Rolls-Royce lowers forecast on air travel
By Rob Freeman | 26th January 2021
Rolls-Royce said it expects to work its way through £2billion in cash this year with continued uncertainty over air travel.
In a trading update the engine maker, which has a base in Gloucester, said new coronavirus variants and ongoing restrictions cut its forecast for engine flying hours.
It predicts they will reach 55 per cent of pre-pandemic levels from 2019, down from the 70 per cent predicted in October.
The trading statement said: "Continued progress on vaccination programmes is encouraging for the medium-term recovery of air traffic and economic activity.
"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."
The company said it had made savings of more than £1billion over the past year with 7,000 roles lost of the 9,000 planned by the end of 2022.
"This restructuring will be a key enabler of our target to deliver at least £750 million of free cash flow (excluding disposals) as early as 2022, contingent on the expected recovery in engine flying hours," the statement said.
"With liquidity of approximately £9billion, we are confident that despite the more challenging near-term market conditions we are well-positioned for the future."
Full year results are due to be announced in March.
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