UPDATE 2-Qantas reviews way it runs A380s in engine probe

* Engine thrust part of A380 blowout probe – source

* Qantas runs A380s at higher power than other airlines

* Rolls shares up 1.8 percent, Qantas close down 1.8 percent

(Adds engineer, analyst comment, updates shares)

By Rhys Jones and Michael Smith

LONDON/SYDNEY, Nov 9 (BestGrowthStock) – Qantas Airways (QAN.AX: ) is
reviewing the way it operates its A380s after last week’s engine
blowout, a source said on Tuesday, amid reports the carrier
worked its Rolls-Royce (RR.L: ) engines harder than rivals.

Qantas’s use of its A380 engines is being looked into as
part of a wider investigation into why a Rolls-Royce Trent 900
engine blew apart last week forcing an emergency landing in
Singapore, an airline source told Reuters on Tuesday.

“The operations are one of the things Qantas are reviewing
along with the components,” the source said.

The Australian newspaper reported Qantas operated its A380
engines at higher maximum thrust levels than rivals, which could
result in resonating vibrations that cause oil lines to crack.

The higher thrust setting is used on some Qantas A380
take-offs on long-haul routes between Los Angeles, Sydney and
Melbourne, the daily said, quoting unnamed engineers. The thrust
setting of 72,000 pounds remained 3,000 pounds below the
engine’s design limits and within operating guidelines, it said.

Qantas chief executive Alan Joyce said on Monday that while
its engines had a “slightly higher level of power” than those
used in Lufthansa (LHAG.DE: ) planes or Singapore Airlines
(SIAL.SI: ), they were certified to operate at those levels.

Jeff Jupp, a fellow of the Royal Academy of Engineering and
former Airbus technical director said: “These engines go through
a lot of testing before they go into service and I am certain
Rolls would have run the engine at thrust levels about 10
percent higher than they are put it into service at.

“It is possible that Qantas may have been running the engine
at closer to its limits than the other airlines, hence they have
had problems with wear before the other carriers.”

Rolls-Royce 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 the blowout. [ID:nSGE6A6045]

Rolls-Royce shares continued to reverse losses after last
week’s 10 percent drop and were up 1.8 percent by 1150 GMT. The
stock closed 2.7 percent higher on Monday after saying the
engine failure was not part of a wider problem in its family of
Trent engines.

Qantas shares closed 1.8 percent lower at A$2.75. The stock
is down about 5 percent since the incident.

Qantas, which declined to comment on the report, had said on
Friday it suspected a material failure or a design issue may
have caused last Thursday’s engine failure over Indonesia which
forced an emergency landing in Singapore.

“I do not think it is a major problem with the architecture
of the engine or its family derivation and is more likely to be
a detail design problem with a bearing or seal” said Jupp.

“I suspect it is associated with the wear and tear in
service because these engines have done about 8,000 hours —
significantly longer than any engine on test runs.”

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For more stories on Qantas engine problems: [ID:nSGE6A706Q]

FACTBOX-Qantas has never had fatal accident [ID:nSGE6A306M]

TIMELINE-Events leading up to A380 incident [ID:nLDE6A31KZ]

For a graphic, click: http://link.reuters.com/fan73q

Slideshow of Qantas plane: http://r.reuters.com/pum73q

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FINANCIAL IMPLICATIONS

Qantas’s A380 planes account for about 7.5 percent of its
seat capacity, according to analysts. JPMorgan analyst Matt
Crowe estimated that a week on the ground would cost the airline
A$15-A$20 million ($15-$20 million) in revenue.

The impact was expected to be below that caused by a
volcanic ash cloud in April which forced Qantas to cancel
Europe-bound flights for around two weeks and had a A$46 million
hit on its profit.

“While the potential cost implications — customer
replacement capacity, rectification and upgrades — of this are
impossible to predict at this stage, the relatively small size
of the (A380) fleet would suggest, whatever the outcome, that it
is containable at group level,” said Investec analyst Andrew
Gollan, adding the investigation would likely take “weeks rather
than days” to complete.

The airline was hit with a further setback on Monday night
when a violent storm grounded some flights out of Sydney.
($1 = 0.9877 Australian dollar)
(Editing by Lincoln Feast and Dan Lalor)

UPDATE 2-Qantas reviews way it runs A380s in engine probe