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Rolls-Royce says Trent 1000 issues discovered in another engine type, will require further inspections

Last updated: 13:05 11 Jun 2018 BST, First published: 07:42 11 Jun 2018 BST

Aero engine
Rolls-Royce said it had now found a similar issue on a "small number of high life Package B engines"

Rolls-Royce PLC (LON:RR.) has said a problem affecting the durability of a certain type of Trent 1000 engine has been discovered in another type and will require further inspections.

The FTSE 100-listed engineer has been working to fix a problem with the compressor in the Trent 1000 Package C engines that power Boeing's 787 Dreamliner jet, forcing planes to be grounded while they are fixed.

READ: Rolls-Royce slips as it reiterates 2018 profit, cash flow guidance, makes progress with engine inspections

In a statement on Monday, Rolls-Royce said it had now found a similar issue on a "small number of high life Package B engines".

It added that while this would incur some additional cost, it did not expect it to affect its free cash flow guidance for 2018 of around £450mln, plus or minus £100mln.

The group said the Package B standard has been in service since 2012 and consists of 166 engines.

The new announcement comes after a weekend press report said the firm is set to axe more than 4,000 jobs as part of efforts to cut costs and boost profits.

The Sunday Times reported that middle managers and back-office staff are to be "culled" in what would be "a devastating blow to its Derby base".

Rolls-Royce has previously said it is restructuring to reduce costs, and plans to give details at an event for "financial analysts and investors" on Friday.

Two ways of viewing news

Russ Mould, investment director at AJ Bell, commented: “There are two ways of looking at the revelation a second class of its Trent 1000 engines will need to be retested after a first batch ran into similar issues in April.

“One is that it demonstrates the company’s commitment to engineering and support excellence. The other less palatable conclusion is that Rolls’ reputation for competence in this area is being undermined.”

He added: “This is significant as the future progress of the company is inextricably linked to its ability to get its engines on an increasing number of planes.

“Doing so will boost the servicing and parts cycle which accounts for a big chunk of the company’s profit and cash flow.”

In early afternoon trading, Rolls-Royce shares were 1.1% lower at 826.4p.

 -- Adds analyst comment; updates share price --

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