Rolls-Royce sell-off to counter record losses
ENGINE-MAKER Rolls-Royce unveiled further action to boost its battered finances as it plunged to a record £5.4billion 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 £2billion, 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 £791million a year earlier.
On an underlying basis, the group swung to a £3.2billion loss from profits of £93million in the previous 12 months.
Shares in the FTSE 100-listed group closed 3p lower at 250p yesterday.
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 yesterday, 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.
In a “severe but plausible downside scenario”, which includes a second wave of Covid-19, it said it would have only necessary borrowing facilities for the next 12 months and would be forced to raise extra cash.