British plane engine manufacturer Rolls-Royce said that it plans to cut 4,600 jobs over the next two years as part of a major restructuring effort.
Around 3,000 of the cuts will affect U.K. employees, particularly at a site in the English city of Derby, where it is one of the biggest local employers. Rolls-Royce currently employs 26,000 people in the U.K., almost half of its total workforce worldwide.
Frank-Martin Hein, spokesperson for the engineering giant, said that up to 2,000 redundancies could be made this year and that mostly support and management roles will be cut.
Chief executive Warren East told the BBC's Today programme that Rolls-Royce needed fewer layers of management: "We have too complex a management and support organisation and we need to simplify that so that we can remain competitive." He warned compulsory redundancies were inevitable.
The company said Thursday it wants to save £400 million ($537 million) over the next two years to sustain an increase in profits.
While Rolls-Royce saw a 25 percent rise in profits in 2017, it has issued a series of profit warnings in recent years, and Rolls-Royce is struggling to recoup the costs of long term investments. Since 2010, the company has invested over £11 billion ($14 billion), a substantial portion of which was devoted to researching and developing a new engine for the Boeing 797.
"These changes will help us deliver over the mid- and longer-term a level of free cash flow well beyond our near-term ambition of around 1 billion pounds by around 2020," said CEO Warren East.
News of the overhaul please the City of London and Rolls-Royce shares topped the FTSE 100 leaderboard with its shares climbing as much as 4.2pc .