Rolls-Royce share take a dive down as flight numbers decrease

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​British Multinational aerospace and defense company, Rolls Royce has admitted to bracing itself to spend £2bn this year. This is due to the decrease in the number of flights as a result of the pandemic that has caused a reduction in the flight of engine-powered planes.
Overall, the reduction in flight has affected the revenue of the company. To worsen the situation, new strains of the coronavirus makes it hard for a clear forecast to be made by experts.
The company that produces engines for Boeing and Airbus aircraft has predicted a reduction in the flying hours this year to 55% of what was experienced in 2019.
This news affected the value of the company’s shares by 9% as seen in early London trading.

In a bid to salvage its finances, Rolls-Royce has decided to sell assets ranging up to billions of pounds. The company will also be closing down some of its factories and cutting out 9000 jobs to save a cost of £1bn.
A statement released by the company reads, “Trading in December was broadly in line with expectations across all business units and we delivered good progress on our restructuring programme. Full-year 2020 Group free cash outflow was in line with previous guidance, and in-year cash cost savings of more than £1 billion were achieved from our mitigating actions. Year-end liquidity was approximately £9 billion, at the upper end of the previously guided range.
 
Continued progress on vaccination programmes is encouraging for the medium-term recovery of air traffic and economic activity. In the near-term, however, more contagious variants of the virus are creating additional uncertainty. Enhanced restrictions are delaying the recovery of long-haul travel over the coming months compared to our prior expectations, placing further financial pressure on our customers and the wider aviation industry, all of which are impacting our own cash flows in 2021.”
 
 
 
 
 

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