Rolls-Royce rebounds after engine woes
Shares gain value, problems remain
LONDON — Rolls-Royce Group PLC edged back from the brink yesterday as investors accepted its assurances that a problem with its engines for the world’s largest airliner was isolated and being repaired.
But the crisis appears far from over for the world’s second-largest civil aircraft engine manufacturer. An Airbus executive suggested that Rolls-Royce knew about the problem before the midair disintegration of a Trent 900 engine last week, raising the question of long-term damage to the reputation of one of Britain’s last globally important industrial manufacturing companies.
And there are no answers yet on how much the incident will cost Rolls-Royce, particularly if the company is forced to pay compensation and undergo a complete overhaul of the faulty engine series. Analysts said that if comments by Airbus’s chief operating officer, John Leahy, were correct, Rolls could face claims for faulty service and lost revenue that would run into the millions of dollars.
Still, there was some initial relief that a plan of action appeared to be in hand. Rolls-Royce shares gained 4.6 percent, or around $700 million, after a rout that wiped $1.5 billion off its share price in the week since the alarming midair malfunction on a Qantas flight.
“Investors have been reassured that the problem is being contained,’’ said Howard Wheeldon, a senior strategist at BGC Partners in London.
Rolls-Royce said that the disintegration of the Trent 900 engine as Qantas Flight 32 flew over an Indonesian island on Nov. 4 was caused by a specific component of the turbine engine that started an oil fire.
It said the problem was unique to its series of lighter-weight, quieter, and less-polluting engines designed specially for the world’s newest and largest passenger plane.
The statement matched a report from the European Aviation Safety Agency, which issued an emergency order Thursday requiring airlines to reexamine their Trent 900s and ground any planes with unusual oil leaks.
Chief executive John Rose said the company will replace the relevant part “according to an agreed program.’’