Rolls-Royce issues dire forecast for year ahead
Rolls-Royce has said it expects to burn through more cash than anticipated in 2021 as planes powered by its engines fly less amid the Covid-19 pandemic.
The company, which was in the midst of cost cutting exercise before the outbreak of the pandemic, expects £2 billion of cash to leave the business in 2021.
This is more than double the amount forecast by the aerospace giant last year.
Rolls-Royce is paid by the number of hours its engines are in use, so Covid-19 restrictions hit revenues.
The company, whose engines power many Boeing and Airbus aircraft, said it expected flying hours for this year to be 55 per cent of those seen in 2019.
This is down from a previous estimate of 70 per cent.
To shore up its finances, the company has already announced plans to sell assets worth billions of pounds.
It is also cutting more than £1 billion in costs by axing 9,000 jobs and closing factories.
“Continued progress on vaccination programmes is encouraging for the medium-term recovery of air traffic and economic activity,” Rolls-Royce said in a statement.
“In the near term, however, more contagious variants of the virus are creating additional uncertainty.
“Enhanced restrictions are delaying the recovery of long-haul travel over the coming months compared to our prior expectations, placing further financial pressure on our customers and the wider aviation industry, all of which are impacting our own cash flows in 2021.”