With the effects of the COVID-19 pandemic seeing flight hours of Rolls-Royce engines halved, the British company has advised that it has already burned through £3 billion (US$3.8 billion) and anticipates that a further £1 billion (US$1.3 billion) of outflow will transpire in the second half of the year.
For the months of April through June, flying hours for its engines fell 75 percent. While still having £8.1 billion (US$10.5 billion) available, Rolls-Royce is now looking at options to strengthen its balance sheet, according to Warren East, the company’s CEO. He told reporters this Thursday that: “The COVID-19 pandemic has created a shock across the entire civil aviation industry,” adding: “Across the first half of this year, widebody engine flying hours, which we get paid for under our servicing contract, were half of what they were last year.”
The company has already announced that 9,000 jobs will go, predominantly from its civil aviation sector, but East warned that there may also be a need to close sites. He further cautioned that though engine flying hours may recover by up to 70 percent in 2021, engine delivery numbers would remain suppressed, indicating that the restructuring target would be to create free cash flow of approximately £750 million (US$975 million) by 2022. While some analysts believe that if the COVID-19 pandemic rages on or a recovery in the industry is delayed then Rolls-Royce may need to turn to the government for help, East was more pragmatic: “The number one thing governments all around the world can do to help this industry is to get people flying again.”
