Rolls-Royce 787 engine woes widen as fault found

Bloomberg

Rolls-Royce Holdings Plc’s engine-durability crisis worsened as the company revealed it has detected new issues that will require extra repair shop visits on a further batch of turbines that power Boeing Co.’s 787 airliner.
The glitch concerns the intermediate pressure compressor on a “small number” of Package B Trent 1000 engines for the Boeing plane, London-based Rolls-Royce said in a statement. The shares fell as much as 2.2 percent.
Following an agreement with the US manufacturer and regulators, some 166 engines that are potentially affected will undergo a one-time inspection to assess the extent of the problem, Rolls said.
Package B turbines have been in service since 2012, and evidence of wear has been detected on “high life” examples, it added.
While the check-up visits will incur “some additional cost,” Rolls-Royce stood by its 2018 free cash-flow estimate of $604 million, plus or minus 100 million pounds.
The reiteration takes into account increased servicing of Package C engines, where the glitch was originally detected, as well as mitigating actions being taken across the group, the company said.
About 80 percent of the Package C engine version have undergone initial checks for cracking or signs of wear and tear on turbine blades, a person with knowledge of the issue has said. Just under a third of those engines failed the initial inspections required by regulators for planes that fly more than 2 hours and 20 minutes from the nearest diversionary airport.
CEO Warren East has said Rolls-Royce will reduce discretionary spending to offset the additional funds needed for overhauls and to keep to a key target of reaching 1 billion pounds in free cash flow by 2020.
The engine maker is due to unveil a new restructuring plan authored by turnaround consultant Alvarez & Marsal at a capital markets day on June 15.