Rolls-Royce have announced they are to cut 4,600 jobs over the next two years, with full implementation by 2020.

Chief Executive Warren East stated that the reorganisation will be the company’s biggest in the last 20 years and will affect around 10 per cent of management and back-office staff. About two-thirds of the cuts will be at their Derby headquarters, with around a third expected to happen by the end of this year.

Since the first of five profit warnings were given in 2014, 5,000 jobs have been cut, with a saving of £250m. Whilst this restructuring will cost £500m to carry out, it is expected to save the company £400m a year by the end of 2020 and will allow for future investment in civil aerospace, defence and power systems. Warren East state:

“We have world class technology [but] we are just not a world class business to go alongside it.”

Added to Rolls-Royce’s difficulties have been the cost implications associated with the issues on the Trent 1000 engine. Parts on the engine - which powers Boeing’s 787 Dreamliner - have been wearing faster than anticipated, causing more than 30 aircraft to be grounded. The problems of premature corrosion will take years to modify and has been estimated by some experts to cost in the region of £1bn to rectify.