Rolls-Royce Holdings projected free-cash outflows of about £2 billion (€2.3bn) this year, saying new curbs on travel will delay a recovery in long-distance flights.
The UK jet-engine maker now expects flying hours for wide-body aircraft to reach 55 per cent of 2019 levels, versus an earlier assumption of 70 per cent, it said Tuesday in a statement.
Rolls-Royce generates service revenue based on the amount of time planes equipped with its engines are in the air.
The forecast marks another sign that renewed curbs on travel are postponing a recovery in aviation, after planemaker Airbus SE last week slowed a ramp-up in production, including the twin-aisle jets that carry Rolls-Royce engines.
Governments from Europe to the US have tightened travel restrictions to slow the spread of highly contagious coronavirus strains that emerged in recent months. This has led airlines to cut back on flight schedules, delaying their return to financial health.
The UK is considering whether to impose hotel quarantines on arriving passengers, a development fiercely opposed by the travel industry.
Rolls-Royce said Tuesday that 2020 cash outflows were in-line with previous guidance. The company said in December it expected negative free cash of £4.2 billion.
The company in October forecast significantly reduced free cash outflow in 2021, turning positive sometime in the second half.
Rolls-Royce reiterated the guidance on the turnaround in free-cash later this year, as the impact of the slowdown is weighted more heavily in the first half.
– Bloomberg
