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Rolls-Royce is in talks with investors over a fundraise of up to £2.5billion as Covid-19 continues to blight global air travel.

The aerospace giant said in a statement that it was “evaluating the merits” of the raise which could be carried out through a rights issue or other forms of equity insurance.

The company is also considering new debt issuance, it said.

According to the FT, Rolls-Royce is in discussions with a number of sovereign wealth funds including Singapore's GIC.

“Amongst other options, we are evaluating the merits of raising equity of up to £2.5billion, through a variety of structures,” Rolls-Royce said in the statement.

“No final decisions have been taken as to whether or when to proceed with any of these options or as to the precise amount that may be raised. A further announcement will be made if and when appropriate.”

The announcement by the firm comes less than a month after it posted an eye-watering £5.4 billion half-year pre-tax loss due to the impact the coronavirus crisis has had on the aviation sector.

Rolls-Royce, which has its civil aerospace and defence divisions in Derby and Filton, near Bristol, revealed the figure in its half-year results at the end of August.