Covid-19 drives Rolls Royce to huge loss
Rolls Royce has reported a loss before tax of £5.4 billion for the first half of financial 2020 as the Covid-19 pandemic takes a huge toll on the aviation sector.
Underlying revenue fell to £5.6 billion, down 24 per cent, while reported revenue stood at £5.8 billion, down 26 per cent.
The company confirmed the closure of factories in Nottinghamshire and Lancashire earlier this week, as part of plans to cut 3,000 jobs across the UK.
The move is part of a previously announced cost-cutting exercise.
The plan will see the company slash its global workforce by a fifth, following the drastic fall in air travel because of the coronavirus outbreak.
Rolls-Royce is in the middle of its biggest restructuring in its history, which will reduce the number of sites it has worldwide from 11 to six.
Warren East, chief executive of Rolls Royce, said: “We ended 2019 with good operational and financial momentum.
“However, the Covid-19 pandemic has significantly affected our 2020 performance, with an unprecedented impact on the civil aviation sector with flights grounded across the world. We have responded rapidly to increase our liquidity, with £6.1 billion at the end of half one of 2020 and a further £2 billion term loan agreed in half two, to help weather the continued uncertainty around the timing and shape of the recovery in the civil aviation sector.”
He added: “We have made significant progress with our restructuring, which includes the largest reorganisation of our Civil Aerospace business in our history.
“This restructuring has caused us to take difficult decisions resulting in an unfortunate but necessary reduction in roles.
“These actions will significantly reduce our cost base, which combined with recovery in power systems and continued resilience in defence, will help us to deliver significantly improved returns as the world recovers from the pandemic.”
Rolls Royce said the Covid-19 shutdown had meant large engine deliveries and flying hours were both down around 50 per cent over the last six months, including a 75 per cent reduction in engine flying hours in quarter two.
However, business jets and regional flying hours were more resilient, the company added.
Image: Rolls Royce