Rolls-Royce says worst is over after record loss

Rolls-Royce says worst is over after record loss

Via Reuters:

The worst of the COVID-19 crisis is over for Rolls-Royce, its CEO predicted on Thursday, after the engine maker plunged to a record 4 billion pound ($5.6 billion) underlying loss for 2020 as its airline customers stopped flying.

The British company said its cash burn should halve this year, and turn positive in the second half as vaccinations kick in and travellers return to the skies.

“The worst is now well behind us,” CEO Warren East said.

But even if that proves optimistic, Rolls is well placed to cope with more turmoil after a drive to cut costs and raise funds, he added.

“We have our cash burn under control … We have ample liquidity to get through this crisis as long as it lasts,” East told reporters.

Rolls’ model of charging airlines for the number of hours its engines fly meant much of its income dried up last year when travel stopped, forcing it to ask shareholders for cash and take on 5.3 billion pounds of new debt.

Its civil aerospace arm, whose engines power Airbus A350 and Boeing 787 jets, accounts for just over half of group revenue in a normal year.

Last year’s cash burn of 4.2 billion pounds was in line with analysts’ expectations, and Rolls guided that would reduce this year to 2 billion pounds.

The company axed 15% of staff in 2020, and earmarked 2 billion pounds of assets for sale to repair its balance sheet.

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