Rolls-Royce reports record £5.4bn loss as Coronavirus hits aviation

Rolls-Royce reports record £5.4bn loss as Coronavirus hits aviation
Rolls-Royce reports record £5.4bn loss as Coronavirus hits aviation

Engine-maker Rolls-Royce unveiled further action to boost its battered finances as it plunged to a record £5.4 billion half-year loss after the pandemic sent demand for air travel slumping.

The group now plans to sell off parts of its business to raise more than £2 billion, on top of the biggest ever shake-up of its civil aerospace arm that has already cost 4,000 jobs since May alone.

Rolls said the asset sales will help boost its balance sheet amid an “unprecedented” drop in aviation activity, which sent it slumping to the mammoth loss for the six months to June 30 against losses of £791 million a year earlier.

On an underlying basis, the group swung to a £3.2 billion loss from profits of £93 million in the previous 12 months.

Shares in the FTSE 100-listed group fell 8% after the results.

Rolls has earmarked ITP Aero in Spain for sale among other businesses to offload, but said it is continuing to “assess additional options” to bolster its finances.

Experts said an investor cash call is looking more likely as the prospects for the aviation sector look grim for the next few years at least.

Derby-based Rolls announced in May that 9,000 jobs would be axed globally in response to the pandemic – 3,000 of which will be in the UK.

At least 5,000 jobs worldwide are now expected to go by the end of this year.

It dealt a blow to UK workers on Wednesday, announcing plans to shut its aerospace factory in Annesley, Nottinghamshire, and merge sites in Lancashire.

In its half-year results, it said demand for large engines is set to remain below 2019 levels until 2025 and warned of “material uncertainties” caused by the pandemic which could cast doubts over its future.

In a “severe but plausible downside scenario”, which includes a second wave of Covid-19, it said it would only have necessary borrowing facilities for the next 12 months and would be forced to raise extra cash.

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