Rolls Royce is continuing with its restructuring efforts and today confirmed it is on track to deliver £1.3bn cost savings by 2022.
The firm has been battered by the pandemic, with roughly half of its income derived from the hours airlines fly using its engines.
It has embarked on restructuring efforts which saw a a £5bn recapitalisation package completed last month, which included £2bn of new equity.
Earlier this week it announced the sale of its nuclear instrumentation business in the first stage of plans to make £2bn in disposals to fuel its recovery.
In a trading update today, Rolls Royce said its cost-cutting measures this year are on track to deliver in-year savings of more than £1bn.
The FTSE 100 firm said it anticipated £4.2bn free cash outflow in 2020 as the impact of a second wave of coronavirus cases affected flying hours in the last quarter. Rolls Royce said engine flying hours, a key measure of its income, were down 42 per cent in the 11 months to November as airlines essentially stopped flying.
The blue-chip engineer said its defence business remains “resilient” with a strong order book and 2021 forecast sales are “well covered”.
Despite a swathe of job cuts and restructuring plans, Rolls Royce today said it is “confident” in its recovery for next year.
While commercial air travel looks likely to recover slowly “the fundamental drivers behind long-term growth in global commercial flights remain intact,” the firm said.
“The outlook remains challenging and the pace and timing of the recovery is uncertain. However, our actions have given us a strong foundation to deliver better returns as our end markets improve and we continue to drive our ambition of delivering more sustainable power,” said chief executive Warren East.