Rolls-Royce warns of higher costs after engine trouble

Rolls-Royce's Trent 1000 engines to undergo further inspections as it warns of disruption to customers

Rolls-Royce warns of higher costs over Trent 1000 engine problems

Airlines operating some of the engines have been ordered by global safety regulators to carry out more regular checks on them, meaning they will be grounded much more frequently for maintenance.

Rolls-Royce said last month it was facing a £370m bill this year because of the engines, but on Friday indicated that replacing more parts and paying airlines compensation will push that figure higher. The time limit would drop as low as 140 minutes, compared with the current window of 330 minutes, a source familiar with the plans said. Now inspections must be carried out after every 200 flight cycles. Nine investment analysts have rated the stock with a sell rating, nine have issued a hold rating and two have assigned a buy rating to the company's stock.

Rolls-Royce announced in a statement this morning that it had made a decision to carry out additional engine inspections on its problematic Trent 1000 engines to those it had previously planned. J P Morgan Chase & Co lowered their price objective on shares of Rolls-Royce Holding PLC from GBX 890 ($11.09) to GBX 730 ($9.09) and set a neutral rating on the stock in a report on Thursday, January 5th. Rolls said there were 380 such engines in service.

Boeing said about 25 per cent of the 787 Dreamliners flying were powered by the engine and it was deploying support teams to mitigate service disruptions.

The need to inspect and fix Trent 1000 engines has led to an industry-wide shortage.

"We will be working closely with Boeing and affected airlines to minimise disruption wherever possible".

It said the check was already required prior to the engine reaching a flying threshold of 2000 cycles or one way journeys but the directive reduces that timeframe to 300 cycles.

"We have an ongoing dialogue with both Boeing and Rolls-Royce and we have been told this problem has their full attention". The snag has led to unscheduled shop visits for dozens of Boeing's 787s at carriers including Virgin Atlantic and British Airways, costing Rolls-Royce more than £220m in charges previous year.

On Friday Rolls said it had chose to increase the number of inspections after the implications of another problem, this time with the compressor, became clear.

Scoot, a budget carrier owned by Singapore Airlines, said it expected some impact on operations.

In March, Rolls said the cash hit from the problem should peak at £340mn in 2018 before falling in 2019.

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