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December 9, 2021

Rolls-Royce (RR.L) expects its free cash outflow in fiscal year 2021 to be better than the previous guidance of 2 billion pounds ($2.64 billion) due to cost cuts and a recovery in the broader market, the British engineering group said on Thursday.

The company, which has more than 400 airlines and leasing customers across the world, said it expects to remove more than 8,500 roles by the end of this year, with the pace of the restructuring running ahead of its plan. A $2 billion sale of its Spanish unit, ITP Aero, saw Rolls-Royce meet its 2 billion pound disposal target in September.

The company was severely hit by the pandemic due to its exposure to the airline industry, forcing it to raise money and take out huge loans. "While external uncertainties clearly remain, we have seen continued gradual recovery in our civil aerospace business, a growing order book in power systems and have secured a significant contract win in defence," Rolls-Royce Chief Executive Officer Warren East said.

The improved trading performance helped the more than century-old company return to positive free cash flow in the third quarter, in addition to reducing the outflow expected in the second half.