UK jet engine maker Rolls-Royce forecast free cash outflow of £2 billion ($2.7bn) in 2021, citing the additional travel restrictions aimed at curbing new Covid-19 strains.
The company expects the flying hours of its widebody engines to reach just 55 per cent of 2019 levels, a downgrade from its October forecast of 70 per cent.
Its share price fell 5.8 per cent to 92.2 pence at 2pm UAE time, before recovering to trade 2.3 per cent lower at 95.73 pence at 5.08pm.
"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 [affecting] our own cash flows in 2021," Rolls-Royce said.
Rolls-Royce projected free cash outflow will be "heavily weighted" towards the first six months of the year.
The London-based company, whose engines power Airbus A350s and Boeing 787s, receives payments from some customers linked to the amount of time its engines are used.
It expects to turn cash-positive at some point during the second half, as flying hours recover from a low base, it said.
Rolls-Royce said it slashed 7,000 roles in 2020 as it made "good progress" towards a target to reduce headcount by 9,000 jobs by the end of 2022 as part of its restructuring.
It has a target to deliver at least £750 million of free cash flow, excluding disposals, by as early as 2022, depending on the expected recovery in engine flying hours.
The company will announce its full-year financial results on March 11.