Rolls-Royce reports record loss as travel slumps

Engineering giant Rolls-Royce, which makes jet engines, has reported record losses after the coronavirus pandemic caused demand for air travel to slump.

The firm reported a pre-tax loss of £5.4bn for the first half of this year.

Rolls-Royce is in the middle of the biggest restructuring of its business in its history.

On Wednesday, it confirmed plans to close factories in Nottinghamshire and Lancashire, as part of plans to cut 3,000 jobs across the UK.

The move is part of a previously announced cost-cutting exercise that will see the company slash its global workforce by a fifth, following the drastic fall in air travel because of the coronavirus outbreak.

The restructuring means that Rolls-Royce will reduce the number of sites it has worldwide from 11 to six.

Wide-body engine assembly and testing, which is currently carried out at three global sites, will be consolidated at its main site in Derby.

Rolls-Royce employs 50,000 people around the world, about half of them in the UK.

Uncertain climate

Chief executive Warren East told the BBC that so far this year, 4,500 people worldwide had left the company.

He said Rolls-Royce had originally expected to deliver up to 500 jet engines this year, but would now manage only half that.

Mr East added that he did not expect demand to recover to late-2019 levels until 2025.

Rolls-Royce said it intended to sell its Spanish unit ITP Aero and other assets to raise at least £2bn.

“In light of ongoing uncertainty in the civil aviation sector, we are continuing to assess additional options to strengthen our balance sheet to enable us to emerge from the pandemic well placed to capitalise on the long-term opportunities in all our markets,” it added.

These options could include selling off more divisions, refinancing or even issuing fresh shares, but no decisions have been taken as yet.

Rolls-Royce added that chief financial officer Stephen Daintith had resigned, but would remain in his role for now to support an orderly transition.

Mr Daintith will be joining online grocery firm Ocado as their chief financial officer in November.

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