Rolls says progress made in Qantas A380 engine probe

By Rhys Jones and Michael Smith

LONDON/SYDNEY (BestGrowthStock) – Rolls-Royce Group Plc moved to contain a crisis of confidence in the safety of its engines on Monday, saying progress was being made in finding out what caused last week’s blowout on a Qantas Airbus A380 flight.

Shares in Rolls reversed losses and rose 3 percent as the group eased fears that the failure of one of the four Trent 900 engines powering the Qantas superjumbo signaled a possible wider problem in its family of Trent engines.

“Rolls-Royce has made progress in understanding the cause of the engine failure on the Trent 900-powered A380 Qantas flight QF32 on 4 November,” the company said in a statement, ruling out any link to a Trent 1000 engine test explosion in August.

“It is now clear this incident is specific to the Trent 900 engine. As a result, a series of checks and inspections has been agreed with Airbus, with operators of the Trent 900-powered A380 and with the airworthiness authorities,” it said.

The company, which has been criticized by newspapers and some analysts for saying little since the incident, responded after Australia’s Qantas grounded its fleet of Airbus A380 superjumbos for at least three more days.

Qantas, which last week said an engine design flaw could be to blame, said it was investigating oil leaks that might have caused the engine explosion on a Sydney-bound flight.

“On three of the engines what we found is slight anomalies — oil where oil shouldn’t be on the engines,” Qantas Chief Executive Alan Joyce told Australia’s ABC radio.

“We’re just trying to check what the cause of that would be. These are new engines on new aircraft and they shouldn’t have these issues at this stage, so it’s given us indication of an area for us to focus into,” Joyce said.

The incident has weighed on Rolls, which competes with a consortium led by General Electric and Pratt & Whitney in providing the engines needed to power the world’s largest airliner.

Rolls shares fell 9.7 percent last week but closed up 2.7 percent at 606.69 pence after Monday’s progress report.

“Rolls’ reputation has been hit leading airlines to favor alternative engines when possible,” said Credit Agricole analyst Antoine Boivin-Champeaux.

Investors have also expressed fears that the problems could run deeper, affecting other Trent engines for the Boeing 787 Dreamliner and the future Airbus 350, which are both expected to sell in the thousands compared with hundreds of A380 sales.

Boeing last month blamed Rolls for forcing it to push back delivery of its already-delayed 787 Dreamliner after a Trent 1000 engine blew up at a UK test site in August.

But Rolls on Monday denied any link between the two events.

“We can be certain that the separate Trent 1000 event which occurred in August 2010 on a testbed in Derby is unconnected,” the company’s statement said.

“This incident happened during a development programme with an engine operating outside normal parameters. We understand the cause and a solution has been implemented.”

A wider problem in the Trent family could have dealt a serious blow to Airbus as its A350 is only offered with Rolls engines, whereas GE is an alternative supplier on the 787.

Qantas’s reputation as one of the world’s safest airlines also came under the spotlight, while investors looked at the cost of grounding aircraft and compensating passengers. Qantas shares in Sydney closed 2.1 percent lower at A$2.80.

Thursday’s engine failure over Indonesia’s Batam island was the biggest incident to date for the A380, which went into service in 2007 and can carry more than 500 people.

Airbus parent EADS has said the plane is safe to fly.

In August a Lufthansa A380 en route to Tokyo from Frankfurt shut down a Rolls engine shortly before landing because of a change in oil pressure, and a Singapore Airlines A380 flight turned back to Paris in September because of an engine problem.

Underscoring the pressure on the UK engineering firm to provide reassurance to travelers, one analyst said it could face tougher measures barring a quick resolution.

“The next step could be a regulatory body such as the (Federal Aviation Administration) mandating the grounding of all A380 aircraft with Rolls engines until this is sorted out,” said Nomura analyst Jason Adams.

Besides Qantas, Singapore Airlines and Lufthansa operate A380s with Rolls engines. The other current operators Emirates and Air France use the rival U.S.-made engines.

Joyce said Qantas had no plans to change its delivery schedule for new A380 planes and it was too early to talk about any legal claim against Rolls-Royce or Airbus.

A second Qantas flight out of Singapore was forced to make an emergency landing after another problem on Friday, this time with an older type of Rolls engine on a Boeing 747-400 jumbo.

The Australian carrier has never had a fatal accident since it started flying jetliners, a reputation famously mentioned by Dustin Hoffman’s character in the 1988 movie “Rain Man”. (Additional reporting by Balazs Koranyi, Michael Perry, Sonali Paul, Tim Hepher; Editing by Will Waterman, Greg Mahlich)

Rolls says progress made in Qantas A380 engine probe