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Rolls-Royce is considering hiring investors to get £ 2.5 billion to boost its finances as the coronavirus continues to wreak havoc on global travel.
The company, which makes the engines for the aircraft, said it was “evaluating” the increase and was looking at a number of options, including a rights issue.
Rolls-Royce previously said it did not expect demand to return to pre-pandemic levels for five years.
It has already announced 9,000 job cuts as part of a major restructuring.
The Financial Times was reported for the first time Rolls-Royce has been considering raising £ 2.5bn and is in talks with a number of sovereign wealth funds including GIC in Singapore.
“We continue to review all financing options to enhance the flexibility and robustness of the balance sheet,” the company said.
“Among other options, we are assessing the benefits of increasing equity by up to £ 2.5 billion, through a variety of structures including a rights issue and possibly other forms of equity issuance. Our review also includes the issuance of new bonds.”
He added that no final decisions had been taken “on whether to proceed with any of these options, when, or on the exact amount that could be raised.”
The government holds a “golden stake” in Rolls-Royce that prevents the company – which is of strategic importance to the UK – from submitting to foreign control.
Record the loss
In August, Rolls-Royce reported a record loss of £ 5.4 billion in the first half of its fiscal year.
The global travel industry has virtually come to a standstill due to the pandemic. Hopes for a revival of activity have been dashed by changes in quarantine countries requiring travelers to the UK to self-isolate.
Under the “hourly force” model, Rolls-Royce makes money every time an aircraft is used with one of its engines. Around £ 4 billion a year is generated through this model.
However, it expects flying hours to halve this fiscal year.
About 3,000 jobs have been abolished in the UK, and it is reducing the number of its locations worldwide from 11 to six, including factory closures in Nottinghamshire and Lancashire.
It hopes the restructuring of its civil aviation division will save more than 1.3 billion pounds by the end of 2022.
Rolls-Royce also aims to raise more than £ 2 billion by selling parts of the group, including ITP Aero’s turbine business in Spain.
Last month, the company terminated a £ 2 billion loan that was partly supported by the UK Export Finance Corporation, a government agency.
While Rolls-Royce’s civil aviation business has been affected by the pandemic, the company said its defense division remains resilient and, in its latest findings, reported a 2% increase in revenue.
