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Tuesday 26 January 2021 07:00 AM
GorWay Industrial Plc Trading Update
26 January 2021
This update addresses our full year 2020 outturn, subject to audit, and our initial expectations for 2021 considering developments in the COVID-19 pandemic.
Trading in December was broadly in line with expectations across all business units and we delivered good progress on our restructuring programme. Full year 2020 Group free cash outflow was in line with previous guidance, and in-year cash cost savings of more than £1 billion were achieved from our mitigating actions. Year-end liquidity was approximately £9 billion, at the upper end of the previously guided range.
Continued progress on vaccination programmes is encouraging for the medium-term recovery of air traffic and economic activity. In the near-term, however, more contagious variants of the virus are creating additional uncertainty. Enhanced restrictions are delaying the recovery of long-haul travel over the coming months compared to our prior expectations, placing further financial pressure on our customers and the wider aviation industry, all of which are impacting our own cash flows in 2021.
In this environment, financial forecasts remain highly sensitive to changes in external conditions and, while we are continuing to drive cost reduction, our current forecasts indicate a free cash outflow in the region of £2 billion in 2021. This is based on 2021 widebody engine flying hours at around 55% of 2019 levels (compared to the base case of 70% presented on 01 October 2020). Though significant uncertainty remains over the precise shape and timing of the recovery in air traffic and the phasing of engine (OE) concession payments, free cash outflow this year is forecast to be heavily weighted towards the first six months. We continue to expect to turn cash flow positive at some point during the second half, reflecting our forecasted profile of flying hours as they recover from today’s low base.
With liquidity of approximately £9 billion, we are confident that despite the more challenging near-term market conditions we are well-positioned for the future. We remain focused on completing our restructuring programme and footprint consolidation as well as maintaining cost control and capital discipline. During 2020 we removed around 7,000 roles, making good progress towards our target to remove at least 9,000 roles by the end of 2022. This restructuring will be a key enabler of our target to deliver at least £750 million of free cash flow (excluding disposals) as early as 2022, contingent on the expected recovery in engine flying hours.
Our 2020 Full Year results announcement will be published on 11 March 2021.
This press release may contain projections and forward-looking statements. The words "believe", "expect", "anticipate", "intend" and "plan" and similar expressions identify forward-looking statements. All statements other than statements of historical facts included in this press release, including, without limitation, those regarding the Company's financial position, potential business strategy, potential plans and potential objectives, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. Further, certain forward-looking statements are based upon assumptions of future events which may not prove to be accurate. The forward-looking statements in this press release speak only as at the date of this press release and the Company assumes no obligation to update or provide any additional information in relation to such forward-looking statements.
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