Rolls-Royce hints at re-entry into narrow-body jetliner market, shares rally
By Michele Maatouk
Date: Thursday 03 Dec 2020
(Sharecast News) - Rolls-Royce shares surged on Thursday after the engine maker's director of energy and technology told Bloomberg in an interview that the coronavirus crisis may provide it with space for development of critical new engine technologies and a possible re-entry into the narrow-body jetliner market.
Burr said that while the wide-body plane sector in which the company specialises has been hit hard by the pandemic, the slump will also create a window before cash-strapped airlines are ready to invest in radical changes such as a push into hydrogen propulsion.
He told Bloomberg: "The industry's going through a bit of a hiatus. We want to be in a position that when someone launches a new product we're credible, whatever that market may be. We don't rule ourselves out of any part of the market today because evolution in the 2020s could be really quite exciting."
Although Rolls-Royce is cutting thousands of jobs in order to weather the Covid-19 crisis, Burr said it wants to preserve engineering talent for the future by transferring staff to its nuclear and defence businesses.
At 1140 GMT, the shares were up 9.5% at 127.86p.
IG analyst Chris Beauchamp said: "Rolls-Royce has always managed to demonstrate a capacity to adapt to even the toughest times, and today's announcement about a move back towards the narrow-body jetliner market has provided the spark the shares have been searching for in order to maintain their rebound from the November lows.
"The shares have only recouped around a third of their losses from late October, and the bounce since the beginning of November is perhaps only the latest in a series of false dawns for a share price that has yet to find a low."
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