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SHARE OF THE WEEK: Investors hope recent turbulence in air travel will not hit Rolls-Royce forecasts

This Is Money logo This Is Money 03/12/2021 Daily Mail City & Finance Reporter
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Investors will be crossing their fingers next week and hoping the recent turbulence in air travel will not affect Rolls-Royce's forecasts. 

Restrictions brought in by many countries to contain the Omicron variant have again hit long-haul flying. 

Rolls makes engines for large planes but earns money from maintaining them, and a large chunk of its revenue depends on how many hours they fly. 

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The City will want an indication to the extent of the damage Omicron has wrought on Rolls' recovery when it releases a trading update next Thursday. Shares have risen by almost 20 per cent since September. 

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Half-year results released in August showed a surprise profit as it benefited from major cost-cutting that included slashing 9,000 of 52,000 jobs, raising £5billion and aiming to sell at least £2billion of businesses. But there is still much to do. 

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: 'Producing and servicing [long-haul] aircraft engines has not been a nice business to be in over the last 18 months. To that end, we aren't expecting a complete about-turn in fortunes.' 

Analysts and shareholders are also monitoring any updates on its small modular reactor programme, which is aiming to build a fleet of mini nuclear power plants in the UK by the early 2030s. 

The company running the project, in which Rolls has an 80 per cent stake, recently secured £195million funding from private investors and £210million in Government grants. 


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