Rolls-Royce returns to profit, but warns over international travel recovery
Embattled engine-maker Rolls-Royce returned to profit in the first half of 2021, but warned that the pandemic-hit international aviation industry is not set to recover until after 2022.
The Derby-based group posted bottom-line profits of £393 million for the first six months of the year in a marked improvement from mammoth losses of £5.4 billion a year ago, helped by swingeing cost-cutting.
On an underlying basis, it reported pre-tax profits of £133 million compared with losses of £3.2 billion a year earlier.
It said international travel will bounce back once border restrictions are lifted, but warned that the recovery will take longer than first forecast.
Rolls said: “We are confident that, when border restrictions are lifted, the recovery of international travel will accelerate.
“However, based on current industry forecasts for the pace of recovery in international travel, this is likely to occur beyond the initial expected timeframe of 2022.”
Embattled engine-maker Rolls-Royce has returned to profit in the first half of 2021, but warned that the pandemic-hit international aviation industry is not set to recover until after 2022 (Paul Ellis/PA)
The engineering group’s civil aerospace arm – its largest division – suffered as the coronavirus crisis hammered the global aviation industry.
Chief executive Warren East has sought to take swift action to cut costs and raise extra capital to strengthen the company’s battered balance sheet, with the aim of saving a total of £1.3 billion by the end of 2022.
This includes swinging the axe on at least 9,000 jobs worldwide – two-thirds of which will affect the UK – and Rolls confirmed around 8,000 have already gone under the programme.
The firm said its goal to raise at least £2 billion from selling off some parts of the business is also “progressing well”, having announced a deal on Wednesday to offload Norwegian maritime engine maker Bergen to British group Langley Holdings.
It added that the sale of its Spanish unit, ITP Aero, is “moving forwards” and that it expects to complete the sale of the civil nuclear instrumentation and control business later in 2021.
Rolls confirmed late on Wednesday that it is in exclusive talks to sell ITP to investment group Bain Capital over a reported 1.6 billion euro (£1.5 billion) deal.
Mr East declined to comment on the price, except to say the group is holding “live discussions”.
The chief executive said the expansion of the travel list is “a very encouraging” sign, but added that, while domestic and business travel markets are recovering, international travel is still lagging behind.
He told BBC Radio 4’s Today programme: “We’re concentrating on what we can control. Clearly we can’t control how fast markets open up, but anything that governments around the world can do to open up air travel is good news for our business.”
