London, May 5, 2026, 20:04 BST
- Rolls-Royce shares picked up a bit on Tuesday, even as the FTSE 100 logged its steepest single-day drop since late March.
- Last week’s guidance remains in focus for investors, who are also contending with Middle East turmoil and rising fuel expenses.
- For Rolls, it all comes down to engine flying hours. That’s still the core metric for airline usage—and it’s at the heart of the 2026 profit story.
Shares of Rolls-Royce Holdings plc managed a slight climb in London on Tuesday, bucking the broader UK market’s slide. Investors seemed reassured by the company’s reiterated targets for profit and cash flow in 2026. According to Hargreaves Lansdown, the stock closed up 0.23% at 1,196.40p/1,197.00p, even as the FTSE 100 lost 1.4%.
The drop drew attention, coming as HSBC’s unexpected loss, spiking energy prices, and renewed U.S.-Iran tensions weighed on sentiment. According to Reuters, the blue-chip FTSE 100 fell to 10,219.1 points—marking its sharpest daily slide since late March.
Rolls-Royce faces a sharper, more pressing issue—could Middle East disruption trim the long-haul flight hours that power its civil aerospace revenue? The company’s earnings from airlines are linked to long-term service agreements, which depend partly on the number of hours Rolls-powered jets spend in the air.
On April 30, Rolls-Royce stuck with its 2026 outlook, still projecting underlying operating profit between 4.0 billion and 4.2 billion pounds and free cash flow in the range of 3.6 billion to 3.8 billion pounds. Free cash flow—which reflects what’s left after covering operating and capital expenses—remains a key figure for investors, as it pays down debt and supports dividends and buybacks.
In the company’s AGM statement, Chief Executive Tufan Erginbilgic described Rolls-Royce’s start to the year as “strong,” adding he expects to “fully mitigate the current financial impact” linked to the Middle East disruption. Erginbilgic also cited “good progress” on the company’s transformation programme, which he said underpins confidence in hitting the 2026 targets. Rolls-Royce
Civil aerospace is still the key variable here. Rolls-Royce reported that large engine flying hours climbed another 5%, hitting 115% of 2019’s figures for the first quarter, with the full-year target unchanged at 115% to 120% of 2019 levels. Engine flying hours, or EFH, track the actual time aircraft engines are running.
Last week, Reuters noted that Rolls-Royce engines are used on Airbus A350 and Boeing 787 aircraft—both widebody models—making the company more vulnerable to shifts in long-haul traffic, rather than the recent narrowbody route reductions some airlines have implemented. According to the company, Trent XWB engine flying hours at Middle Eastern carriers have now climbed back to levels seen before the conflict.
Competitive signals are mixed here. GE Aerospace, RTX’s Pratt & Whitney, and Safran all fight for share in engines and propulsion, but for Rolls-Royce, the real story right now revolves around widebody aftermarket service and tightening costs. UBS, quoted by Interactive Investor ahead of the AGM, flagged potential upside for Rolls “relative to peers”—pointing to its turnaround playbook, with pricing power and fatter margins at the heart. Interactive Investor
Another boost came from power systems. Rolls-Royce reported that in the first quarter, order intake for power generation—covering both gas and diesel engines—jumped roughly 50% from last year, with data-centre demand leading the charge. Defence also saw a lift: improved aftermarket results and a jump of more than 20% in original equipment deliveries both contributed.
The risk hasn’t disappeared. According to Reuters, travel-related shares took a hit Tuesday, with British Airways parent IAG dropping 1.6% as worries about pricier fuel weighed on the sector. Should fuel costs stay elevated or airlines run into fresh trouble on Middle East routes, carriers might pull back flying hours faster than Rolls-Royce has penciled in—potentially squeezing the service revenue those investors are banking on.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, pointed out the “decent amount of execution risk” facing Rolls-Royce. Markets, he said, wouldn’t take it well if management missed their improvement targets. Chiekrie also noted that customers weren’t thrilled about the higher maintenance needs on some newer aircraft engines—though the company is now installing upgraded parts. Hargreaves Lansdown
Investors now look to July 30, when Rolls-Royce is set to release half-year results. In the meantime, shares will hinge mainly on two factors: the pace of widebody flying’s comeback, and confidence in Erginbilgic’s profit strategy holding up if geopolitical risks flare again.
