Aerospace giant Rolls-Royce expects to burn through more cash than expected his year as planes powered by its engines fly less amid the pandemic.
The company, already slashing billions of pounds in costs, expects £2bn of cash to leave the business in 2021, more than double forecasts.
It is paid on the number of hours its engines are in use, so the Covid restrictions hit its revenues.
New strains of the coronavirus are also making predictions harder, it added.
Rolls-Royce, whose engines power many Boeing and Airbus aircraft, said it expected flying hours for this year to be 55% of those seen in 2019, which was down from its previous estimate of 70%.
The news sent shares in the company down as much as 9% in early London trading.
To shore up its finances, the company has already announced plans to sell assets worth billions of pounds. It is also cutting more than £1bn 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 on Tuesday.
“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 has about £9bn it can draw upon, it said, meaning that it was “confident that despite the more challenging near-term market conditions we are well-positioned for the future.”
Rolls-Royce also said it expected to stem the tide of money flowing out of the business in the second half of the year.
Source: bbc.com
