Covid19; Rolls-Royce minimized expectations as to how much its engines would fly this year.

Britain’s Rolls-Royce minimized expectations for how much its engines would fly this year and warned of a big cash outflow, accusing extra travel restrictions strived at preventing the spread of new COVID-19 variants. Rolls-Royce said it now assumed a cash outflow in the region of 2 billion pounds ($2.7 billion) in 2021, higher than current analyst estimates which vary from Morgan Stanley’s 900 million pounds to 1.55 billion pounds forecast by Jefferies.

That outflow indicates lower flying hours, which decides how much it is paid by airlines using its engines. Flying hours are expected to come in this year at about 55% of 2019 levels, compared to a base forecast of 70% Rolls-Royce gave in October. The firm’s shares sank 7% to 90.5 pence in early trading. The stock has lost 58% of its value in the last 12 months, while Britain’s bluechip index has lost 10%.

Rolls-Royce said liquidity of 9 billion pounds gave it courage that it was well-positioned for the future in spite of the more challenging environment. The company, whose engines power Boeing 787s and Airbus A350s, said last year when increasing its liquidity with a 2 billion pound rights issue that it wanted the funds given the uncertainty around the speed of the recovery in air travel.

Amidst the pandemic, Rolls-Royce plans to sell assets worth 2 billion pounds. It is also cutting more than 1 billion pounds in costs by cutting down 9,000 jobs and closing factories.