Rolls-Royce loses £56m after engine blow

Manufacturing giant Rolls-Royce today revealed a £56 million hit after the mid-air failure of one of its Trent 900 engines on a Qantas superjumbo.

The Derby-based group said the blow contributed to a 20% fall in underlying profits at its civil aerospace arm last year.

Rolls faced a reputational crisis last November when one of its engines exploded and forced an A380 superjumbo into an emergency landing.

The group said today a "rapid and effective response" from all involved helped it identify the fault and return to normal service within weeks.

It said the bulk of the associated costs had now been taken, although it said further "modest" costs may be seen this year.

The woes did not hold back profits growth in the wider business, with underlying pre-tax profits up 4% to £955 million in 2010.

Rolls - whose chief executive Sir John Rose is retiring next month after 15 years - said the group and wider industry had "learned lessons" following the Qantas engine incident.

It blamed an "uncontained disc release" for the incident, a fault which it said happens around once a year on the world's large civil aircraft fleet.

"However this was the first time an event of this nature had occurred on a large civil Rolls-Royce engine since 1994," it added.

Its entire Trent 900 fleet has now been inspected and the group has paid out for most of the service and support costs and settlements to affected customers.

Sir John assured that the incident had not impacted on demand for Trent 900 engine.

Rolls said despite the challenges in its civil aerospace division last year, the business had a record order book at the year-end as a recovery in the aviation industry picked up pace.

The bounceback in this business is expected to help deliver good overall profits growth in 2011, according to Rolls.

The group has also been benefiting from a strong business in emerging markets, which offset much of the downturn during the global recession.

More than half its order book comes from emerging markets.

In presenting his last set of annual results, Sir John said it had been "an extraordinary privilege" to lead Rolls.

He will hand over to the boss of Dutch retail group Royal Ahold and former British Airways finance director John Rishton, who has been a non-executive with Rolls since 2007.

Sir John said he intends to take a "long holiday" after he retires and has no plans yet for life after Rolls.

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