Rolls-Royce Holdings PLC (LSE:RR.) should report collective flight times of its engines at the top end of guidance this year, according to Bank of America analysts.
This would see Rolls-Royce engine flight times at roughly 87% of pre-2019 levels, marking a boost given the FTSE 100-listed manufacturer is paid partially based on how much its power units are used.
“In our view, wide body recovery and China reopening has continued through the fourth quarter and this has been felt positively on Rolls-Royce’s portfolio,” the bank said in a note.
Rolls-Royce is particularly exposed to the long-haul sector, given its engines are used by longer-distance operators, meaning its engine time recovery has lagged behind those supplying the booming short-haul sector.
According to BofA, Rolls-Royce is set to be the only original equipment manufacturer (OEM) to see engine flight times rise relative to 2019 quarter-on-quarter, however.
Rolls-Royce could then see its engines fly in line with pre-pandemic figures come next year, analysts added, as the long-haul sector finally fully recovers to 2019 levels.
Rolls-Royce reported engine flight times at 83% of 2019 levels at 7.7 million hours in August’s interim results, up 26% on the first half of 2022.
This saw the FTSE 100-listed manufacturer generate £2.3 billion through long-term service agreement receipts, compared to £1.6 billion a year earlier.