FTSE storms bring fresh turbulence for Rolls-Royce

MARKET turbulence blew Rolls-Royce shares further off course today, despite reassuring comments from boss Warren East over the engine giant’s path to recovery.

His AGM update showed the company remains on track to achieve its target of generating cash again by later this year, having burned through £4.2 billion in a gruelling 2020.

Large engine flying hours are still only around 40% of 2019 levels, but demand for cargo flights and the maintenance of key routes means this is in line with planning assumptions.

East has responded to the crisis in the aviation industry by instigating a 9,000 headcount reduction up to the end of 2022, while also generating £7.3 billion of liquidity through initiatives such as a £2 billion rights issue in November.

While the timing of the recovery remains uncertain, East said Rolls looked to be well positioned for when the rebound in international air travel does happen.

Shares peaked for this year at 127p in March but have fallen back since then and were down another 3.5p to 101.3p as the FTSE 100 endured a big sell-off.

The top flight index slid 2.5% or 169.11 to 6,835.23 after yesterday’s big jump in US consumer prices fuelled fears of longer lasting inflationary pressures and the prospect of sooner-than-expected rises in interest rates.

Only one blue-chip stock survived the brutal sell-off, with testing firm Intertek up 2p to 5,810p after unveiling the acquisition of SAI Global Assurance, a market leader in Australia with further operations in the US, Europe and China.

The FTSE 250 index was down 351.66 points to 21,756 as stocks exposed to the re-opening of the global economy fell sharply. .

Shares in Hipgnosis Songs Fund edged up 0.55p to 121.75p after it acquired a catalogue of music from Grammy Award-winning producer, mixer and engineer Andy Wallace. He has collaborated with artists such as Foo Fighters.