An engine failure on a Cathay Pacific flight on Monday has put the spotlight on the British manufacturer Rolls-Royce, which makes and maintains the power plant on the Airbus A350.
As airlines that operate the twin-aisle plane inspect their fleets, investors are trying to establish whether there will be broader implications for Rolls-Royce. The A350, which carries up to 410 passengers, is used mainly on long-haul routes.
What was the problem with Cathay Pacific’s engines?
Cathay Pacific flight CX383 took off from Hong Kong on its way to Zurich, Switzerland, on Monday. Shortly after takeoff, one of the two Rolls-Royce engines on the Airbus A350-1000 failed. The plane was forced to circle over the sea for more than half an hour, dumping fuel before landing safely back in Hong Kong, according to FlightRadar24, an aircraft-tracking website.
The affected component was a fuel nozzle inside the Trent XWB-97 engine, made by the FTSE 100 manufacturer Rolls-Royce, according to Reuters.
What happens now?
Cathay Pacific, which operates 48 A350s, has said 15 jets need a replacement part. The airline has already had to cancel 34 return flights, and it will update plans for the rest of the week on Wednesday. The aircraft were all expected to be back in service by Saturday.
However, other airlines are now inspecting their fleets.
What could the implications be for Rolls-Royce?
The key question for Rolls-Royce is: how widespread is the problem? The company, which makes the engines in Derby, earns much of its money from fees related to engine flying hours, so groundings can be costly.
Tufan Erginbilgiç, Rolls-Royce’s chief executive, has overseen an astonishing appreciation in the company’s market value – up nearly fivefold to £39bn – since taking over at the start of 2023. As well as cutting management jobs, he has achieved this increase in part by charging airline customers more. However, these customers might balk at the rising charges if their engines are out of service for long periods.
Any extended issues would be an unwelcome return to past form for Rolls-Royce. It previously suffered billions of pounds of extra costs on its Trent family of engines – named after the English river – because of cracks in the blades at the centre of the Trent 1000 models fitted to the Boeing 787 Dreamliner.
Erginbilgiç has already pledged to spend £1bn over the next few years to try to improve the performance of the Trent engines.
How did Rolls-Royce respond?
Rolls-Royce said it was limited in the information it could provide because of an official investigation into the incident (as is standard in any mishap involving aircraft).
However, the company highlighted the Cathay statements that it had secured the spare parts and that repairs could be completed “on wing” – meaning they could be achieved more quickly, without needing to remove the engines entirely.
What are the airlines saying?
Some of the other airlines that operate the A350 said they were checking the relevant engines. Qatar Airways and Japan Airlines said they were monitoring the situation.
Singapore Airlines, which has 61 A350s with slightly different XWB-84 engines, said it was checking its fleet “as a precautionary measure”, but that there had been no impact on its flights so far.
Will this have a long-term effect on Rolls-Royce?
Rolls-Royce’s share price slumped by 6.5% on Monday as investors worried the engine failure might mean engines spending more time on the ground than in the air. However, its share price rebounded by 2% on Tuesday, after Cathay indicated the issue would be resolved by the weekend.
Analysts at Jefferies, an investment bank, wrote in a note to clients that the £2.7bn drop in the engine manufacturer’s market value on Monday implied “what feels like excessive costs per aircraft, given this is likely limited [to] the A350-1000 with low part count per engine”.
