Rolls-Royce shares dip to lowest level for more than decade

Rolls-Royce shares dip to lowest level for more than decade as analysts warn it could need to raise at least £6bn in order to survive coronavirus crisis

Rolls-Royce shares dipped to their lowest level for more than a decade as analysts warned it could need to raise at least £6billion in order to survive the coronavirus crisis. 

The engineering group is thought to be looking to secure around £1.5billion in emergency funding by selling new shares. 

And it is also understood to be trying to sell its Spanish division, ITP Aero, for an estimated £1billion. 

But Rolls could need as much as £6billion just to keep going during the aviation industry downturn caused by the pandemic, JP Morgan analysts have warned. 

Rolls fell another 0.5 per cent, or 1.2p, to 230.4p yesterday – the lowest level since 2009 in the depths of the last recession. 

The stock has fallen 66 per cent so far this year and Rolls is worth £4.5billion having been valued at almost £23billion six years ago. 

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The mass grounding of flights for several months hit the company hard and has knocked two-thirds off its market value since the start of the year. Rolls makes plane engines – but it earns money from maintaining them and its profits depend on the number of hours they fly. Airlines expect it could take until 2024 before demand for flights recovers to the same levels as last year, so Rolls is facing a difficult few years ahead. 

It is planning to axe 9,000 staff from its 52,000-strong workforce. 

But the company is thought to be looking to raise through the share and ITP Aero sales ‘are not adequate to put Rolls on a sound financial footing’, JPMorgan brokers cautioned in a note to investors. 

The analysts added they believe ITP may only be worth £750m in the current market. 

A spokesman said: ‘We are in the early stages of reviewing a range of potential options to strengthen our balance sheet and position ourselves for the recovery following Covid-19.’ 

source: dailymail.co.uk