At the Rolls-Royce Holdings PLC (LSE:RR.) trading update on Thursday an update on the "evolution of large engine flying hours will be key", said Deutsche Bank.
This underpins the company's medium-term margin and free cash flow improvement story, analyst Christophe Menard said.
At the end of April 2024, he expects engine flying hours (EFHs) to have improved to 103-105% of 2019 levels, well within CEO Tufan Erginbilgiç's guidance range of 100-110% for the year.
Latest IATA data shows international traffic was up 20% so far in the first quarter globally, with Asia being particularly strong at around 45% annual growth.
In China, where Rolls has a strong presence, international traffic was up over fourfold in the quarter, effectively reaching 77% of 2019 levels, the analysts noted.
"Based on our analysis of the latest Cirium data, we expect RR's EFHs to be up by >20% YTD, reaching at least 103-105% of 2019 levels," he said.
Menard said the "could be a welcome boost" to cash inflows from Rolls' long-term service agreements in the quarter.