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MarketScreener Homepage  >  Equities  >  Nyse  >  Boeing Company (The)    BA

BOEING COMPANY (THE)

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Rolls-Royce hit by further setback to fixing Boeing 787 engines

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09/20/2019 | 05:00am EDT
FILE PHOTO: View of one of two Rolls Royce Trent 1000 engines of Boeing 787 Dreamliner during media tour of the aircraft ahead of the Singapore Airshow in Singapore

(Reuters) - Rolls-Royce will take longer than expected to fix problems with its Trent 1000 engine, frustrating efforts to get Boeing 787s grounded by the glitch flying again and knocking the British company's shares.

Rolls-Royce, whose engines power large civil and military planes, said on Friday it had sped up turbine blade replacement for some models, leading to additional removals and delaying a reduction in the number of grounded aircraft to single figures until the second quarter of 2020.

The company faces 1.6 billion pounds in extra costs and disruption as a result of the engine problem, which is due to the poor durability of components, and the latest delay spells further frustration for its customers and investors.

Its shares were down 3.5% at 780.8 pence at 0851 GMT, the largest percentage losers on London's blue-chip index <.FTSE>.

Rolls-Royce, whose customers include more than 400 airlines, 160 armed forces and 70 navies, said in August that it would spend another 100 million pounds to fix the issue.

"We perceived a risk that further action would be required, potentially leading to higher costs being incurred ... today's announcement that guidance for the Trent 1000 cash costs in 2019 and 2020 remains unchanged comes as a relief," Jefferies analysts, who rate the stock as "buy", said.

Rolls-Royce CEO Warren East said in August that a target of fewer than 10 aircraft on the ground at the end of the year might take a bit longer to achieve as a result of an additional repair load resulting from faster deterioration of a blade on the Trent 1000 TEN.

DEEP REGRET

The Trent 1000 TEN is the latest version of an engine that has had a problematic entry into service. As of late February, Rolls said 35 787s were grounded globally due to engine blades corroding or cracking prematurely.

"We deeply regret the additional disruption that this will cause our customers and we continue to work closely with them to minimise the impact on their operations," Rolls-Royce said.

Airlines have faced disruptions because of the groundings, with Norwegian Air's strategy switch to prioritise profits over growth hampered by the global grounding of Boeing's 737 MAX aircraft and long-running problems with Rolls-Royce's engines on Boeing Dreamliners.

Singapore Airlines has also grounded two 787-10 jets fitted with the Trent 1000 TEN engines.

Rolls-Royce is keen to avoid further problems with the engine and in March dropped out of the race to power Boeing's planned mid-market aircraft.

(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Saumyadeb Chakrabarty, Jacqueline Wong and Alexander Smith)

By Noor Zainab Hussain 

Stocks treated in this article : Norwegian Air Shuttle ASA, Rolls-Royce, Singapore Airlines Ltd.

Stocks mentioned in the article
ChangeLast1st jan.
BOEING COMPANY (THE) 1.79% 337 Delayed Quote.2.65%
ROLLS-ROYCE -0.11% 724.4 Delayed Quote.-12.67%
SINGAPORE AIRLINES LIMITED 0.11% 9.11 End-of-day quote.-3.39%
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Financials (USD)
Sales 2019 81 605 M
EBIT 2019 3 292 M
Net income 2019 2 577 M
Debt 2019 15 615 M
Yield 2019 2,37%
P/E ratio 2019 75,0x
P/E ratio 2020 14,1x
EV / Sales2019 2,52x
EV / Sales2020 1,66x
Capitalization 190 B
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Technical analysis trends BOEING COMPANY (THE)
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Income Statement Evolution
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Mean consensus OUTPERFORM
Number of Analysts 24
Average target price 403,00  $
Last Close Price 337,00  $
Spread / Highest target 54,6%
Spread / Average Target 19,6%
Spread / Lowest Target -13,9%
EPS Revisions
Managers
NameTitle
Dennis A. Muilenburg Chairman, President & Chief Executive Officer
Jenette E. Ramos Senior Vice President-Supply Chain & Operations
Gregory D. Smith CFO, EVP-Corporate Development & Strategy
Theodore Colbert Chief Information Officer & SVP-Data Analytics
Gregory L. Hyslop CTO, Senior VP-Engineering, Test & Technology
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