Defence and aerospace giants BAE Systems and Rolls-Royce warn of job losses

A Eurofighter Typhoon at BAE Systems' Warton Aerodrome in Lancashire.
Photo: Peter Byrne/PA Wire

A Eurofighter Typhoon at BAE Systems' Warton Aerodrome in Lancashire. Photo: Peter Byrne/PA Wire - Credit: PA

Aerospace and defence group BAE Systems and engine maker Rolls-Royce have both warned of job losses amid weakening demand.

Up to 371 jobs are to be axed at BAE as it slows production of its Typhoon jet fighters – a move it said would hit its 2015 financial results and see sales of the aircraft fall from around £1.3billion this year to £1.1billion in 2016.

BAE said most of the job losses would affect its 13,000-strong workforce at Samlesbury, in Lancashire, although it added that opportunities elsewhere in the business could mitigate the number of compulsory redundancies.

The group has cut earnings outlook for the full year and now expects earnings per share to be around 38p, the same as last year, having previously said they would be “marginally higher”.

However, while incoming orders have disappointed, the group said it expected talks to see additional Typhoon contract wins “in the months ahead”.

BAE chief executive Ian King said: “Overall the company is operating in an improving business environment and we continue to win new orders, with good prospects for the future.

“In the short term, action to extend the production life of Typhoon aircraft by reducing the current production rate and a charge to impair the carrying value of the Williamstown shipyard in Australia will impact the group’s 2015 results.”

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Rolls-Royce, meanwhile,is set to “streamline” its senior management next year after again downgrading its profits forecast for 2016.

The firm said that 2015 profits would be at the lower end of its guidance range of £1.325billion to £1.475bn and that, due to significantly weaker demand, it faced profit “headwinds” of around £650million next year, up from the £300m cut to profits outlined in July.

In response, the company will launch a restructuring programme for next year, which it hopes will save it around £150m to £200m a year.

The programme will see the firm “simplify the organisation model, streamline senior management and add greater pace and accountability to decision-making”.

Rolls-Royce currently has around 2,000 staff who would fall into the senior management category. It is not yet clear how many jobs might be cut, but they will not be limited to its UK operations.