Rolls-Royce shares slip as concerns about the travel industry linger

Rolls-Royce shares fell as lingering concerns about the state of the travel industry weighed on the company despite an uptick in demand for its aircraft engines.

The FTSE 100 engineer, whose customers include Airbus and Boeing, said the flight hours of its major engines — a key metric for measuring the company’s health — in the four months to the end of October were 65 percent of pre-pandemic levels. , and was up 36 percent so far this year.

The recovery came amid an uptick in air traffic across Europe and North America following the easing of travel restrictions from Covid-19. But demand is still held back by ongoing containment measures in China and the rest of Asia.

Rolls also signaled ‘robust’ demand from the defense industry with contract renewals totaling £1.6bn.

But the group sounded the alarm over the pressure on the supply chain, adding that it has raised staff wages by 6.5 per cent and has given each British worker £1,500 to offset ‘significant increases in the cost of living’. .

Despite the uncertainty over travel demand and inflation, the company reiterated its full-year expectations, while outgoing boss Warren East noted that the company has repaid £2 billion in debt, mainly thanks to the sale of its Spanish company ITP Aero.

“This marks a milestone recovery in the strength of our balance sheet,” East said. Shares, however, fell 3.5 percent, or 2.9p, to 80.16p.

Sophie Lund-Yates, analyst at Hargreaves Lansdown, said Rolls was still “struggling with a myriad of headwinds from outside forces,” and until restrictions were eased in China, the use of its engines “would never fully take off” .