Rolls-Royce nosedives into the red with a £2.9bn loss as cost of repairing faulty aircraft engines piles up
Rolls-Royce plunged into the red with a loss of £2.9billion in 2018 as it took a hit from one-off charges related to faulty aircraft engines.
The engineer that makes engines for commercial planes, the military and trains said it booked a charge of £790million related to problems with its Trent 1000 model.
Last year a fault with the engine used on Boeing 787 grounded planes flown by major airlines.
Engine trouble: Rolls-Royce, which makes engines for commercial planes, the military and trains said it booked a charge of £790m related to problems with its Trent 1000 model
Rolls-Royce faces a bill of around £1.5billion spread over five years for dealing with the costs to repair the engines.
It said it had also taken a £186million hit on its Trent 900 engine operations after Airbus said this month it would stop producing its A380 plane after not receiving enough orders for the super-jumbo jet.
In addition, it took a £2.1billion hit from financial instruments used to hedge exposure to the US dollar.
The manufacturer said it had taken the ‘very difficult’ decision to withdraw from the race to supply engines to Boeing’s new mid-market planes.
The firm has proposed launching a mid-sized jet to fill a gap between the narrow and wide-body aircraft.
Rolls-Royce said it would not be able to meet the US airline’s timetable and did not want to overstretch itself or run into similar problems like the ones it faced with the Trent 1000 engines.
Chief executive Warren East said: ‘We tried very much to make it work. It’s not easy to walk away from something like that.’
A restructuring has already cut 1,300 out of 4,600 proposed job losses, and the firm will have saved £400million in annual costs by the end of next year.
Revenues rose 7 per cent to £15.7billion. In 2017, it made £14.7billion and pre-tax profit of £3.9billion.
Analyst George Salmon, of Hargreaves Lansdown, said: ‘Warren East hasn’t quite got Rolls-Royce firing on all cylinders.’