Rolls to fix A380 engine fault, take profit hit


Rolls-Royce says it will fix an engine fault which forced a Qantas A380 superjumbo to make an emergency landing last week, although the cost of the incident will mean slower profit growth this year.

“The failure was confined to a specific component in the turbine area of the engine. This caused an oil fire, which led to the release of the intermediate pressure turbine disc,” the British enginemaker said on Friday. “Our process of inspection will continue and will be supplemented by the replacement of the relevant module according to an agreed programme.” Chief executive John Rose said the upgrade would be undertaken in collaboration with EADS-owned planemaker Airbus, Trent 900 customers, and regulators.
“This will enable our customers progressively to bring the whole (A380) fleet back into service,” said Rose. “We regret the disruption we have caused.” The world’s second-largest maker of aircraft engines said underlying profit growth for 2010 would now be slightly lower than a previously guided 4-5 percent growth because of costs associated with the blowout.

Rolls-Royce shares, down 10 percent in the past week, were up 2.2 percent at 597 pence by 0850 GMT to value the company at around 11.4 billion pounds ($18.4 billion) and make it the top gainer among a handful of risers on the FTSE 100 .FTSE. “Overall, it is pleasing the Trent 900 issue has been narrowed down and can be fixed for what appears to be a relatively modest cost. But the short-term disappointment is lowered guidance,” said Investec analyst Andrew Gollan who cut Rolls-Royce’s 2010 earnings guidance by 3 percent.

Separately, Boeing said the failure of an electric panel, which then caused a fire in the surrounding insulating material, was behind an emergency landing this week of one of its new 787 Dreamliner aircraft which is fitted with a Trent 1000 engine made by Rolls-Royce.

Rolls-Royce said the financial impact of the Trent 900 incident would be partly mitigated by better performance at its marine and defence businesses during the third quarter.

Qantas’s six Airbus A380s have been grounded since last Thursday when a Trent 900 engine partly disintegrated mid-flight, forcing a fully-laden A380 to make an emergency landing in the biggest incident to date for the world’s largest passenger jet. Following the failure, Rolls-Royce advised A380 operators to perform safety checks on Trent 900 engines.

Airbus parent EADS unveiled stronger-than-expected third-quarter profit on Friday and boosted its outlook and production targets on the back of a recovery in aircraft demand.