LONDON (Reuters) – British aero-engine maker Rolls-Royce (RR.L) said it was scrapping its targets and its final dividend, taking steps to shore up its finances as airlines around the world ground planes due to the coronavirus pandemic.
The company said on Monday it had also secured an additional 1.5 billion pound ($1.8 billion) revolving credit facility, bringing its overall liquidity to 6.7 billion pounds, to give it headroom during a potential prolonged downturn.
Rolls-Royce, whose engines power Airbus and Boeing’s widebody jets, is paid by airlines based on how many hours its engines fly, but over 60% of the world’s widebody fleet are now grounded according to aviation data provider Cirium.
That is cutting Rolls’s income from airlines. It said it would address that challenge by focusing on cutting its cash expenditure, including reducing salary costs across its workforce by at least 10% this year.
Withdrawing its previously announced guidance for 2020, and noting the ongoing uncertain outlook, Rolls said the board was no longer recommending its final shareholder payment in respect of 2019, saving the company 137 million pounds.
($1 = 0.8163 pounds)
Reporting by Sarah Young; editing by Kate Holton