Aviation and energy focused engineering company Rolls-Royce has reported a free cash outflow of £3bn in the first half as widebody engine flying hours fell by approximately 75% in the second quarter. In a trading update for the first half of 2020, the company said cashflows had been 'significantly affected' by Covid-19, and attributed approximately £1.1bn less cash inflow to lower receipts associated primarily with widebody engine flying hours, together with lower engine deliveries. Another approximately £1.1bn of that was down to a one-off adverse impact from the cessation of invoice factoring, the company reported, but it saw a positive impact of approximately £300m from savings 'related to the mitigating actions achieved' in the first half. Rolls-Royce confirmed that it expected the rate of cash outflow to ease in the second half. The company confirmed that its civil aerospace business experienced a significant reduction in demand due to the effects of COVID-19, as widebody engine flying hours were down by approximately 50% in the first half, compared to the prior year period, and dropped 75% in the second quarter. Rolls-Royce added that since April, when flying hours were down 80% compared to April 2019, it had seen 'early signs of recovery' with a marginal improvement in May and June led by an increase in flights in China, Asia Pacific and the Middle East. The company has forecast that widebody engine flying hours will be around 55% lower this year, but expects that more long-haul routes will open up in the fourth quarter. Following its announcement on 20 May of job cuts, in its trading update Rolls-Royce said that, to date, it has received more than 3,000 expressions of interest for voluntary severance in the UK, with two-thirds expected to leave the business by end of August. Chief executive Warren East said: 'We started this year with positive momentum and strong liquidity and acted swiftly to conserve cash and cut costs to protect Rolls-Royce during the pandemic. 'We are taking steps to resize our civil aerospace business to adapt to lower medium-term demand from customers and help secure our future.'
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