Britain’s Rolls-Royce downgraded expectations for how much its engines would fly this year and warned of a big cash outflow, blaming extra travel restrictions aimed at stopping the spread of new COVID-19 variants.
Rolls-Royce said that it now expected a cash outflow in the region of 2 billion pounds in 2021, significantly higher than the 864 million pounds of outflow analysts are currently expecting according to a consensus forecast on its website.
It now expected engine flying hours, a key measure of how much it is paid by airlines, to come in this year at about 55% of 2019 levels this year, compared to a previous base case forecast of 70% given last October.
Rolls-Royce said that its liquidity of 9 billion pounds gave it confidence it was well-positioned for the future despite the more challenging environment. It also said it was making good progress with cost-cutting plans.
It stuck to its forecast to turn cash flow positive at some point during the second half of the year, saying it expected the cash outflow to come mainly in the first half.
($1 = 0.7332 pounds)