Rolls Royce Shares were 0.5% higher today after Virgin Atlantic completed a £1.5bn rescue plan. The news ends the threat of another airline and customer leaving the skies for the engine maker.
In my last article on Rolls I said: The latest drop sees the price trading at 232.2 and it’s possible we could see the 3rd August lows around 213 tested.” The share price has since tested that support level and is now looking to bounce.
Virgin Atlantic is planning to cut 0ver 1,100 jobs as part of the plan after the airline already cut 1,150 more jobs after already cutting more than 3,500 jobs earlier in the year. The airline said: “The outlook for transatlantic flying, which is core to Virgin Atlantic’s business, remains uncertain with US-UK travel curtailed”.
Rolls Royce has been hit hard this year by the airline crisis as the company gets paid by flight hours for its engines. The market is still not coming back to full capacity but the latest deal for Virgin will give shareholders some peace that another major aircraft owner now has funds to ride out the winter period. In its latest earnings report, Rolls Royce reported a record loss of £5.4bn for the first half of 2020. Management noted that flying hours for their engines were down 70-75% in the May to July period.
Rolls Royce Technical Outlook
Rolls Royce tested the 213p support level this week and has since bounced from that level. For shorts, a move above 240p would be a signal that we may test the 50 moving average at 260. Longs must look out for a close below that 213p level, which would signify further losses ahead.
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Rolls Royce Daily Chart
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