Rolls-Royce shares slip despite rebound in demand for aircraft engines as concerns about the travel industry linger

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  • The FTSE 100 engineer said that in the four months to the end of October, its large engines had 65% flight time of pre-pandemic levels.
  • But demand remains constrained by ongoing containment measures in China and elsewhere in Asia.
  • The group also sounded the alarm about the pressure on its supply chain and added that it had given staff pay increases of 6.5% and paid each UK employee £1,500.

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Rolls-Royce CEO Warren East

Rolls-Royce shares fell as lingering concerns about the health of the travel sector weighed on business despite a recovery in demand for its aircraft engines.

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The FTSE 100 engineer, whose clients include Airbus and Boeing, said his large engine flight hours — a key metric for measuring the health of the business — were 65% of pre-pandemic levels in the four months to the end of October. , and has climbed 36 percent so far this year.

The recovery comes amid a rebound in air travel across Europe and North America following the easing of travel restrictions due to Covid-19. But demand remains constrained by ongoing containment measures in China and elsewhere in Asia.

Rolls also noted “strong” demand from the defense industry, extending contracts totaling £1.6bn.

But the group sounded the alarm over the pressure on its supply chain and added that it had raised staff salaries by 6.5% and given each UK employee £1,500 to offset a “substantial increase in the cost of living”.

Despite uncertainty over travel demand and inflation, the company reaffirmed its guidance for the full year, while outgoing boss Warren East noted that the firm had paid off £2bn of debt, largely thanks to the sale of its Spanish business to ITP Aero.

“This marks an important milestone in restoring our balance,” East said. Shares, however, fell 3.5%, or 2.9 pence, to 80.16 pence.

Sophie Lund-Yates, an analyst at Hargreaves Lansdown, said Rolls is still “battling a lot of headwinds from outside forces” and until restrictions are lifted in China, its engine use “will never fully take off.”

Credit: www.thisismoney.co.uk /

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