Rolls-Royce has slumped to a half-year loss and admitted fixing cracks and other problems with two jet engines would cost more than £1bn over the next three years.
Problems with the Trent 1000 engines, which power the Boeing 787 Dreamliner, and its sister Trent 900 engine have forced the company to carry out costly inspections and repairs and to redesign some parts. Several aircraft have been grounded, leading to flight cancellations and forcing airlines to lease other planes.
As a result Rolls-Royce has been forced to accept a one-off cost of £554m – pushing the business £1.3bn into the red in the first six months of the year. In the same period last year the company made £1.4bn profit.
Rolls-Royce said the cost of fixing the Trent 1000 and Trent 900 problems would be about £450m this year and next, and then decline by at least £100m in 2020.
Its chief executive, Warren East, apologised to airlines using the engines for the inconvenience: “The Trent 1000 in-service engine issues have caused significant disruption for a number of our customers, which we sincerely regret.”
However, thanks to strong growth in other parts of the business Rolls-Royce expects to make underlying operating profits of £400m-£500m this year, at the upper end of its guidance.
East has embarked on a major shakeup of the business, selling the firm’s fuel injection and commercial marine businesses and slashing 4,600 mainly managerial and administrative jobs, to focus on three core divisions.
George Salmon, equity analyst at Hargreaves Lansdown, said: “Happily, they’re all showing signs of improvement.
“The challenge will be managing the disruption caused by failures in its Trent line, while avoiding any more mishaps.”
