Jet engine maker Rolls' woes deepen as more shortcomings found
Following an agreement with Boeing and regulators, some 166 engines that are potentially affected will undergo a one-time inspection
Rolls-Royce’s engine-durability crisis worsened as the company revealed it has detected new issues that will require extra repair shop visits on a further batch of turbines that power Boeing's 787 airliner.
The glitch concerns the intermediate pressure compressor on a “small number” of Package B Trent 1000 engines for the Boeing plane, London-based Rolls-Royce said on Monday. The shares fell as much as 2.2 per cent.
Following an agreement with the US manufacturer and regulators, some 166 engines that are potentially affected will undergo a one-time inspection to assess the extent of the problem, Rolls said. Package B turbines have been in service since 2012, and evidence of wear has been detected on “high life” examples, it added.
While the check-up visits will incur “some additional cost”, Rolls-Royce stood by its 2018 free cash-flow estimate of £450 million (Dh2.2 billion), plus or minus £100m. The reiteration takes into account increased servicing of Package C engines, where the glitch was originally detected, as well as mitigating actions being taken across the group, the company said.
About 80 per cent of the Package C engine version have undergone initial checks for cracking or signs of wear and tear on turbine blades, a person with knowledge of the issue has said. Just under a third of those engines failed the initial inspections required by regulators for planes that fly more than 2 hours and 20 minutes from the nearest diversionary airport.
Chief executive Warren East has said Rolls-Royce will reduce discretionary spending to offset the additional funds needed for overhauls and to keep to a key target of reaching £1bn in free cash flow by 2020.
The engine maker is due to unveil a new restructuring plan authored by turnaround consultant Alvarez & Marsal at a capital markets day this week.
The engine maker is set to slash 4,000 jobs as part of the plan in a bid to cut costs and increase profits, the Sunday Times reported, without saying where it got the information. The cull could concern among middle management and back-office staff. The company declined to comment on details.
The shares fell 0.9 per cent to 827.60 pence at 8:20am in London, giving a market value of €15.4bn (Dh66.67bn).
Updated: June 11, 2018 02:28 PM