Rolls Royce ditches 2020 free cash flow targets due to Wuhan Coronavirus

According to a report from the Financial Times, Rolls-Royce is slated to abandon its targets on deliveries, profits, cash and dividend, as airlines around the world ground their planes in the wake of the Wuhan Coronavirus outbreak.

Rolls-Royce is also scheduled to announce new credit facilities to the tune of $1.22 billion (1 billion pounds) aimed at bolstering liquidity.

The airplane engine maker has been hit hard by the pandemic.

According to the Financial Times report which cites a source, engine flying hours were down by nearly 40%. Rolls Royce is paid on the number of hours its engines fly.

Towards the end of February, Rolls Royce had forecast a 2020 free cash flow of 1 billion pounds, excluding any material impact from COVID-19. It has now decided to ditch this pledge, said the report.

Dividend payment of 11.7 pence per share, frozen since 2016, will also be suspended, said the FT report.

On Monday, Rolls Royce will be reopening its civil aerospace facilities in the UK with a fraction of its normal workforce, after suspending operations in March.

Furthermore, Rolls Royce could also eventually furlough around 50% of its 7,500 UK shop-floor workers, with wages supported by government subsidy, said two sources.



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