Rolls’ £5bn plea to survive Covid

SHARES DIVE WITH FIRM HIT BY CRISIS

EMBATTLED aircraft engine maker Rolls-Royce says it needs £5billion after being plunged into crisis by the coronavirus pandemic.

The industry giant, one of Britain’s most important engineering firms, has been hammered by the collapse in air travel. As well as making engines, it also rakes in a big chunk of its money from maintaining them for airlines.

Derby-based Rolls is proposing to go cap in hand to investors for £2bn through a rights issue. The remainder would come from issuing bonds and extending loans.

Boss Warren East said, “We wanted this package to provide sufficient headroom even through our worst case scenario.”

Even before Covid-19 struck, RollsRoyce was dealing with issues concerning its Trent 1000 engines.

Speculation about a rights issue had already seen Rolls’ share price tumble.

It dived further yesterday, hitting a 17-year low of £1.15 at o one stage. Two years ago its s share price stood at £10.

Hedge funds that shorted the f firm’s stock – borrowing shares i in the hope they would fall in v value – could have made a p packet from the slump.

Yesterday’s emergency cash call came after a wave of cost cutting, with at least 9,000 job losses announced in May, a third of them in the UK.

Last month, Rolls announced half-year loss of £5.4bn.

Russ Mould, investment director at City firm AJ Bell, said the firm had suffered a “massive fall from grace”.

He added: “Investors taking part in the share and bond issue need to have considerable faith in the aviation industry getting back on its feet.” a