Rolls Royce Bleeds As UN Projects $4 trillion Setback for Tourism Industry

Summary:

Rolls Royce share price continues to bleed as the new delta coronavirus variant threatens to stifle the recovery of the aviation industry.

Rolls Royce share price continues to bleed as the spread of the Delta variant of the coronavirus threatens the tourism and aviation industry once more. The emergence of the highly virulent delta strain, which infected dozens of fully vaccinated people in Canada, is already generating new travel restrictions in several countries.

Experts say it will take another two years for the tourism industry to bounce back to pre-pandemic levels. This comes as the United Nations Conference on Trade and Development (UNCTAD) and the World Tourism Organization (WTO) project that economic losses to the tourism industry due to the pandemic would top $4 trillion in 2020 and 2021. According to experts in both organisations, the availability of vaccines and the evenness of distribution could play a massive role in the industry’s recovery.

Rolls Royce makes engines for aircraft and derives revenue from this source based on the number of hours the engines are operating. In other words, no flights mean no payments from this source.

This experience is driving the company’s aggressive diversification campaign, investing in new technology such as battery packs for electric aircraft, energy startups (such as Kowry Energy) and engines with lower carbon footprints.

Rolls Royce share price is currently down by 0.02% as it struggles to stave off a 5th straight day of losses.

Technical Outlook for Rolls Royce

Price found support at the 95.05 price mark (21 December and 19 February lows). A firm bounce has taken the price off these lows, but the price remains under pressure. A breakdown of 95.05 allows the support at 90.52 to come into focus (lows of 28 January to 12 February). 86.40 (lows of 13 November 2020 and 26 January) and 80.00 form additional downside targets.

On the other hand, an extension of the intraday bounce puts Rolls Royce on course to aim for the 99.90 resistance. A break of this level allows 103.63 and 110.00 to come into the picture as potential upside targets, with an additional target at 113.70.