Rolls-Royce shares have been falling to their lowest levels for over a decade as analysts warn it may need to raise £ 6 billion to survive the coronavirus crisis
Rolls-Royce shares have fallen to their lowest levels for more than a decade, as analysts warned that it may need to raise £ 6 billion to survive the coronavirus crisis.
The technical group would like to secure approximately £ 1.5 billion in emergency financing by selling new shares.
And it is also believed to be trying to sell its Spanish division, ITP Aero, for an estimated £ 1 billion.
But Rolls would need £ 6 billion to continue through the aviation industry recession due to the pandemic, JP Morgan analysts have warned.
Rolls fell another 0.5 percent, or 1.2 p, to 230.4 p yesterday – the lowest level since 2009 in the depths of the latest recession.
The stock has fallen 66 percent so far this year, and Rolls is worth £ 4.5 billion, estimated at nearly £ 23 billion six years ago.
- Virgin Galactic has announced it will partner with Rolls-Royce to develop an aircraft capable of traveling three times the speed of sound.
The massive grounding of flights over several months hit the company hard and has shrunk two-thirds of its market value since the beginning of the year. Rolls makes aircraft engines – but it makes money to maintain them and the profit depends on the number of hours they fly. Airlines expect it will take until 2024 for demand for flights to return to the same level as last year, so Rolls faces a few tough years.
It plans to cut 9,000 employees from the 52,000 employees.
But the company would like to increase its share, and the sale of ITP Aero “is not enough to make Rolls financially healthy,” JPMorgan brokers warned in a note to investors.
The analysts added that ITP may be worth only £ 750 million in the current market.
A spokesperson said, “We are in the early stages of assessing a range of potential options to strengthen our balance sheet and position ourselves for the recovery after Covid-19.”