Rolls Royce suffers Singapore blow after China triumph

The day after sealing a big deal in China, another setback for Rolls-Royce: Singapore Airlines says it's going to replace the (Rolls-built) engines on three of its A380 superjumbos...

by Emma Haslett
Last Updated: 10 Feb 2011
Until recently, Rolls-Royce had been seen as one of the few success stories of the British manufacturing industry. But things have taken a turn for the worse since one of its engines blew up on a Qantas flight last week. And it has more problems today: Singapore Airlines said it was planning to replace the engines on three of its 11-strong fleet of Airbus A380s, after oil was spotted on their turbines. Although the airline insists the move is purely precautionary, it will come as another blow to Rolls, which has already seen its share price plummet by 10%. Plus it negates much of the positive PR gained by signing that £750m deal with China Eastern Airlines to supply and service engines this week…

The good news (such as it is) is that Singapore Airlines is adamant that the oil it spotted on the planes’ Trent 900 engines (the same ones that blew up on the Qantas flight) was ‘different to what Qantas had found’ (although it’s difficult to tell exactly what Qantas did find. Its technical explanation of the fault with the engine that blew up was: ‘there was oil where oil shouldn’t be’. Not terribly helpful.). And although Singapore Airlines is replacing one of the engines on each of the three planes affected, it’s still opting for the Trent 900s, albeit with ‘a minor variation’. So it’s not like it’s abandoning the use of Rolls Royce engines altogether.

Still, it’s undoubtedly a setback for Rolls-Royce – particularly after the manufacturer’s deal with China Eastern, which it secured yesterday as part of the Prime Minister’s trade mission to China. The agreement will see Rolls Royce supply and service the Trent 700 engines for the airline’s recently-ordered fleet of Airbus A330 planes, as well as providing ‘enhanced performance’ kits to upgrade the engines on its existing A330s. Rolls Royce has also been given a target of reducing the airline’s carbon emissions by 190,000 tonnes in the first year of its contract, the amount produced by 80,000 cars over the same period (sounds rather a lot to us). The Prime Minister will have been delighted; previously, most of the deals announced as a result of the trip had been fairly small in scale. But today’s announcement by Singapore Airlines will inevitably take the edge off Rolls’ celebrations.

So far the UK firm has kept its counsel about the problems with the Trent 900, despite the endless analysis in the press – on the (quite sensible) basis that it needs to work out exactly what happened before it does anything else. This China deal will have provided a welcome distraction – but it looks to have been a fairly short-lived one.

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