Rolls-Royce Holdings PLC (LON:RR.) shares went into reverse in late-morning after Singapore Airlines grounded its fleet of Boeing Co (NYSE:BA) 787 Dreamliners due to issues with the Trent 1000 engines - manufactured by Rolls-Royce - that power the aircraft.
On Tuesday, the carrier said it had detected durability issues with the engines and had already withdrawn two of the aircraft from service to await replacements.
READ: Rolls-Royce falls as it backs out of second engine contract tender in a week
The Trent 1000 has been causing headaches for FTSE 100-Rolls since last Spring, with repair and compensation costs totalling around £790mln in its latest full year.
The incident also casts more unfavourable publicity on Boeing as the aircraft maker struggles to contain the public relations fallout from its 787 MAX aircraft, which it grounded last month following two fatal crashes.
UBS ups target price, but before news from Singapore
In a note to clients, which was no doubt written before the Singapore Airlines issue came to light, analysts at UBS upped their target price for Rolls-Royce to 1,160p from 1,130p, saying the fleet of widebody aircraft that use the company’s engines was “likely to benefit” from issues with the Boeing 737 MAX as well as delayed deliveries of Airbus’s new A321neo aircraft due to issues with its PW1000G engines, manufactured by rival firm Pratt & Whitney.
The bank also reiterated its ‘buy’ rating on the stock, saying their estimates predicted a stronger free cash flow in 2018 and better guidance for 2019.
However, following the Singapore news, Roll-Royce shares were down 2% at 900.4p.