Rolls-Royce B787 engines hit by safety order

London

ROLLS Royce-Holdings said it's swapping out more than 30 Boeing 787 engines amid concern that they could suffer a power surge that might lead to shut down mid flight.

Concern is focused on 787-8 Dreamliners where both Trent 1000 turbines have accrued a high number of flights or operating hours, according to the European Union Aviation Safety Agency (EASA), which issued an airworthiness directive on Friday ordering such engines to be "de-paired".

A profit-target downgrade from Citigroup pointing to an earlier update on spiralling Trent 1000 costs also weighed on the stock, together with reports late last week that Boeing is considering another cut to Dreamliner production.

A Rolls-Royce spokeswoman said five operators are impacted by the EASA order and around 4 per cent of the total fleet of 787 engines, with nine planes still requiring attention.

Trent 1000 design glitches have plagued Rolls since 2016, with cash costs for in-service work on the engines expected to amount to £2.4 billion (S$4.2 billion) through 2023, according to a November update.

"The Trent 1000 programme has been like whack-a-mole for Rolls-Royce," said Nick Cunningham, an analyst at Agency Partners in London. "They address one problem and another one crops up. The latest airworthiness directive from EASA suggests that the risks for the Trent 1000 are more on the downside than on the upside. They may have to provision for higher costs when they report earnings."

Rolls-Royce said in November that it was aiming for fewer than 10 aircraft on the ground for modifications by the end of the second quarter. It said it expected costs of as much as £550 million in 2020 to deal with the issue. BLOOMBERG