Rolls-Royce's 787 headache worsens with extra engine inspections

[LONDON] Rolls-Royce Holdings Plc said it will incur extra costs and further disrupt services for airline customers as its carries out additional inspections on engines it builds for Boeing Co's 787 Dreamliner jet.

The checks will be made on a batch of 380 Trent 1000 turbines after testing indicated that more frequent scrutiny is required to cope with an existing durability issue, Rolls said in a statement Friday, barely a month after the London-based company suggested the problem was under control. The move will affect about a quarter of the 787 fleet, according to Boeing.

"The requirement for more regular inspections will lead to higher than previously guided cash costs being incurred during 2018," Rolls said in the release. "We are reprioritising various items of discretionary spend to mitigate these incremental cash costs." The company maintained its estimate of £450 million (S$841.8 million) for annual free cash flow.

Issues with components on the Trent 1000 and an engine used on the Airbus SE A380 led to a 170 million-pound hit on Rolls's cash flow last year, and that figure was already set to double in 2018. Even before today's guidance the company had said a re-design of problem parts for the 787 wouldn't be fully incorporated in the fleet until 2022.

The Trent 1000 snag, which concerns the engine compressor, has led to unscheduled shop visits for dozens of Boeing Co's 787s at carriers including Virgin Atlantic Ltd and British Airways, costing Rolls more than £220 million in charges last year.

BLOOMBERG