Further pain likely as RollsRoyce plunges to record loss

● Engine-maker is already cutting 700 jobs in Scotland ● Business hard hit by downturn in international travel

Rolls-royce, the engine-maker already cutting 700 jobs at its Inch inn an site in Renfrewshire, yesterday unveiled further action to boost its battered finances as it plunged to a record £5.4 billion half-year loss.

The group, which has been hit badly by the slump in air travel caused by the pandemic, now plans to sell off parts of its business to raise more than £2bn, on top of the biggest ever shake-up of its civil aerospace arm that has already cost 4,000 jobs since May alone.

Rolls told investors that the asset sales will help boost its balance sheet amid an “unprecedented” drop in aviation activity. On an underlying basis, the FTSE-100 group racked up a £3.2bn loss.

The firm 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.

Derby-headquartered 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 earlier this week, announcing plans to shut its aerospace factor y 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 down side scenario ”, which includes a second wave of Covid-19, it said it would only have necessary borrowing facili - ties for the next 12 months and would be forced to raise extra cash.

This“could be achieved through some combination of debt, equity and the proceeds from business disposals,” Rolls added.

Chief executive Warren East said: “The Covid-19 pandemic has significantly affected our 2020 performance, with an unprecedented impact on the civil aviation sector with flights grounded across the world.”

Industry expert Howard Wheel don of Wheel don Strategic Advisory said :“Never before and particularly in a period of just six months has Rolls-Royce been forced to witness such a dramatic period of necessary change that was not of its own making.

“Time has been of the essence and the result of change has required the most radical transformation of the civil aerospace business ever seen.

“Looking ahead, with sup - port from the UK government and others for low carbon transition, the company is very well positioned with its net zero emission plans and that includes electrification [and] hybrid work in power systems.”