Tue. Sep 29th, 2020

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Rolls-Royce posts $7 billion loss as Covid-19 crisis batters air travel

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Rolls-Royce Holdings Plc posted a pretax loss of 5.4 billion pounds ($7 billion) for the first half and said it plans to sell assets to raise cash as the coronavirus crisis batters air travel.

The loss from the grounding of global plane fleets was swollen by a charge for closing dollar hedges that won’t be required as sales shrink, Rolls-Royce said Thursday, together with a writedown of the value of its main jet-engine arm.

The company said it wants to raise at lease 2 billion pounds from disposals within 18 months, identifying the ITP Aero unit as the asset most likely to be offloaded.

Rolls is also closing sites and cutting jobs as it grapples with a slump that’s expected to depress demand for the wide-body aircraft it powers for years to come. Chief Executive Officer Warren East, who had already warned that the civil-engines business could emerge a third smaller, said 4,000 posts have been eliminated so far out of a potential 9,000 that may need to go.

“We have made significant progress with our restructuring, which includes the largest reorganization of our civil aerospace business in our history,” East said, adding that the “difficult decisions” will significantly reduce the group’s cost base.

East will have to carry through the transformation without Chief Financial Officer Stephen Daintith, who is leaving to take on the same roll at grocery-delivery firm Ocado.

Rolls shares have slumped 63% this year, cutting its market value to 4.9 billion pounds.

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