 2015 is in the process of carrying out a major cost-cutting drive.
“We must ensure our wide ranging business transformation programme delivers the full benefits expected, not only in terms of cost savings but also the cultural and behavioural changes necessary to ensure the transformation is sustained and high standards of business conduct are maintained,” he said.
“These are essential if we are to become a more trusted, resilient company.”