Last checked at 
* FY underlying pretax loss of 4 bln stg
* Cash outflow of 4.2 bln stg in 2020, in line with
consensus
* Sticks to 2021 cash burn guidance
* Says ITP sale progressing well
* Shares up 2%
(Adds background, updates shares)
By Sarah Young
LONDON, March 11 (Reuters) - Rolls-Royce has enough
funding to weather the crisis in the aviation industry caused by
the pandemic, its chief executive said on Thursday, after the
engine maker plunged to a record 4 billion pound ($5.6 billion)
underlying loss for 2020.
The British company said its cash burn should halve this
year, and turn positive in the second half as vaccinations kick
in and travellers return to the skies.
"The worst is now well behind us," CEO Warren East said.
But even if that proves optimistic, Rolls is well placed to
cope with more turmoil after a drive to cut costs and raise
funds, he added.
"We have our cash burn under control ... We have ample
liquidity to get through this crisis as long as it lasts," East
told reporters.
Rolls' model of charging airlines for the number of hours
its engines fly meant much of its income dried up last year when
travel stopped, forcing it to ask shareholders for cash and take
on 5.3 billion pounds of new debt.
Its civil aerospace arm, whose engines power Airbus A350 and
Boeing 787 jets, accounts for just over half of group revenue in
a normal year.
Last year's cash burn of 4.2 billion pounds was in line with
analysts' expectations, and Rolls guided that would reduce this
year to 2 billion pounds.
The company axed 15% of staff in 2020, and earmarked 2
billion pounds of assets for sale to repair its balance sheet.
HISTORIC LOSS
Rolls, founded in 1906 and one of the last vestiges of
Britain's once mighty manufacturing industry, posted an
underlying pretax loss of 4 billion pounds for 2020, worse than
analyst expectations for a 3.1 billion pound loss and its
biggest ever on an underlying basis.
Rolls shares were up 2.6% to 116 pence at 1050 GMT. They
have lost 41% since the start of the pandemic around a year ago,
but have gained 22% in the last month on travel recovery hopes.
Jefferies analyst Sandy Morris said Rolls had "much to do",
but the "fix" was feasible. "The possibility of reaching modest
net debt by end 2023 is alive," he said.
Rolls' cash flow improvement this year depends on airlines
flying 55% of 2019 levels during 2021. Its assumption is for
more travel later this year as vaccine programmes progress.
The sale of Rolls' Spain-based ITP unit, expected to be its
biggest disposal, is progressing well and there are ongoing
conversations with a number of potential buyers, it said.
"We're open to approaches from any party with a credible
offering at the moment. That includes being open, by the way, to
discussions with potential Spanish investors or partners," East
said.
Industry sources say the sale has sparked tensions with
Germany’s MTU Aero Engines, a partner of U.S. engine maker Pratt
& Whitney. MTU said last month it not been invited to
bid. Rolls declined to comment.
Part of Rolls' asset sale plan ran into problems this week
when Norway suspended the 150 million euro sale of Rolls'
Norwegian unit, Bergen Engines, on security grounds.
($1 = 0.7174 pounds)
(Reporting by Sarah Young. Editing by Guy Faulconbridge and
Mark Potter)
