Pandemic tests Rolls-Royce resilience after prolonged engine trouble

Publish December 19, 2020
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As one of only four major aero engine-makers globally, Rolls symbolizes British industrial interests at a crucial time for a country trying to assert its place in a post-Brexit world and dogged by uncertainty over future trade relations

LONDON: Rolls-Royce may be the jewel in Britain’s industrial crown, but the coronavirus crisis has left the engine-maker facing one of the toughest challenges in its 114-year history.
The Airbus and Boeing supplier bought itself time by raising £5 billion ($6.8 billion) to survive the global grounding of planes, but is warning that 2020 will be even worse than expected.
Before it secured extra funds in November, analysts had raised the possibility that the maker of powerplants for British nuclear submarines might need to be saved by the state.
And Prime Minister Boris Johnson sought to allay concerns last month, saying the government would work with Rolls to ensure its long-term future as a “great, great British company” after credit agencies cut its debt rating to “junk.”
As one of only four major aero engine-makers globally, Rolls symbolizes British industrial interests at a crucial time for a country trying to assert its place in a post-Brexit world and dogged by uncertainty over future trade relations.
But existing concerns over a long-running problem with engine blades have been compounded by worries over Rolls’ finances, which represents a significant stumbling block in an industry where airlines sign decade-long agreements.
With many airlines only paying when they fly, Rolls’ future depends on the recovery of engine flight hours on widebody intercontinental jets, and convincing its airframer partners and airline customers that its problems are behind it.
Both have fretted about one of the industry’s key suppliers during the crisis, several industry executives told Reuters.
“When you buy an airplane it is for many years. If the engine manufacturer disappears or changes shape, that can hurt the (future) value,” one airline executive said.
The problems are particularly unsettling for Airbus, which depends on Rolls for all wide-body jets after the A380’s demise.
And airlines looking to its flagship A350 or smaller A330neo are asking Airbus for reassurance both about Rolls’ engines and its financial position.
While Airbus backs Rolls’ technology, it wants “to understand what is going on with them on everything,” an industry source said.
Meanwhile at Boeing, many of its 787s had to be grounded due to the Trent 1000 problem, which Rolls says will cost it 2.1 billion pounds to fix in the 2017-2023 period, just as travel demand was surging before the pandemic.
Boeing, keen to keep its main engine partner GE competitive, is also anxious about Rolls, sources said.

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