Rolls-Royce Holdings PLC (LSE:RR.) is unlikely to face a “material” blow after European regulators ordered A350 engine inspections following Cathay Pacific’s incident earlier this week.
Citi analysts moved to reassure that any compensation required from the engine maker would likely be “limited,” reiterating a ‘buy’ rating a 550p share price target.
Europe’s aviation safety agency (EASA) said Thursday that “one-time inspections” of some A350s across Europe would be required after an engine issue saw a Zurich-bound Cathay flight forced to return to Hong Kong on Monday.
Some 48 A350 planes were subsequently grounded by Cathay, following reports of an engine fire, with inspections finding defective engine fuel lines in 15.
Citi noted no other airlines had reported similar issues as of yet, adding the inspections by Cathay had been fast with unaffected jets able to return to service immediately.
“External fuel pipes are easily accessible and can be replaced on the apron,” analysts added, with any replacements not set to face long lead times and fixes able to be completed without removing engines.
Rolls-Royce shares fell 2.6% on Friday.