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Rolls-Royce will axe 2,600 jobsReuters

Rolls-Royce has announced it will cut 2,600 jobs over the next 18 months after the firm was forced to make a profit warning last month.

The British engineer said the job losses will cost £120m but will eventually save around £80m once the changes have been fully implemented.

"We are taking determined management action and accelerating our progress on cost," said chief executive John Rishton told Reuters.

"The measures announced today will not be the last, however they will contribute towards Rolls-Royce becoming a stronger and more profitable company."

The decision comes after Rolls-Royce last month surprised investors by announcing its first profit warning in a decade, an alert that wiped 8% off the company's value in a single day.