British aero-engine maker Rolls-Royce said it would sell assets to try to raise at least 2 billion pounds ($2.6 billion) as it battles to shore up a balance sheet ravaged by the COVID-19 pandemic and slump in travel.

Rolls-Royce plunged to a record loss before tax of 5.4 billion pounds ($7.14 billion) in the first half of 2020 and, compounding its woes, finance chief Stephen Daintith resigned, although said he would stay for a transition period.

The company said it would continue to look at options to bolster its finances even after asset sales. But asked about a possible rights issue, Daintith said Rolls-Royce had a good level of liquidity and a plan to cut costs.

“We’re not going to be drawn on any particular option for strengthening the balance sheet. We’re taking our time, considering carefully,” he told reporters on Thursday.

JP Morgan analysts said a rights issue was needed: “In our view only a very major capital raise would put Rolls-Royce on a sound footing.”

As the company is an important supplier to the UK government on military programmes, there has been media speculation that Britain could be forced to rescue it.

“Probably the most important thing that government can do is help get people flying again,” CEO Warren East said, when asked about potential state help.

Planes stopped flying for months in coronavirus lockdowns earlier this year and travel remains at a much lower level than before the pandemic, hitting Rolls-Royce as airlines pay it based on how many hours engines fly.

Flying hours were down 70-75% in May, June and July, and the company warned of considerable uncertainty over the timing and shape of a recovery.

To boost its coffers, Rolls-Royce said it planned to sell ITP Aero, which is based in Spain and makes turbine blades for jet engines, and other assets to raise at least 2 billion pounds over the next 18 months.

The group will also consolidate its aerospace manufacturing facilities into six locations from 11, and said 4,000 job cuts had already been made at its civil aerospace unit of the 9,000 announced in May - part of this year’s 1 billion pound cost cutting plan.

Daintith is set to move to retail technology firm Ocado and Rolls-Royce said the search for a successor was underway.

Meanwhile, London’s FTSE 100 retreated on Thursday as earnings updates from firms including Rolls-Royce underlined the extent of the corporate damage from the COVID-19 pandemic ahead of the annual Jackson Hole central bankers’ conference later in the day.

The blue-chip FTSE 100 fell 0.3%, with banks, insurers and energy stocks leading the declines.

Rolls-Royce tumbled 7.3% to a more than three-week low after sinking to a first-half underlying loss before tax of 3.2 billion pounds ($4.2 billion). The wider aero and defence index lost 1.8%.

All eyes are now on US Federal Reserve Chair Jerome Powell’s address at the virtual Jackson Hole Symposium, where he is expected to outline a more flexible approach to policy, including targeting an average inflation rate of around 2% that will allow rates to stay super-low for longer.

“Something like that could prove positive for equities, as it would mean extra-loose monetary policy for longer,” said Charalambos Pissouros, market analyst at JFD Group.

Trillions of dollars in stimulus has sent global equity benchmarks back to their pre-pandemic highs, but the UK’s FTSE 100 is still about 21% below that level as the economy struggles to recover from a record crash in the second quarter.

Data on Thursday showed British car production rose sharply in July but is still well below last year’s level, while another set of figures showed firms in the services industry cut jobs rapidly in the three months to August to ride out the pandemic.

A 13.8% surge in OneSavings Bank helped the mid-cap FTSE 250 rise 0.1% as the specialist mortgage lender reported a 2% rise in its underlying net loan book.

Hays, one of the world’s biggest recruitment agencies, rose 1% even as it posted a 12% fall in annual net fees, while advertising company WPP jumped 4% as it resumed its dividend after beating dire forecasts for second-quarter trading.

Separately, British online supermarket and technology group Ocado said on Thursday Duncan Tatton-Brown would step down as chief financial officer after eight years in the role and be replaced by Rolls-Royce finance chief Stephen Daintith.

The company said Tatton-Brown, who is stepping down due to family circumstances, would continue as CFO until Nov. 22 after which he would be a non-executive director of three Ocado units.

Reuters