Rolls-Royce to increase inspections of Trent 1000 engines

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The warning by Rolls-Royce comes ahead of anticipated announcements by U.S. and European aviation regulators, who are expected to issue guidance to airlines as soon as Friday.

The affected 787's ETOPS is expected to be reduced from the certified 330 minutes flight time to the nearest airport to about 140 minutes, requiring the aircraft to fly closer to diversionary airports than straight to its destination. Now inspections must be carried out after every 200 flight cycles. Three investment analysts have rated the stock with a sell rating, five have assigned a hold rating, two have issued a buy rating and one has assigned a strong buy rating to the company.

Rolls-Royce plans to re-prioritise its discretionary spend to mitigate the increased cash costs. Citigroup restated a "buy" rating and issued a GBX 1,060 ($14.98) price target on shares of Rolls-Royce in a research report on Thursday, March 8th. Its civil aerospace business is engaged in the development, manufacture, marketing and sales of commercial aero engines and aftermarket services.

But there could be worse to come for operators of the affected engines.

One of the biggest names in British manufacturing, Rolls-Royce is in the midst of a restructuring by CEO Warren East but its turnaround has been hampered by problems with some turbine blades that have worn out more quickly than expected.

CEO East said Rolls was working with Boeing and airlines to minimise the disruption.

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This check was already required prior to the engine reaching a flying threshold of 2000 cycles (one way journeys).

"It's disappointing and frustrating that our new aircraft don't work the way they are supposed to", spokesman Lasse Sandaker-Nilsen said, adding that it had cancelled a flight from Paris to NY next week as a result.

A Virgin spokeswoman said it had been aware of the increased inspections announced on Friday and that the cover it had in place would be sufficient. The snag has led to unscheduled shop visits for dozens of Boeing's 787s at carriers including Virgin Atlantic and British Airways, costing Rolls-Royce more than £220m in charges past year.

British Airways, Japan's ANA, Air New Zealand and Thai Airways, which also use Trent 1000 engines, were not available for immediate comment.

In March, Rolls said the cash hit from the problem should hit a peak of £340 million in 2018 before falling in 2019.

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