H1 trading Widebody engine flying hours were 50% lower in H1 (Q1 -25%, Q2 -75%, April -80%). MRO activity was broadly stable YoY, with the Trent 1000 backlog addressed and Aircraft on Ground in single digits. Defence activity has remained unaffected, as per expectations. Liquidity and financial position Free cash outflow of c.£3bn, with an H2 improvement expected resulting in FY cash outflow of c.£4bn. Cost mitigation actions for 2020 of £1bn are on track, with c.£300m achieved in H1. Liquidity has increased to £8.1bn, including a new undrawn £2bn 5-year term-loan facility. Making progress As a reminder, Rolls announced in May a c.17% reduction in global headcount, incurring c.£800m of cash costs across 2020-22, with total expected annualised savings from all actions of more than £1.3bn (headcount reduction contributing c.£700m). FCF target reinstated A 2022 FCF target of £750m has been introduced – we think this compares favourably with expectations despite the cash headwind from the hedge book reduction. Flying hours achieving 70% of 2019 levels by next year appear achievable on current recovering trends. Our view While management continue to review options to strengthen the balance sheet and position the business for recovery, actions to conserve cash have been decisive and it appears the storm is being navigated – today’s statement should be taken well.