Rolls-Royce plans 'painful' overhaul to save £200m a year

Chief executive Warren East, who took over in the summer, is outlining plans to investors after the firm issued its fourth profit warning in just over a year, earlier this month. In the business jet market, Rolls-Royce has lost significant market share to its competitors. JPMorgan Chase & Co. restated an underweight rating and set a GBX 630 ($9.53) price objective on shares of Rolls-Royce Holding PLC in a research note on Wednesday, October 7th.

Mr East's comments came as he unveiled details of a review of the business.

A European Union probe into levels of competition in maintenance, from which aero-engine companies derive the bulk of revenue, is focused mainly on the single-aisle market and therefore doesn't much concern Rolls, East said.

East, however, said the focus will be on reducing costs and simplifying processes and systems which he said had become "bloated" over "many, many years".

Under the shareholding changes in Hong Kong Aero Engine Services, SIAEC will divest its entire 10 percent shareholding in the business for $116 million, with Rolls-Royce and HAECO each taking 5 per cent, increasing their shareholdings to 50 percent each.

He said: "I don't actually know the job numbers right now", adding that more will be revealed when the company reports its full-year results in February.

"This is fundamental to ensuring Rolls-Royce best positions itself to compete for the long-term opportunities before us", he added.

Some analysts have suggested that the company's marine engine unit - including diesel maker MTU - has proved to be a distraction from its core aerospace business, and USA activist investor ValueAct has pushed for the company to sell the division.

Jobs are at risk among its 2,000 global senior managers as Rolls looks to save up to £200million a year from 2017 but engineers will not be affected.

With cost savings and major restructuring high on the agenda, he has made it clear the Rolls-Royce overhaul will be very thorough.

East said it was a matter for the board as to whether the hedge fund was given a seat on the Rolls-Royce board.