Rolls-Royce says it plans to cut 2,600 jobs over the next 18 months, mainly in its aerospace division.

Chief executive John Rishton said: "We are taking determined management action and accelerating our progress on cost."

"The measures announced today will not be the last, however they will contribute towards Rolls-Royce becoming a stronger and more profitable company."

It was also announced that chief financial officer Mark Morris will be replaced by former Jaguar Land Rover chief financial officer David Smith, who took up the role of finance director at its aerospace division earlier this year.

The restructuring is expected to cost stg£120m (€153m) over the next two years - but the company said it should see cost benefits of stg£80m (€102m) annually.

Sources say the job losses are due to general market conditions and are part of a series of cost cutting measures.

Shares in Rolls-Royce leapt 2.63% after the announcement.

Last month, the company warned that its underlying revenues for 2014 would be between 3.5% and 4% lower than expected, blaming the shaky economy and the effect of Russian trade sanctions.

Rolls-Royce grew from the electrical and mechanical business established by Henry Royce in 1884 - but it now employs more than 55,000 people in 45 countries.

It has not been revealed which offices are most likely to be affected.

Its customers include 160 armed forces, 70 navies and more than 380 airlines and leasing firms.

Rolls-Royce is best known for its aero engines which power some of the world's most advanced passenger jets, such as the new Airbus A350 and the Boeing 787 Dreamliner.

The company is not affiliated with the Rolls-Royce automobile brand, which is owned by Germany's BMW.