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Rolls-Royce to ax 4,600 jobs in restructuring plan

Rolls-Royce Holdings PLC will cut some 4,600 roles over the next two years in a proposed restructuring to boost profits, margins and cash flow.

CEO Warren East said the workforce reduction would not affect teams fixing issues affecting its Trent 1000 engines since the job cuts are centered on corporate support functions and management, not manufacturing or engineering, Reuters reported.

Most of the job cuts will be in the U.K., where the majority of corporate and support functions are based, the company said in a June 14 release, but the move to reduce management layers will also include engineering. About a third of the affected roles are expected to leave by the end of 2018, ramping up to a full implementation of headcount reductions and structural changes by mid-2020.

Rolls-Royce expects to spend £500 million in cash for the restructuring, including cost of redundancies and related systems, and will incur the one-off costs across 2018, 2019 and 2020. The company expects full-year net cost savings from the restructuring to reach a run rate of £400 million per year by the end of 2020.

The company said its full-year 2018 guidance for group free cash flows of about £450 million, plus or minus £100 million, remains unchanged.

CEO Warren East said a more streamlined organization will allow the company to both generate higher returns and "invest for the future." COO Simon Kirby is reportedly leaving in June as part of the streamlining efforts.