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Rolls-Royce budgets €1.7bn to fix engines

Major customers of the Trent 1000 include Boeing, which uses the faulty engines on its 787s.

Rolls-Royce has budgeted nearly £1.5 billion (€1.7 billion) for the period until 2022 to fix the faulty rotor blades in its engines, TTG reports.

The UK-based manufacturer, which is owned by German multinational BMW, has long been investigating serious issues with the compressors in its Trent 1000 units. The fault exists in two batches of its engines, it said in June.

The company has set aside a further £550 million for the works this year, its half-year results issued yesterday reveal. This takes the total projected cost to almost £1.5 billion.

Major Trent 1000 customers include Boeing, which uses the engines on its 787s, such as those operated by Norwegian.

“We continue to be impacted by the challenge of managing significant Trent 1000 in-service issues and have recognised an exceptional charge of £554m,” says Warren East, Rolls-Royce chief executive.

“[It] represents the profit impact of that part of the total current and estimated costs out to 2022.”

Eating into revenues
However, Rolls-Royce was ahead of its financial expectations for the six months to June 30, East claimed, despite posting a pre-tax loss of £1.3 billion. Much of this loss was due to the engine repair costs.

He added that growth was strong from civil aerospace and power systems, and expected underlying profit and cash flow for 2018 to be in the “upper half” of its estimates.

Fixing its Trent 1000 and Trent 900 engines will, by the end of the year, likely cost Rolls-Royce in excess of £600 million and an additional £450 million in 2019 and £350 million in 2020.

In May, the company confirmed it was cutting around 10% of its workforce, around 4,600 jobs, in an effort to save £400 million a year. A complete company-wide restructuring is expected to cost £500 million to the end of 2020, offset by £400 million yearly savings.

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