What's going on?

Looks like Rolls-Royce is going to give you up and let you down: the jet engine-maker revealed a $7 billion loss for the first half of the year on Thursday.

What does this mean?

Rolls-Royce�s massive loss was mostly down to two things: pandemic-induced �restructuring� (read: firing people) and a halt in global travel, which saw demand for planes � and for Rolls� new jet engines and the upkeep of existing ones � demolished. But there were other responsible parties too, like unfavorable currency fluctuations and �write-downs�. In other words, the company reviewed the value of the various parts of its business, and acknowledged they�re now worth less than it thought.


Things didn�t get much better when Rolls looked forward either: the company reckons it�ll have more cash going out than coming in next year. So it�s planning to sell off chunks of its business in hopes of raising at least $2.6 billion, just in case a second coronavirus wave arrives and knocks aircraft demand again.

Why should I care?

For markets: Tick tock.�

Rolls-Royce�s stock initially dropped 10% on Thursday. Investors might�ve been turned off by the challenge of finding a willing buyer of its assets, not to mention agreeing a price before time and money runs out � especially since it just lowered the value of parts of its business. Still, investors might now think the only way is up: the company�s shares quickly recovered their losses…

The bigger picture: Cheap and cheerful.�

Maybe Rolls should look at wooing low-cost airlines like Ryanair and Wizz Air: they�re looking to add more planes to their fleets, even as the bigger, more established airlines are struggling. They�ve got more cash on hand than their rivals, and demand for their predominantly short-haul routes is expected to recover much sooner than for long-haul.