The jet engine invented by Frank Whittle was a thirsty beast. The same applies to Rolls- Royce, inheritor of that world-beating technology. It expects to burn through £4 billion this year, returning to a positive free cash flow of just £750 million or more in 2022. The blow coronavirus has dealt to aviation has fallen heavily on Rolls-Royce, a specialist in engines for wide-bodied, long-haul travel. Surely an equity bailout is needed from investors or government?… The outlook painted by chief executive Warren East was grim. The company is cutting its currency hedge on $37 billion of dollar revenues over seven years by $10 billion. You do not need to be an engineering wizard like Mr East to see that equates to an £25 billion drop in aggregate sales to £68 billion over the same period… Rolls-Royce needs to reduce leverage and regain its investment-grade rating. But its need for equity is not desperate. It has about £8 billion of liquidity. That includes an undrawn £2 billion loan with a partial guarantee from the UK government… UBS… expects Rolls-Royce will miss its 2022 free cash flow target of £750 million by about £330 million. But UBS also questions the need for a financing when there is no immediate crisis. The outlook for a vaccine and post- coronavirus travel will become clearer in the next few months. The company should keep calm and carry on cutting costs.?

Lex.