Rolls-Royce has lost its nerve... people are panicking

Sir Ken Jackson, AEEU

The cuts, which follow a thorough review of the company's prospects in the wake of the 11 September terror attacks on the US, will mainly hit the firm's British operations, where about 3,800 staff will go.

Sir Ken Jackson, general secretary of the Amalgamated Engineering & Electrical Union, said that the company had been hasty.

"Rolls-Royce has lost its nerve... people are panicking," he told BBC Radio Four's Today programme.

John Wall, national secretary for aerospace at the MSF union, said: "The company has failed again to grasp the concept of partnership with the workforce."

Union leaders had earlier warned the firm, which employs 43,500 people in 48 countries, against a knee-jerk reaction to the slump in the wider aviation industry.

Plants await the axe

Rolls-Royce plants in Derby, Bristol, and East Kilbride and Hillington in Scotland are also thought to be at risk of substantial job losses.

Reports suggested that the Derby plant may bear the brunt of the cuts.

Aerospace job cuts this year

Boeing: 30,000 Honeywell: 6,500 United Technologies: 5,000 Rolls-Royce: 5,000 Bombardier: 3,800

Rolls-Royce has said it will reveal details of the regional breakdown over the next few weeks.

In addition to the 5,000 cuts, some 1,000 contract workers will also be shed, the firm said.

Although Rolls-Royce said some sectors of its business would be unaffected, it warned that sales at its civil aerospace business in 2002 were likely to be some 25-30% below this year's.

This fall represents a loss of some �1bn in trade.

Friday's cuts replace a programme announced earlier in the year, under which 2,000 jobs were to be lost as part of a three-year cost-reduction plan.

Fall in demand

Many airlines were suffering downturns in business before the attacks, as demand contracted in line with the US-led global economic slowdown.

More than 50% of Rolls-Royce's business is with civil aerospace customers.

Demand for civil aircraft engines is plummeting

It makes engines for a wide range of commercial aircraft including the new long-range Airbus A340 and the Airbus A380 super-jumbo, which has yet to go into commercial operation.

Both Airbus and rival aircraft maker Boeing have confirmed that many airlines have asked for delays in the delivery of aircraft and that new orders have fallen sharply.

Rolls-Royce's US competitor United Technologies - which owns Pratt & Whitney - has already cut thousands of jobs.

In the City, Rolls-Royce shares, which lost 6% on Thursday, closed up 2.75p at 137p on Friday.