Engine maker Rolls-Royce today confirmed it had started talks with workers about how to tackle a £1.1 billion shortfall in its UK pension fund.
The deficit was announced at the same time as the company said underlying profits for 2002 had fallen to £255 million from £475 million a year earlier.
The economic slowdown has hit Rolls-Royce hard, with demand for civil aircraft engines sharply lower and the pension fund affected by weak stock markets.
However, the company stuck by forecasts today that it would return to growth in 2003 as the benefits of a post-September 11 restructuring take effect.
Chief executive Sir John Rose said: "We are consulting with our employees with the objective of limiting the financial impact of the current pension fund deficit."
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