• NOVEMBER 8, 2010

Rolls-Royce Narrows Engine Probe

By DANIEL MICHAELS And ENDA CURRAN

DPA/Zuma Press

A Rolls-Royce Trent 900 engine at a Lufthansa site in Germany in July

Rolls-Royce Group PLC said Monday thatit is closing in on understanding why one of its engines on a Qantas Airways Ltd. Airbus A380 jetliner blew apart last week, and the British engine maker is making fixes that will allow the Australian carrier to return its superjumbo jets to service.

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Rolls-Royce said in a written statement that the Qantas incident was unrelated to an apparently similar accident in August with a test engine for the new 787 Dreamliner made by Airbus's top rival, Boeing Co. of the U.S.

"It is now clear this incident is specific to the Trent 900 engine," which is used only on Airbus A380s, Rolls-Royce said Monday. Rolls-Royce added that checks are now being completed that will allow the aircraft to resume operations "in full compliance with all safety standards."

Qantas Chief Executive Alan Joyce said the carrier's engineers found oil leaks in engines on three of its six A380s. The fleet of double-decker planes—which are made by Airbus, a unit of European Aeronautic Defence & Space Co.—has been grounded since Thursday, after the fiery blowout of a turbine that forced a flight with 466 passengers and crew onboard to make an emergency landing in Singapore soon after taking off.

Mr. Joyce said Monday that Qantas's A380 jets are likely to remain grounded for at least another 72 hours.

"These engines are not performing to the parameters you would expect," he told a news conference in Sydney.

Qantas engineers identified oil leaks on engines from three separate superjumbo jets, one in Sydney and two others in Los Angeles, Mr. Joyce said. "The oil leaks were beyond normal tolerances," he said.

A Rolls-Royce spokesman declined to comment on Mr. Joyce's statements.

Mr. Joyce added that Qantas's Trent 900 engines are adjusted to provide more thrust than those on the two other airlines that use the engine model. He said this could help explain the failure. The two other airlines, Deutsche Lufthansa AG and Singapore Airlines, found no problems on their engines after conducting detailed inspections.

"We have done our checks and we are back in normal A380 operation," said a Lufthansa spokesman.

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The Trent 900 is designed to deliver between 70,000 and 80,000 pounds of thrust. All three airlines' Trent 900s are physically identical, but control computers on Lufthansa's and Singapore Air's engines are set at 70,000 pounds, while Qantas's are set at 72,000 pounds, according to people familiar with the equipment.

The average length of Qantas A380 flights is also longer than those of Lufthansa and Singapore Air A380 flights. This means the Australian carrier's superjumbo jets generally carry more fuel and are heavier at takeoff, and so require more engine power to get off the ground.

All of these issues are being examined by investigators as possible factors contributing to the incident, although a person familiar with the investigation said the difference in thrust alone wouldn't explain the engine failure.

"One of the things we're looking at is whether those operational considerations by having the high level of power" are actually contributing to this, Mr. Joyce said. If that is the issue, he added, "this is a problem with the engine not meeting its design criteria." A spokeswoman for Qantas said other issues are still being examined as well.

Mr. Joyce's comments increased pressure on Rolls-Royce, which is based in Derby, England, amid concerns of a wider design problem with its higher-powered engines for certain A380s. The company makes and services turbines for aircraft, naval vessels and power systems. It is separate from the car brand of the same name, which it spun off in 1973 and was purchased by German auto maker BMW AG in 1998.

Shares in Rolls-Royce are down 7.3% since Wednesday, although the company's stock price rebounded 2.7% on Monday to close at 607 pence (US$9.83) in London.

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Fitch Ratings, which tracks companies' debt, said in a prepared statement that Rolls-Royce's public problems "have no immediate impact on the company's ratings." But Fitch said it "will monitor events closely over the coming days and weeks to assess the extent of the effect on Rolls-Royce."

Qantas faces heavy losses from grounding its fleet of the 460-passenger aircraft as it juggles flight schedules and rotates spare aircraft into its roster. Shares in Qantas fell 2.1% to close at 2.80 Australian dollars (US$2.84) in Sydney on Monday. The company's stock price is off 3.1% since the engine blowout forced Flight QF32 to turn back on Thursday en route to Sydney. Qantas said last week it is leasing aircraft from British Airways PLC to meet its flight schedule without the use of the A380 fleet.

"It's too early to put a number on total cost," Mr. Joyce said.

Write to Enda Curran at enda.curran@dowjones.com