Qantas settles A380 case with Rolls for A$95m

Qantas has reached a A$95m (£62.5m) settlement with the engine maker Rolls-Royce over a mid-air explosion last year that required one of its Airbus A380 aircraft to make an emergency landing with 469 people on board, and forced the Australian carrier to ground its entire fleet of the superjumbos.

The A380's captain, Richard de Crespigny, was widely praised for landing the jet safely after its No 2 engine blew up shortly after Flight QF32 took off from Singapore in November, heading for Sydney. The Australian Transport Safety Bureau, which investigated the incident, blamed an oil leak in the Rolls-Royce Trent 900 engine, caused by a manufacturing defect.

Qantas grounded its six A380s for several weeks, pulling its largest aircraft from some of its most lucrative routes during the busy southern hemisphere summer. Singapore Airlines and Lufthansa were also forced to take A380s out of service to replace Trent 900 engines on their superjumbo fleets.

Qantas said the out-of-court settlement would boost its pre-tax profits for the 2011 financial year, which ends this month, to an estimated A$500-A$550m. It has now abandoned legal action against Rolls.

However, the chief executive, Alan Joyce, also warned that "tough decisions" about Qantas's loss-making international operation lay ahead, with a planned restructuring expected to focus more on Asia.

The airline, which has announced job cuts and scaled back growth plans, has also been hit by rising fuel prices, flight disruptions caused by ash from a Chilean volcano and, earlier this year, a string of natural disasters including earthquakes in New Zealand and Japan.

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