Shares in Rolls-Royce (LON:RR.) plummeted on Friday after the aerospace engineer said it would deliver around 10% fewer large engines to ariline customers due to production issues.
Rolls, which makes aero engines for planemakers Airbus and Boeing, said in a statement on Friday afternoon that it had suffered "early stage production ramp up challenges" meaning it would likely fall short of its target to deliver 550 large engines in 2018. It now expects to deliver some 500 engines.
READ: Rolls-Royce profits dented by cost of fixing engine problems
Earlier on Friday Rolls shares crashed to their lowest in 18 months following a Bloomberg report that said only 10 of Rolls' Trent 7000 engines will have been delivered by the end of this month, "far short" of the 30 engines promised to Airbus in order to deliver 15 of its new A330neo jets to airlines by the year-end, according to an internal memo cited in the report.
The Trent 7000 is being built to power Airbus's new wide-body A330neo, which is expected to be launched before the year-end – around a year later than initially planned.
"While we regret the impact this will have on our customers, we are today re-iterating our financial guidance for 2018 profit and free cash flow as provided at the time of our interim results in August 2018," Rolls said in the statement, adding that it continues to work very closely with Airbus and its other customers on the details of the delivery schedule.
"While the production ramp up issues in Q4 are regrettable, such issues in the early stages of a new engine program are not uncommon in our industry. As we move into 2019 we are confident that Trent 7000 production and delivery volumes will increase significantly to meet our customer commitments," it added.
Shares in Roll-Royce fell as much as 13% in early afternoon trade but recovered losses and were 4% down at 838.90p in mid-afternoon trade. Airbus shares in Paris initially fell 5% on the news but pared some losses and were 2.5% down at €94.7 later in the day.
This is the latest set-back for Rolls-Royce, which is already grappling with design faults its Trent 1000 engine, which powers the Boeing Dreamliner jet.
Rolls has already set aside £1.3bn to cover charges related to the Trent 1000 delays as many carriers have been forced to take their Dreamliners out of service for repairs. The engine maker risks penalties when it misses contractual deadlines for delivering new engines, which could happen with the Trent 7000 delays.