Rolls-Royce PLC (LON:RR.) posted an underlying loss of nearly £4bn in 2020 and said it expects the pace of recovery in air travel to be slower than previously expected.
The aeroengine maker slashed its workforce and raised £7.3bn through loans, export credits and a £2bn share issue to keep going during the pandemic which saw hours flown by its engines fall to 43% of the 2019 level.
Around 7,000 jobs have been cut out of the planned 9,000 reductions, it said.
In 2021, Rolls-Royce said it expects engine hours (EFH) to recover to 55% of the 2019 total, which will mean a further cash outflow of £2bn, with hours flown to rise to 80% in 2022.
Previously, Rolls said it had expected to be flying at 90% in 2022.
The group’s power systems arm should recover much quicker and be back to 2019 levels at the start of 2022, while defence activity is expected to be stable.
Revenue in the year to end-December fell by 29% to £11.8bn while underlying losses soared to £3.96bn (£583mln profit) which included £1.7bn for unwinding a hedge position.
Operating losses were £2.1bn though this was helped by a release of £620mln from the provision to rectify the problems with the Trent 1000 engine.
More than £4.1bn of cash flowed out of the business during the year, Rolls-Royce added, though due to the fundraises and cost-saving it closed the year with £9bn of liquidity including cash of £3.5bn.
When EFH reaches 80% Rolls-Royce said it will be generating cash of around £750mln a year.
Warren East, chief executive, added: “We have made a good start on our programme of disposals and will continue with this in 2021.
“We continue to invest in developing market-leading technology and low carbon opportunities in all our end markets, to create value for our stakeholders and ensure we are well-positioned to take advantage of the transition to a lower-carbon economy.”