R-R engine fire-fighting will slow growth 'only slightly'

ROLLS-Royce yesterday revealed the failure of a single component had been behind the fire in one of its engines which forced a Qantas A380 superjumbo into an emergency landing.

The group's chief executive, Sir John Rose, said fixing the fault would lead to only slightly slower profit growth, helping shares recover some of the ground lost since the incident last week.

On Thursday the European Aviation Safety Authority had issued an emergency directive demanding regular checks on all Trent 900 engines made by Rolls-Royce following the fire on a flight from Singapore to Sydney.

Alongside a trading update yesterday, the company said its own investigation revealed the failure was confined to a component in the turbine of the engine which sparked a fire and led to the release of another part.

The component will be replaced in an engine upgrade programme to be carried out in conjunction with Airbus and regulators.

"This will enable our customers progressively to bring the whole (A380) fleet back into service.

"We regret the disruption we have caused," said Rose.

The world's second-largest maker of aircraft engines said underlying profit growth for 2010 would now be slightly lower than the previously expected 4-5 per cent growth because of costs associated with the incident.

Rose, who will step down from the company in March after 26 years, stressed that the scale of the firm's order book and strong balance sheet made Rolls-Royce a "resilient" business with a better-than-expected performance in the marine and defence businesses partially making up for the pressure on its civil arm during the period from July to 11 November.

The company said its marine business, which provides power systems to offshore oil and gas, specialist vessel and naval markets, had seen improving demand.

Growth driven by global customers in its defence business was expected to compensate for the loss in revenues from the UK government following the defence spending review.

The company said its civil aerospace business would hold its market leading position, with aircraft such as the Boeing 787 and business jet Gulfstream G650, both powered by Rolls-Royce engines, entering service over the next few years.

Following the update, Investec analyst Andrew Gollan cut his earnings estimate for 2010 by 3 per cent.

"Overall, it is pleasing the Trent 900 issue has been narrowed down and can be fixed for what appears to be a relatively modest cost," said Gollan. "But the short-term disappointment is lowered guidance."

Airbus parent EADS also said yesterday that investigations into the Rolls-Royce engine problem could delay A380 deliveries in 2011. Boeing added that recent problems with its 787 Dreamliner were not related to the Rolls-Royce-made Trent 1000 engine, allaying fears that there were problems with the wider family of Trent engines.

Shares in Rolls-Royce closed up 27p, or 4.62 per cent, at 611p.