London, May 2, 2026, 16:01 (BST)
- Rolls-Royce Holdings plc shares closed higher Friday after the engine maker held its 2026 profit and cash targets.
- The company said engine flying hours in the Middle East had recovered after disruption tied to the Iran war.
- Investors are watching whether higher fuel costs and airline capacity cuts can still hit widebody demand.
Rolls-Royce Holdings plc shares rose 1.46% to 1,199.20 pence on Friday, extending gains after the British engine maker kept its 2026 outlook intact despite disruption to airline customers from the Middle East conflict. The stock outperformed a weaker FTSE 100, which slipped 0.14% on the day.
The move matters because Rolls-Royce’s civil aerospace business is tied closely to how much airlines fly. Carriers pay the company for use and servicing of engines on long-haul jets, so engine flying hours, or EFH, are a direct read on future service revenue.
Rolls-Royce said at its annual meeting that it still expects 2026 underlying operating profit of 4.0 billion pounds to 4.2 billion pounds and free cash flow of 3.6 billion pounds to 3.8 billion pounds. Underlying operating profit strips out some non-routine items; free cash flow is cash left after running the business and investment spending.
Chief Executive Tufan Erginbilgic told shareholders the company had made a “strong start to the year” and expected to “fully mitigate” the current financial impact from the disruption. The company also said progress on its turnaround plan had given it more confidence in the full-year guidance. Rolls-Royce
In civil aerospace, large engine flying hours rose 5% to 115% of 2019 levels in the first quarter. Rolls-Royce kept its full-year EFH target at 115% to 120% of 2019 levels and said Trent XWB engine flying hours in the Middle East had recovered to pre-conflict levels.
The company supplies engines for Airbus A350 and Boeing 787 widebody jets. Reuters reported that airline customers had faced severe disruption early in the Iran war, with higher fuel prices, flight cancellations and warnings over jet fuel shortages still weighing on the sector.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, wrote that a large part of Rolls-Royce revenue comes from servicing engines on bigger long-haul aircraft, with the business based on hours flown. He said many recent capacity cuts had been in narrowbody aircraft, a part of the market where Rolls-Royce does not operate.
The wider engine market is facing the same fuel shock. GE Aerospace, a key aircraft-engine peer, said in April it was on track for the high end of its 2026 profit outlook but was bracing for elevated oil prices, fuel constraints and slower global growth; CEO Larry Culp told Reuters he was not aware of customers trying to reschedule shop visits.
Rolls-Royce also pointed to strength outside civil aerospace. Defence had a strong start, helped by better aftermarket performance and more than a 20% year-on-year increase in original equipment deliveries, while Power Systems saw power-generation order intake across gas and diesel engines rise about 50% from a year earlier.
The group said its Power Systems order backlog stood at 7.3 billion pounds at March 31, led partly by demand from data centres. Its small modular reactor business also signed contracts tied to projects in Wales and the Czech Republic, which the company said would generate revenue and profit this year.
The risk is that the recovery in flying hours may not hold if fuel prices stay high or airlines pull back more capacity. Chiekrie also flagged another pressure point: some newer aircraft engines have required more maintenance than customers want, and failure to fix those issues over time “could eat into future profits.” Hargreaves Lansdown
Rolls-Royce has also stepped up shareholder returns. The company said it had completed more than 750 million pounds of the 2.5 billion-pound 2026 tranche of its 7 billion- to 9 billion-pound buyback plan, and its next half-year results are due on July 30.
