Nov. 20 (Bloomberg) -- Rolls-Royce Group Plc, the world's second-largest maker of aircraft engines, said it will cut as many as 2,000 jobs worldwide next year as economies slow and programs at Boeing Co. and Airbus SAS suffer delays.

The reduction would be equal to as much as 5 percent of the global workforce, London-based Rolls-Royce said in a statement today. An initial 140 posts will be cut at an assembly and test site at Derby, England.

A slump in sales of new planes as the credit crunch and slowing growth crimp demand for air travel has followed on the heels of delays to major programs. Production of Boeing's 787 Dreamliner has been hurt by a machinist strike, parts shortages, incomplete work by suppliers and a redesign, while Airbus may fall short of next year's delivery goal for the A380 superjumbo.

``We are determined to maintain our focus on cost reduction and competitiveness as the world economy enters a challenging period,'' Chief Executive Office John Rose said in the statement. ``It is too early to determine the precise effects of the global economic downturn and program delays. However, we wanted to give all our employees an early indication of the likely scale of the job reductions we expect in 2009.''

Rolls-Royce fell 5 pence, or 1.9 percent, to 262.75 pence in London trading. The stock has declined 47 percent this year, paring the company's market value to 4.82 billion pounds ($7.13 billion).

Office Jobs

Rolls employs 39,000 people, 60 percent of them in the U.K. The company, which has operations in 50 countries, said in January it would cut 2,300 office jobs to help counter the effects of higher raw-material expenses and the weaker dollar. That program is now largely complete, it said today.

The new reduction will eliminate 1,500 to 2,000 posts, with the emphasis on scrapping temporary positions, avoiding recruitment and seeking voluntary departures, the company said. Britain's Unite trade union said Rolls was overreacting and that it would not accept any compulsory firings.

``This announcement is bitterly disappointing,'' Unite National Officer Bernie Hamilton said by e-mail. ``Rolls-Royce must take a measured approach to this temporary downturn in the airline industry. In the past the company has cut too many jobs and Rolls-Royce struggled to meet the upturn in the market.''

Net income at Rolls fell 4 percent in the first half as it incurred costs from job cuts. Sales advanced 13 percent to 4.05 billion pounds and on Oct. 30 the company said full-year earnings would increase after it won more contracts.

``We have seen similar things in previous downturns and it reflects the reduction in flying and aftermarket revenue,'' Clive Forestier-Walker, an analyst at Numis Securities in London, said of today's announcement. He rates the stock ``hold.''

Traffic Falls

Global airline passenger traffic fell in September for the first time in five years. Carriers worldwide are cutting jobs and grounding planes to cope with the decline.

Rolls-Royce also singled out delays to the A380 and 787 as contributing to the need for job cuts. The U.K. company competes with an alliance of General Electric Co. and United Technologies Corp.'s Pratt & Whitney unit to power the A380, and with GE alone on the 787.

Boeing said Nov. 4 that the Dreamliner's first flight would be pushed back by an unspecified period after a 57-day strike by machinists that ended Nov. 2. Deliveries had been due to begin last May. Airbus said Nov. 14 it's unlikely to meet a goal of handing over 21 A380s in 2009 because of lingering difficulties with cabin wiring that delayed the model for two years.

Outside of the civil airliner market, Rolls-Royce gets 20 percent of engine revenue from military contracts and the rest from marine and industrial orders.

To contact the reporter on this story: Sabine Pirone in London at spirone@bloomberg.net

Last Updated: November 20, 2008 12:43 EST