Rolls-Royce in Britain plans to cut thousands of workers from its payroll over the next 18 months to increase operational efficiency and reduce costs.

The majority of the 2,600 employees facing job loss are in the company's Aerospace division. Most who will be terminated will be let go next year.

"We are taking determined management action and accelerating our progress on cost," said John Rishton, chief executive officer. "The measures announced today (Tuesday) will not be the last, however they will contribute towards Rolls-Royce becoming a stronger and more profitable company.

"We will work closely with employees and their representatives to achieve the necessary reductions on a voluntary basis where possible, while making sure we retain the skills needed for the future."

Rolls-Royce said some company investments in technology and new capacity -- along with organizational changes -- have led to increased output and improved efficiency. Among them: reducing engineering team positions as the Trent 1000 and Trent XWB engines have transitioned from the development phase to the production phase; the opening of new facilities with greater efficiency; and reorganization of the company into two divisions -- Aerospace and Land & Sea, thus reducing management layers and structural cost.

"We anticipate these actions will result in incremental restructuring costs of around �Pounds 120 million (about $1.92 million) over the next two years," the company said. "We intend to accrue around half of these costs this year, subject to employee consultation. We expect annualized cost benefits of around �Pounds 80 million (about $127.9 million) when fully implemented."