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A380 engine fears push Rolls-Royce shares lower | A380 engine fears push Rolls-Royce shares lower |
(40 minutes later) | |
Rolls-Royce shares have continued to fall, dropping 1.4% by mid-morning, as investors worry about the impact of engine problems on the Airbus A380. | Rolls-Royce shares have continued to fall, dropping 1.4% by mid-morning, as investors worry about the impact of engine problems on the Airbus A380. |
Its shares have now fallen about 10% since one of its engines broke apart on a Qantas flight last Thursday. | |
On Monday, Qantas said it had found "slight anomalies" on three A380 engines and was keeping its fleet of six A380s grounded for further checks. | On Monday, Qantas said it had found "slight anomalies" on three A380 engines and was keeping its fleet of six A380s grounded for further checks. |
Tests have uncovered oil leaks in the engines of three of its grounded A380s. | Tests have uncovered oil leaks in the engines of three of its grounded A380s. |
Long-term worries | Long-term worries |
All of Qantas's six A380 planes have Rolls-Royce engines. | All of Qantas's six A380 planes have Rolls-Royce engines. |
The concern is that the engine failure was a sign of one or more major problems, which could hit Rolls-Royce's reputation and future sales. | |
Rolls-Royce, which is working with Qantas on the investigation, has seen its market value fall more than £1.5bn since the incident. | Rolls-Royce, which is working with Qantas on the investigation, has seen its market value fall more than £1.5bn since the incident. |
However, after falling by as much as 3.4% in early trading on Monday, Rolls' shares clawed back some losses after it announced a £350m services contract from EgyptAir. | However, after falling by as much as 3.4% in early trading on Monday, Rolls' shares clawed back some losses after it announced a £350m services contract from EgyptAir. |
The Airbus A380 superjumbo uses one of two engines. | The Airbus A380 superjumbo uses one of two engines. |
The Rolls-Royce Trent 900 engine has been installed in more than half of the A380s currently in service. | The Rolls-Royce Trent 900 engine has been installed in more than half of the A380s currently in service. |
The remainder use an engine manufactured by General Electric and Pratt & Whitney. Their engines have not been implicated in this recent safety scare. | |
The two businesses are committed to engines for a further 197 planes on order. | The two businesses are committed to engines for a further 197 planes on order. |
If it turns out that the Rolls-Royce engine is not fit for purpose and the engine is withdrawn, Rolls would have to offer a refund for the engines sold to its Airbus A380 customers. | |
What is more, Rolls Royce would lose the income that would come from servicing these engines - typically over 40 years - which makes up a big chunk of the engine-makers' revenue. | |
Shares in both Rolls-Royce and EADS, the aerospace giant that owns Airbus, have been falling following last week's emergency landing by the Qantas A380. | Shares in both Rolls-Royce and EADS, the aerospace giant that owns Airbus, have been falling following last week's emergency landing by the Qantas A380. |
On Monday, EADS shares were down 0.5%. | On Monday, EADS shares were down 0.5%. |