Rolls-Royce says flying hours of its large engines reached 40% of their levels so far in 2021
Rolls-Royce (LON:RR) confirmed on Thursday that it will turn free cash flow positive at some point during the second half of 2021 as the vaccine roll-out continues and air travel makes a return.
The FTSE 100 engineering company said its performance since the turn of the year has met expectations after what proved to be a brutal period during 2020.
Because Rolls-Royce charges airlines for the amount of time in which they use the engines, its income plummeted when travel restrictions came into place.
The company has taken measures, including taking on debt and raising equity in order to remain afloat.
During the first four months of 2021, Rolls-Royce said that the flying hours of its large engines had reached 40% of their levels from before the pandemic.
Rolls-Royce Holdings plc is holding its Annual General Meeting (AGM) today. In his address to shareholders, chief executive Warren East will commented: “We faced unprecedented challenges in 2020 with events that were beyond our control. We acted quickly and decisively by putting in place the measures necessary to protect our people and our business. I would like to thank our colleagues for the dedication and hard work this year and all our stakeholders for their engagement and support.”
Jack Winchester, Analyst at Third Bridge, commented on Rolls-Royce’s update and outlook:
“As Rolls Royce holds its AGM today, it will be looking back on a first few months which seemingly have not been a great surprise. Flying hours logged by the company’s engines – and the metric by which Rolls Royce collects cash from customers – was at just 40% of 2019 levels and is expected to reach 45-55% for the full year.”
“Rolls Royce is trapped in a costly holding pattern until long-haul travel recovers, and that isn’t forecast to happen until at least 2024, according to many of our experts. The company’s focus on the wide-body engine market means that until more long-distance commercial jets are back in the air again Rolls Royce is going to continue losing money.”
