The FTSE 100 group, whose shares are down two-thirds this year, has taken a big financial hit from the grounding of flights due to Covid-19, since it gets paid according to the hours flown by aircraft fitted with its engines.
Warren East, chief executive, said on Thursday that the company was continuing to examine options for strengthening Rolls-Royce’s balance sheet, as the extent of the damage was revealed.
The company sank into a £5.4bn pre-tax loss during the six months ended June 30, a figure that included impairment charges and write-off, restructuring costs and a £2.6bn non-cash revaluation of currency hedging contracts.
Revenues dropped a quarter to £5.8bn and at an underlying level the operating loss was £1.7bn. The company burnt through £2.8bn of cash in the period, as large engine flying hours were almost cut in half, and management expects a further outflow of £1bn in the second half of 2020.
In an attempt to survive the collapse in global aircraft demand, the company is undertaking a deep restructuring that involves axing 9,000 jobs — almost one in every five of its total workforce.