Rolls-Royce nosedives to a £1.3bn loss as problems with flagship Trent 100 engines continue
Problems with its flagship Trent 1000 engines helped push Rolls-Royce to a £1.3billion loss.
The engines have been deteriorating faster than expected, prompting airlines including Air New Zealand to ground planes while they are fixed.
Rolls will spend £1.3billion making and fitting new blades and compensating airlines in the next four years, and recognised £554million of that in its half-year results.
Other restructuring charges and currency swings meant it made a loss of £1.3billion for the half-year compared to a £1.4billion profit during the same period last year.
Rolls-Royce’s Trent 100 engines have been deteriorating faster than expected, prompting airlines including Air New Zealand to ground planes while they are fixed
However, investors were cheered by underlying positive signs from the business, which makes engines and propulsion systems for submarines, ferries and jets.
Its civil aerospace and power systems divisions grew, cash flow expectations were better and overall sales were up 14 per cent to £7billion. Shares rose 7.1 per cent, or 70.2p, to 1058p.
The engine problems come as Rolls ramps up their production, looking to have 50 per cent of the market for wide-body aircraft engines by the early 2020s.
Chief executive Warren East said: ‘Providing we can find a way through this, and we now have a pretty clear path through, then I don’t think it’s going to make a big difference in the long run.
‘Obviously in the short-term, trying to sell a Trent 1,000, we have to overcome all the issues.’
Rolls has found a fix for the blades involving shifting their centre of gravity. It expects disruption to continue into next year and did not say how much has been claimed in compensation.
On top of axing jobs, East has been trying to save money by cutting costs such as non-essential travel and hotels.
It also plans to move its corporate headquarters in London to cheaper premises.
George Salmon, at Hargreaves Lansdown, said: ‘Rolls is well-placed to become the leading supplier of the engines those jumbo planes need. Recent developments are encouraging.’