Storm clouds over Rolls Royce

By: Miguel A. Rodriguez

09:45, 14 September 2020

Rolls Royce forced to fire 9,000 due to the pandemic.

Rolls Royce: one of the biggest global employers released a statement yesterday in which it announced that it will cut at least 9,000 out of 52,000 employees due to the pandemic and because the aviation business is on hold. According to them, it will take several years for it to recover. The new numbers are added to the 4,000 furloughs, as the company used the scheme provided by the government. Some of the cuts will be at their largest site in Derby. Moreover, some locations across the U.K. are to be closed.

This new announcement came after yesterday's 70% drop in the number of jobless people, reaching a ten year high.

The aviation industry represents 50% of Rolls Royce's total revenue, and now the company expects one-off restructuring costs of 800 million. Still, in the long-term, the return will generate 1.3 billion pounds.

But the bad news isn't unexpected, as airlines have cut the flying hours by 90%, with Airbus and Boeing cutting the production numbers for the next couple of years. The overall air traffic volume is to decrease by 45% this year.

The pandemic had an impact on the airline industry, which is now close to bankruptcy. The 2019 level is reachable once again, but it will take at least 2-3 years, according to aviation experts. 

After the statement, the stock price dropped by 3%, while UK100 remained flat. 

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Sources: investing.com, bbc.com


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This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided.