LONDON - British engine maker Rolls-Royce said it was on the right track to meet its forecasts for 2021, reassuring investors that despite a muted recovery of long-haul travel across the world its cost-cutting and disposal plans were stabilizing the business.
At the height of the Pandemic last year revenues at Rolls's civil aviation business, its largest unit, tumbled as airlines stopped flying, resulting in a perilous few months for the company before it raised new cash and secured loans.
For 2021, Rolls-Royce stuck to guidance for free cash flow to improve to 2 billion pounds and for cash flow to turn positive in the second half of this year, but it warned that slow aviation recovery will affect its 2022 target.
The group said it could reach free cash flow of 750 million pounds as early as 2022, but it said the pace of travel recovery meant that this was now likely to happen later.
Rolls-Royce has a cost-cutting program and a 2 billion pound disposal plan to help repair its finances from the drop in flying during the pandemic.
It said it would achieve more than 1 billion pounds of cost savings in 2021 and noted that the disposals were progressing well.
The company announced on Wednesday that it was in exclusive talks with a Bain Capital Group consortium for the potential sale of its Spanish ITP Aero unit, for a reported 1.6 billion euros.
In Rolls's civil aviation business, its largest unit, large engines flying hours, in the first half, came in at 43% of pre-pandemic levels, just a slight improvement from the 40% recorded in the first few months of the year.