Second Wave Hits Rolls-Royce

Engine flying hours were at 33% of 2019 levels in October and November, 29% in the third quarter and 24% in the second quarter.

Rolls-Royce has said its widebody engine flying hours for the first 11 months of the year were only 42% of the number recorded over the same period in 2019.

This has been disastrous for its MRO business, much of which charges on a flight-hour basis, while time-and-materials contracts have also been affected as airlines have sought to avoid costly maintenance events.

Deferrals and cancellations of new widebody aircraft orders have also hurt its original equipment sales, causing to the British OEM to forecast negative free cash flow for 2020 of £4.2 billion ($5.5 billion).

However, Rolls-Royce has stuck with its guidance for a return to cash generation in the second half of 2021, having noted a “gradual recovery” in flying hours, albeit one that stuttered in October and November as many countries experienced a second wave of Covid-19 infections.

Engine flying hours were at 33% of 2019 levels in October and November, 29% in the third quarter and 24% in the second quarter.

“We have taken decisive actions to protect and reposition our business in difficult and uncertain trading conditions, including the impact from a second wave of COVID-19,” stated Rolls-Royce CEO Warren East, adding: “The outlook remains challenging and the pace and timing of the recovery is uncertain. However, our actions have given us a strong foundation to deliver better returns as our end markets improve.”

Those actions include the recently announced restructuring of its manufacturing operations, with several elements transferred from UK sites to Spanish company ITP Aero, which Rolls-Royce plans to then sell off.

Rolls-Royce took majority control of ITP in 2016. The OEM expects to deliver 250 engines in 2020.

Comments

1 Comment
Do not be surprised to see the Chinese make a " behind the curtain " run to take over Rolls Royce, they have the capital to do it and the UK Government might just look the other way