Rolls-Royce has announced that it will be turning to its investors in order to secure a £2.5bn financial boost in a bid to recover from the devastating impact of the COVID-19 pandemic on the firm and aviation manufacturing sector.
Rolls-Royce reported a record half-year loss of £5.4bn. The firm has already made thousands of job cuts due to the impact of COVID-19 – and its financial announcement could spell further cuts in the weeks ahead.
The group’s half-year loss follows losses of £791m a year earlier.
Rolls-Royce has already announced 9,000 job cuts as part of a major restructure – with more predicted.
A statement from the company read: “We continue to review all funding options to enhance balance sheet resilience and strength. Amongst other options, we are evaluating the merits of raising equity of up to £2.5bn, through a variety of structures including a rights issue and potentially other forms of equity issuance. Our review also includes new debt issuance.”
The firm revealed that large engine deliveries were down by 50% in the first six months of the year when compared to the same time period in 2019. Due to the grounding of flights across the world, Rolls’ revenues were hit even harder.
Warren East, Chief Executive of Rolls-Royce said: “We ended 2019 with good operational and financial momentum. However, the COVID-19 pandemic has significantly affected our 2020 performance, with an
unprecedented impact on the civil aviation sector with flights grounded across the world.
“This restructuring has caused us to take difficult decisions resulting in an unfortunate but necessary reduction in roles. These actions will significantly reduce our cost base, which combined with recovery in Power Systems and continued resilience in Defence, will help us to deliver significantly improved returns as the world recovers from the pandemic. While our actions have helped to secure the Group’s immediate future, we recognise the material uncertainties resulting from COVID-19 and the need to rebuild our balance sheet for the longer term.”