Rolls-Royce shares fall further as airline outlines engine problems

ROLLS-ROYCE shares fell yesterday after fresh details emerged about the scale of the problems with the engines that the FTSE 100 company supplied to Japanese airline ANA.

The airline has said it will have to replace some engines on its airliners. At a press conference in Japan, ANA added that it could take three years to completely replace the corroded turbine blades in the Trent 1000 engines on all 49 affected Boeing 787 Dreamliner aircraft.

Shares in Rolls fell 2.2pc to 767½p as investors digested the long-term implications for the engineering company. This was after they fell 2pc last week when the problems first emerged.

On Thursday ANA announced that it was having issues with the engines and was cancelling more than a dozen 787 flights. The airline has estimated that it may have to scrap as many as 300 flights over the coming month.

ANA operates the world’s largest fleet of 787s – one of the world’s most advanced civil aircraft.

The problem is understood to affect blades in the Trent 1000’s turbines, which are corroding far earlier than expected resulting in the engines being shut down. Sources close to Rolls said the problem was related to the way ANA operates its 787s, using them for shorter flights than most other airlines and in weather conditions than can encourage corrosion. This means the blades are wearing out faster than expected. The problem is thought to be limited to ANA aircraft.

ANA said yesterday that replacing them with a modified version which is not affected by the problem could take up to three years. It is likely that Rolls will have pick up the tab of replacing the engine parts because of its “aftercare” maintenance contracts.

However, it is understood that the company’s assumptions on the maintenance costs of these arrangements are conservative. This means it is unlikely to have a significant impact on the Rolls’s financial performance.

Speaking at a business event in Germany, Warren East, the chief executive of Rolls-Royce, described the problems as a “manageable issue”. “With the more intensive use, the natural wear and tear on the engines happens sooner,” he said.

Rolls competes with General Electric to provide engines for the 787. The British firm has about 40pc of the market of the 445 Dreamliners in service.