LONDON (Reuters) - British engineering company Rolls-Royce downgraded this year’s cash outflow forecast and warned of a challenging outlook as the slump in air travel continues. But the company stuck to its guidance to turn cash flow positive during the second half of next year, saying that its deep cost-cutting plans were on track and would help turn its cash burn rate around. The company, whose engines power Boeing 787s and Airbus A350s, has been hit by the travel slump during the coronavirus pandemic and to survive it raised 2 billion pounds ($2.7 billion) from shareholders in November. Just weeks later, Rolls-Royce on Friday downgraded this year’s cash outflow forecast, saying it now expected that to be 4.2 billion pounds, worse than the 4 billion pounds it was guided to in October. It also warned the recovery in engine flying hours, a key measure of how much it is paid by airlines, had slowed due to a second wave of coronavirus infections in some places. Shares in Rolls-Royce were down 7% to 118.5 pence at 0834 GMT, paring some of the 80% gains the stock has made since positive vaccine news emerged in early November. Having tapped shareholders for funds also and taken on 3 billion pounds of new debt last month, CFO Stephen Daintith told reporters that Rolls-Royce had “ample liquidity to get us through 2021”. Chief executive Warren East said he was confident Rolls-Royce would meet its 2021 cash flow target but the timing of it would depend on the recovery of flying hours. Over the 11 months to November, engine flying hours were approximately 42% of their prior year level, meaning Rolls will likely miss the base case forecast it gave in October for engine flying hours to come in at 45% for 2020. To ride out the pandemic, the company plans to sell assets worth 2 billion pounds to pay down debt and is cutting 1.3 billion pounds in costs by axing 9,000 jobs and closing factories, a plan it said on Friday was on track.