Rolls-Royce predicts growth fall
Rolls-Royce has revealed that the cost of fixing a fault with its Trent 900 engine could lead to "slightly lower" profit growth this year, compared with previous forecasts of 4% to 5%.
Although shares in the Derby-based company have taken a beating since the engine failure came to light, the firm soared to the top of the FTSE 100 Index at one stage and is confident that it can overcome its recent difficulties.
The European Aviation Safety Authority has issued an emergency directive demanding regular checks on all Trent 900 engines made by Rolls-Royce, while Qantas, which discovered small oil leaks in engines on three separate aircraft, has prolonged the grounding of its A380 fleet.
Rolls-Royce chief executive Sir John Rose, who will step down from the company in March after 26 years, revealed Rolls' response would eventually bring the whole fleet back into service.
He said: "Safety is the highest priority of Rolls-Royce. This has been demonstrated by the rapid and prudent action we have taken following the Trent 900 incident."
Howard Wheeldon, senior strategist at brokers BGC Partners, claimed the company had provided sufficient information to calm the market and airlines with A380s.
He said: "In the coming weeks and months we may learn through the ongoing examination whether we are talking about a component quality issue, an engineering design flaw, a materials related failure or whether there is a relationship to heavy wear and tear."
Mr Wheeldon added Rolls-Royce had offered enough reassurance for investors to believe the problem had been resolved, albeit at a high cost that will "likely run into many millions".
Meanwhile, Rolls-Royce said the failure was confined to a specific component in the turbine of the Trent 900 engine, which sparked an oil fire and led to the release of another part - a turbine disc.
Passengers on board Qantas flight QF32 described seeing the engine burst into flames minutes into a journey from Singapore to Sydney last week, which scattered debris over Indonesia's Batam island.