Analysts believe Rolls-Royce Holdings PLC (LSE:RR.)'s financial liability will be "contained" following an engine issue that caused dozens of Cathay Pacific flights to be grounded.
Deutsche Bank said on Tuesday that while there were "some concerns" over the suspected fuel line issue, "preliminary analysis" suggested Rolls-Royce's financial liability would be limited.
Cathay Pacific announced dozens of cancellations after a Rolls-Royce-powered A350-1000 flight to Zurich was forced to return to Hong Kong shortly after takeoff due to an engine component issue on Monday.
The Hong Kong carrier said at least 34 return flights would be axed as a number of the widebody jets were grounded “for several days” due to inspections.
This includes eight of the airline’s nine flights to Singapore on Tuesday, with the only flight taking the route using a Boeing 777-300 jet.
Cathay has subsequently identified issues in 15 of the A350s, with three already having been fixed, according to Reuters.
Cathay engineering director Keith Brown said the airline was liaising with regulators and manufacturers following the incident, including Rolls-Royce which provides the XWB-97 engine used to power A350-1000s.
This comes after Rolls-Royce grappled with an issue in its Trent 1000 engine prior to the pandemic, with funds still being paid out over the faults during the first half of this year.
AJ Bell's Russ Mould added on Tuesday that Rolls-Royce's reputation had been damaged by the Trent 1000 crisis, which related to blades in the engines.
"Another scandal could scupper Rolls-Royce’s recovery efforts", he noted, as the industry waits to hear if the latest issue is solely related to Cathay.
Other carriers appeared to be operating A350s as usual on Tuesday, with Cathay set to bring its grounded jets back into service by the weekend.
Rolls-Royce shares faced a blow on Monday on the news before rebounding on Tuesday.