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LONDON (Reuters) – Britain’s Rolls-Royce has lowered expectations for its engine theft this year and warned of a large cash outflow, accusing additional travel restrictions aimed at stopping the spread of news variants of COVID-19.
Rolls-Royce has said it now expects a cash outflow of around £ 2 billion ($ 2.7 billion) in 2021, more than analysts’ current estimates, which range from 900 million pounds to 1.55 billion pounds from Morgan Stanley forecast by Jefferies.
These outputs reflect lower flight hours, which determines how much he gets paid by airlines using his engines. Flight hours are expected to reach around 55% of 2019 levels this year, compared to a baseline forecast of 70% that Rolls-Royce gave in October.
Shares of the company fell 7% to 90.5 pence early in trading. The stock has lost 58% of its value in the past 12 months, while the UK bluechip index has lost 10%.
Rolls-Royce said £ 9 billion in cash has given it confidence that it is well positioned for the future despite a more difficult environment.
The company, whose engines power the Boeing 787s and Airbus A350s, said last year, when boosting its liquidity with a £ 2 billion rights issue, that it needed funds given uncertainty surrounding the pace of air transport recovery.
“Tighter restrictions are delaying the resumption of long-haul travel in the coming months compared to our earlier expectations,” Rolls-Royce said in a statement.
Governments around the world are tightening their borders. The United States is banning non-U.S. Citizens who recently stayed in South Africa and Britain is on the verge of requiring some international arrivals to be quarantined at hotels.
To overcome the pandemic, Rolls-Royce plans to sell assets worth £ 2 billion. It is also cutting more than a billion pounds in costs by cutting 9,000 jobs and closing factories.
He stuck to his forecast of making cash flow positive at some point in the second half of the year, saying he expected the cash outflow to come mostly from the first half.
He said he remained on track to meet his plan to deliver at least £ 750million of free cash flow by 2022, excluding divestitures and subject to the resumption of flight hours.
(1 USD = 0.7344 pounds)
Reporting by Sarah Young; Edited by James Davey, Kate Holton and Edmund Blair
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