Rolls-Royce shares fall after incident

Posted on: February 4th, 2019 by
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Shares in Rolls-Royce PLC have dropped more than 4 per cent after an engine manufactured by the company blew out on a Qantas Airways-operated Airbus A380 superjumbo jet.


Qantas grounded its six-strong A380 fleet, which all use Rolls-Royce engines, after the midair incident on Thursday on the Singapore to Sydney Flight QF34.

The plane with more than 450 people on board was forced to make an emergency landing at Singapore, trailing smoke from a blackened engine.

Qantas Chief Executive Alan Joyce appeared to blame the engine, made by Rolls-Royce.

“This issue, an engine failure, has been one that we haven’t seen before,” he told reporters in Sydney. “So we are obviously taking it very seriously, because it is a significant engine failure.”

Rolls-Royce, which also manufacturers engines for A380s by Singapore Airlines and Lufthansa, said it was recommending a series of checks on the Trent 900 engines.

“The in-service fleet of Trent 900 engines is small and relatively new, and the group feels that it is prudent to recommend that a number of basic precautionary engine checks are performed. This process is now under way,” the engine maker said.

We will continue to work closely with our customers as the investigation moves forward. This is at a very early stage and it would be inappropriate to draw any conclusions at this time.”

But the midair drama is another blow for the London-based company after earlier incidents on Singapore Airlines and Lufthansa A380s. It also comes just weeks after Boeing Co grounded one of the new 787 airliners it was testing because of problems with the Rolls-Royce Trent 1000 engine.

Germany’s Lufthansa, which currently operates three A380s, said it was continuing with service as normal.

Concern was reflected in a 4.3 per cent slump in Rolls-Royce shares to 626.5 pence ($A10.17) in early afternoon trade on the London Stock Exchange.

“Clearly whilst there is some justification for concern particularly for the engine maker we do not believe that the event will cause damage to prospects for further A380 sales,” said Howard Wheeldon of BGC Partners.

“However, we suspect that given the fact that Rolls-Royce has recently suffered a separate well-publicised incident on a test Boeing 787 engine it is likely that sentiment is likely to remain subdued on the shares until investors have sight of an initial report on the incident cause.”

Airbus has delivered a total of 37 A380s so far since the airline’s commercial debut on a Singapore Airlines flight in 2007.

Thirteen are in service with Emirates, 11 with Singapore Airlines, six with Qantas, four with Air France and three with Lufthansa.

Rolls-Royce is the manufacturer of the Trent 900 engines on A380 jets operated by Qantas, Singapore Airlines and Lufthansa. A380s flown by Emirates and Air France are instead kitted out by the Engine Alliance, a 50/50 joint venture between GE Aircraft Engines and Pratt & Whitney.

In September 2009, a Singapore Airlines A380 was forced to turn around in mid-flight and head back to Paris after an engine malfunction. On March 31, a Qantas A380 with 244 people on board burst two tyres on landing in Sydney after a flight from Singapore.

Last August, a Lufthansa crew shut down one of the engines as a precaution before landing at Frankfurt on a flight from Japan, after receiving confusing information on a cockpit indicator.

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