Rolls-Royce hit by further setback to fixing Boeing 787 engines

As of late February, Rolls-Royce said 35 Boeing 787s were grounded globally due to engine blades corroding or cracking prematurely. (AFP)
Updated 20 September 2019

Rolls-Royce hit by further setback to fixing Boeing 787 engines

  • The company faces £1.6 billion ($2 billion) in extra costs and disruption as a result of the engine problem
  • As of late February, Rolls said 35 787s were grounded globally due to engine blades corroding or cracking prematurely

Rolls-Royce will take longer than expected to fix problems with its Trent 1000 engine, frustrating efforts to get Boeing 787s grounded by the glitch flying again and knocking the British company’s shares.
Rolls-Royce, whose engines power large civil and military planes, said on Friday it had sped up turbine blade replacement for some models, leading to additional removals and delaying a reduction in the number of grounded aircraft to single figures until the second quarter of 2020.
The company faces £1.6 billion ($2 billion) in extra costs and disruption as a result of the engine problem, which is due to the poor durability of components, and the latest delay spells further frustration for its customers and investors.
Rolls-Royce, whose customers include more than 400 airlines, 160 armed forces and 70 navies, said in August that it would spend another £100 million to fix the issue.
“We perceived a risk that further action would be required, potentially leading to higher costs being incurred ... today’s announcement that guidance for the Trent 1000 cash costs in 2019 and 2020 remains unchanged comes as a relief,” Jefferies analysts, who rate the stock as “buy,” said.
Rolls-Royce CEO Warren East said in August that a target of fewer than 10 aircraft on the ground at the end of the year might take a bit longer to achieve as a result of an additional repair load resulting from faster deterioration of a blade on the Trent 1000 TEN.
The Trent 1000 TEN is the latest version of an engine that has had a problematic entry into service. As of late February, Rolls said 35 787s were grounded globally due to engine blades corroding or cracking prematurely.
“We deeply regret the additional disruption that this will cause our customers and we continue to work closely with them to minimize the impact on their operations,” Rolls-Royce said.
Airlines have faced disruptions because of the groundings, with Norwegian Air’s strategy switch to prioritize profits over growth hampered by the global grounding of Boeing’s 737 MAX aircraft and long-running problems with Rolls-Royce’s engines on Boeing Dreamliners.
Singapore Airlines has also grounded two 787-10 jets fitted with the Trent 1000 TEN engines.
Rolls-Royce is keen to avoid further problems with the engine and in March dropped out of the race to power Boeing’s planned mid-market aircraft.


France ready to take Trump’s tariff threat to WTO

Updated 08 December 2019

France ready to take Trump’s tariff threat to WTO

  • Macron government will discuss a global digital tax with Washington at the OECD, says finance minister

PARIS: France is ready to go to the World Trade Organization to challenge US President Donald Trump’s threat to put tariffs on French goods in a row over a French tax on internet companies, its finance minister said on Sunday.

“We are ready to take this to an international court, notably the WTO, because the national tax on digital companies touches US companies in the same way as EU or French companies or Chinese. It is not discriminatory,” Finance Minister Bruno Le Maire told France 3 television. Paris has long complained about US digital companies not paying enough tax on revenues earned in France.

In July, the French government decided to apply a 3 percent levy on revenue from digital services earned in France by firms with more than €25 million in French revenue and €750 million ($845 million) worldwide. It is due to kick in retroactively from the start of 2019.

Washington is threatening to retaliate with heavy duties on imports of French cheeses and luxury handbags, but France and the EU say they are ready to retaliate in turn if Trump carries out the threat. Le Maire said France was willing to discuss a global digital tax with the US at the Organization for Economic Cooperation and Development (OECD), but that such a tax could not be optional for internet companies.

“If there is agreement at the OECD, all the better, then we will finally have a global digital tax. If there is no agreement at OECD level, we will restart talks at EU level,” Le Maire said.

He added that new EU Commissioner for Economy Paolo Gentiloni had already proposed to restart such talks.

France pushed ahead with its digital tax after EU member states, under the previous executive European Commission, failed to agree on a levy valid across the bloc after opposition from Ireland, Denmark, Sweden and Finland.

The new European Commission assumed office on Dec. 1.