British engine-maker Rolls-Royce registered $5.58 billion loss in 2020, as the pandemic stopped airlines flying, but stuck to its outlook for cash outflow to improve in 2021.
Rolls-Royce’s model of charging airlines for the number of hours its engines fly meant its income dried up last year when travel stopped. It was forced to raise $6.9 billion from shareholders and in loans to buffer against the uncertainty.
Rolls-Royce posted group underlying pre-tax loss of $5.6 billion for last year compared to the $4.3 billion loss forecast by analysts.
Its cash outflow, the measure most watched by analysts, of $5.8 billion was in line with consensus, and Rolls guided that it would improve this year to an outflow of $2.8 billion, with the figure turning positive during the second half.
That improvement depends on airlines flying 55 percent of 2019 levels during 2021. Rolls-Royce said its assumption is for travel to gradually improve this year, accelerating in the second-half as vaccine programs progress.
Blaming tightening travel restrictions in the early part of this year, the company had already warned that its 2021 cash outflow would be worse than previously expected.