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Rolls-Royce CEO Sees Long Haul Flights Back at Pre-Pandemic Levels By 2024

Sam Boughedda
Sam Boughedda trader
Updated 28 Dec 2022

Warren East, the outgoing Chief Executive of Rolls-Royce (LON: RR.), told the BBC, in his last interview before he departs the company, that he believes long-haul aviation will hit pre-pandemic levels by 2024.

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YOUR CAPITAL IS AT RISK. 81% OF RETAIL CFD ACCOUNTS LOSE MONEY.


East, speaking on the company’s journey navigating the last few years, told the BBC that at around the start of the pandemic, flying hours, which is how the company is paid, was down to around 10% of prior year levels as lockdowns and travel restrictions took hold, labelling the event “absolutely catastrophic.”

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YOUR CAPITAL IS AT RISK. 68% OF RETAIL CFD ACCOUNTS LOSE MONEY

As a result, East said cash was “pouring out of the business” for another six months or so after that initial slowdown at “really alarming rates.”

However, Rols-Royce was able to navigate the extremely challenging period for the aviation sector, and despite its share price declining this year, it has gained over 38% in the last three months.

When asked when he expects the aviation industry to be back at pre-pandemic levels, East told the interviewer that short-haul travel back is at “pretty much” pre-pandemic levels, but in the long haul space, he explained that overall, it is still at “about 70%,” although there is a spread depending on the region.

“A lot of our Chinese business is domestic travel, so it’s wide-body jets using our engines,” East commented. “But it’s for domestic travel, and that just hasn’t been happening. They’ve been at about 30% for much of the year.”

However, he said the news from China regarding a further easing of restrictions regarding travel was “very encouraging.” China revealed it will remove quarantine measures for international travellers from January 8.

“By maybe 2024 or 2025, we should be back at pre-pandemic levels, but that, of course, means that the rest of the economy has significantly grown in the meantime,” the outgoing Rolls-Royce CEO stated.

Earlier this month, Delta Air Lines lifted its expectations amid strong demand. “Demand for air travel remains robust as we exit the year, and Delta’s momentum is building,” the US carrier told investors.

With many travel-related companies and analysts expecting air travel demand to remain strong next year, Rolls-Royce shares could be one to watch, especially if macro headwinds ease.


YOUR CAPITAL IS AT RISK. 81% OF RETAIL CFD ACCOUNTS LOSE MONEY.


Sam Boughedda
Sam is a trader and lead stock market writer at AskTraders. After starting his career in the forex market, Sam now focuses on stocks, specifically consumer staples.