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etvfutures.com April 26, 2018


Rolls-Royce signals customer disruption and higher costs over engine checks

14 April 2018, 01:10 | Cesar Cruz

Rolls-Royce to increase inspections of Trent 1000 engines

Rolls-Royce's Trent 1000 engines to undergo further inspections as it warns of disruption to customers

It stresses that neither the Trent 1000 TEN powerplant nor the Package B version of the engine will be affected by the new inspections.

In an update this morning, Rolls-Royce said: "The increased inspection frequency is driven by our further understanding of the durability of the Trent 1000 Package C compressor, a condition that we highlighted earlier this year". It is carrying out a programme of repairs to the engines that are...

It says, however, that the need for more regular inspections will result in higher cash costs that those in its previous financial guidance.

Warren East, CEO, Rolls-Royce, said: "Our focus is on supporting our customers and doing all we can to minimise any impact on their operations".

Boeing said an existing European Aviation Safety Agency Airworthiness Directive for the Package C engine requires inspections of an intermediate pressure compressor blade at certain flight cycles. Rolls-Royce noted that it was reprioritising various items of discretionary spend to mitigate the costs, and reaffirmed its free cash flow guidance for the current year. Societe Generale raised shares of Rolls-Royce from a "sell" rating to a "hold" rating in a research report on Thursday, March 8th.

The engine's problems have already forced airlines to change schedules and lease other aircraft but moves to reduce Extended Range Twin Engine Operational Performance Standards (ETOPS) for affected planes will have further consequences for long-haul routes.

"Our team of technical experts and service engineers is working around the clock to ensure we return them to full service as soon as possible", he said.

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East said Rolls was working with Boeing and airlines to minimise the disruption.

"We have an ongoing dialogue with both Boeing and Rolls-Royce and we have been told this problem has their full attention".

A Virgin spokeswoman said it had been aware of the increased inspections announced on Friday and that the cover it had in place would be sufficient.

Air New Zealand is one of the airlines affected by the problem, with nine of the Package C engines, said it expected there would be some impact on its worldwide schedule as a result of the additional checks.

In December the EASA ordered airlines to replace some Trent 1000 engines.

In March, Rolls said the cash hit from the problem should hit a peak of £340 million in 2018 before falling in 2019.



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