Rolls-Royce will suspend its dividend for the first time since privatisation in 1987, as Covid 19 grounds most widebody planes globally, according to a media outlet.
The group is also aiming to announce new credit facilities in excess of £1bn to bolster liquidity that at the end of 2019 was close to £7bn. An announcement could come as early as Monday, said the media outlet.
Rolls-Royce, which builds engines for widebody aircraft including the Airbus A350 and A330, and Boeing’s 787 Dreamliner, has been impacted by global measures to contain the spread of Covid 19.
The company’s civil aerospace division, which accounts for roughly half of Rolls-Royce’s £15.4bn annual revenue, makes its profit from the number of hours its engines fly. But two-thirds of the world’s widebody aircraft are now in storage, according to Cirium, an aviation consultancy.
As a result the group will ditch a pledge, set in 2017 and restated only in February, to generate £1bn in free cash by the end of this year. It had also promised 15 per cent growth in core operating profit for this year.
The wide-body market had been slowing before the virus hit. Rolls-Royce had cut expectations for deliveries from 500 to 450 for this year and scaled back expectations to 400-450 for 2021. Those targets are also defunct.