The pandemic hit hard on the aerospace engineering giant, Rolls-Royce. In order to survive during these difficult times, as the flights reduced by more than half, the company burned through 3 billion pounds. The amount refers to only the first six months of this year, as the company charges air-carries based on how much time the engine is in the air.
To keep themselves afloat, drastic measures are being taken. 3,000 UK workers applied for voluntary redundancy, out of which 2,000 will leave by the end of August. Overall, 9,000 people will be declared redundant. The UK staff makes for 2/3 of the total employees.
Rolls-Royce stated that engines have flown at only 25% of the second quarter capacity, compared to the same time last year, and dropped by 50% in this year's first two quarters. Moreover, the revenue fell by 1.1 billion pounds because of the decline in engine deliveries. Until now, RR managed to save 300 million pounds since April, when it announced it would start cutting costs, and if everything goes according to the schedule, it will have 1 billion pounds in cash savings by the end of the year.
However, according to analysts, the engine flying hours are expected to go as high as 70% of pre-pandemic levels in 2021.
The market wasn’t too happy about it, and Rolls-Royce stocks ended the day lower by 11%.
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Sources: cnbc.com, theguardian.com, standard.co.uk